👫I wish I knew this when I was younger.
👫If you have earned income, starting from any age (eg. modeling, design side gig) that you are able to show on taxes, you can contribute to a RothIRA account. So, why is this account so special? Well, unlike keeping your money in the bank and letting it sit there, you can actually put this money into a RothIRA account, and have the money grow with the market providing ~6-7% returns. The best part about this account is that it grows tax free and you also don’t have to pay taxes on it upon withdrawal. So, it’s superior to saving money in the bank, or investing in a taxable account where you have to pay capital gains taxes. Because this account is so amazing, there is a limit on how much you can contribute and who can contribute with set max income limits. (Although, for high-earners above the income limit, there is the Backdoor RothIRA option).
👫So, the usual concerns are, “Is my money safe in this account? How can I trust it? What if the market crashes? I don’t know, the investing stuff sounds risky.” Everyone has these thoughts at first. Historically since the beginning of the stock market, the market performance has always recovered and has always gone up. So the best thing to do is to think long-term, invest in index funds (VTSAX etc.), "set and forget" and let the index funds do their thing. This is the easiest and best way to grow wealth.
👫Keep in mind, no one can time the market (not even Warren Buffett), and even then, by the time you take your money out and transfer it, or put more money in, the market may have already gone back up or down and you lose out on the earnings. So it's best to invest for the long-term in index funds as the best wealth building option.
💵The 2021 Roth IRA limits are:💵
$6,000 if you're under age 50
$7,000 if you're age 50 or older
And you have to have earned less than 125K if you are single and less than 198K if you are married.
👫Talk to your kids, friends and family about this because I promise you, it will build stronger relationships!
By the way, you can purchase my bestselling kids financial workbook HERE. Best for ages 3-7 years old with lots of fun and engaging financial worksheets.