Roth IRA: The Idiots’ Partial Guide

As I outlined last Saturday, I really know very little about investing.  However I have made it my goal to learn more this year since I will be at that stage no later than the fall and I really NEED to know what I am doing before I start putting serious money into investments.  I’m not the only one: PaidTwice said she wanted me to write an “Investing 101 for Idiots” Part One when I mention to her I had blogger’s block earlier this week.  So I have decided Saturdays are the perfect day to set aside for my forrays into attempting to learn about investing and wading through the industry-specific jargon that seems to always trip me up.

One thing I seem to have figured out (half by accident) is that a Roth IRA is the right thing for me to be in at this time.  You see, I was reading some online articles and posts about why Roth IRAs are bad for people…and every reason they listed for it being bad was GOOD for me.

Take the whole taxes thing:  Since Roth IRA money is already taxed, a lot of investing folks who know way more than me tell people to shy away since there is the possibility of the retiree being in a lower tax bracket.  Folks, I simply can NOT be in a lower tax bracket!  Seriously, it just isn’t possible…for 2006 taxes files last spring we got everything back, then another $30 on top of that.  Since the federal government has not yet added a negative tax bracket…I just cannot be any lower.  Now, since I am in the NON-tax bracket that means I really don’t have much to put in right now, but I do put $50 a month in to get the ball rolling.  I need to take full advantage of my lack of taxable status to its furthest possible extent, since someday I will be earning big bucks with my PharmD once I finally get it.

I also discovered a neat thing about IRAs in general, Roth or traditional.  They have a lower minimum investment than regular accounts.  I discovered this one on my own by accident: I got “fund fever” over the summer, took a cold shower for a month, then started nosing around looking at potential funds.  The good ones usually have a minimum starting investment of $3,000…way out of my league right now.  Then I noticed a second minimum listed: $250 for IRAs.  Now that I could scrape together!  So I deviated from “the” Dave Ramsey plan back in August to open up a Roth IRA.

I’m not even going to attempt the other reasons for or against Roth IRAs…well because I don’t have a good grasp on them just yet.  I will toss a link out for those who know more than I do: 4 killer reasons a Roth IRA should be your #1 option from  My chat buddy Dan the Numbers Man loves this article, so right now that’s sounds like a great endorsement to me LOL since Dan has been investing since I was in grade school…and actually understands the stuff.  (Like most “investing guys” he has trouble explaining his knowledge to me in a way I will understand LOL so he says he will be reading this category faithfully….no pressure there!)

So, from everything I have read and heard, if you are in the NON-tax bracket, then the Roth IRA is the absolute best investment “vehicle” to be in, and it won’t take all that much to get the ball rolling.  I can’t start one for my son just yet, since one of the requirements I have found is that you need to have some form of earned income.  VA disability doesn’t count, so it was a very good thing I went out and got my job delivering pizzas!