The Roth IRA is a great way to invest for the future. It gives the investor more options than most other investment types. If you don’t have a 401K at work, a Roth IRA is probably your best choice. The main thing a Roth gives you is options. Below are the main advantages to having a Roth IRA.
1) Contributions Grow Tax Free. Any money you put in a Roth IRA can be withdrawn without tax consequences. While you are taxes at ordinary tax rates when withdrawing 401K money, this is not so with the Roth. Being able to withdraw this money at retirement with Uncle Sam getting a slice is a good deal.
2) Contributions can be used to fund college expenses. This is one of those options that make this investment great. You can use contribututions to pay for your college or your children’s college. Our financial needs change due to circumatances. Even if you desire to use this for retirement, if your financial picture changes you can use this to help fund Suzie’s first year in college.
3) Contributions can help with the purchase of a first home. Here is another great option provided by this investment. Money inside a Roth IRA can be used as down payment toward your first home purchase.
4) Roth IRA assets can be passed to your heirs tax free. What a comfort knowing that your children won’t lose a portion of your estate to the government! If you have a Roth IRA, this money will pass to your designated survivor without tax consequences.
5) Contributions (not earnings) can withdrawn at anytime without tax consequences. You never know what is around the corner. If a costly financial issue drains your emergency fund, you can use money in a Roth (contributions) as a back up.
I hope you can see a Roth IRA is a GREAT investment tool. If you’re interested in reaping any of the benefits above, open one real soon. You won’t regret it.