Question by piscesgurl310: How and where do I start a retirement account.?
I am 21 , going to school, and living with my parents. I plan to put $ 200 to start a retirement account and then add roughly $ 83 a month to make it $ 1,000 a year for the next few years till I get a better paying job.
My question is can I open an online retirement account? Right now my bank is bank of america. I also wanted to know if I started a 401k with my current employer how does that transfer to future employers. I do NOT plan on staying at this job much longer.
Until I learn more about stocks and other investment tools I just want to focus on retirement accounts.
Answer by Thin Kaboudit
You can start an IRA (Independent Retirement Account) with any on-line brokerage, my recommendation (based on nothing except I like them!) would be BuyAndHold.com, whose IRA stuff is here:
Don’t get too big a head, but you are WAAAY smarter than almost every other 21-year-old in the country to be thinking about this now. The market has historically returned 10-12% a year on average, long-term, and will continue to do so unless the world “goes out of business”, LOL. If you invest $ 200 now, and add $ 83 a month, by the time you retire at, say, 61, you will have over $ 1.1 million, even if you never increase the amount you are saving above $ 83 a month! Behold the miracle of compound interest!
(If you wait until 70 to retire, and can achieve 13%, you’ll have about $ 13M!)
Since you are so young, you probably want to opt for a Roth IRA (which you would fund with money you already paid income taxes on), especially if an employer allows you to participate a pre-tax 401(k) plan.
Well done on being so smart!
Have a great life!
What do you think? Answer below!