(Yes, that’s spelled correctly. )
term to know: IRA
Let’s start here…
When thinking about saving, it’s important to be familiar with the tools available to us. Like we discussed last week, there’s no perfect way to give your wrinkled-self some love, but we can definitely learn about what options we have. I’ve said it before and I’ll say it again:
The best thing you can do is !!! start !!!
Meet IRA!
She’s an investing account ~with benefits~ designed to encourage you to set aside money for retirement. IRA is cool because she offers tax advantages that other accounts don’t. She has a yearly maximum of $6k in contributions.
There’s a catch to those benefits— you can only withdraw money from IRA after age 59.5 (or pay an early withdrawal penalty.) She has a few different ~flavors~ that you may have heard of.
Traditional IRA
I like to think of her like a sweet, fruity drink at a bar— tastes good now but will probably make you feel like shit later*. A Traditional IRA offers tax-savings today rather than at retirement. That means, when you go to withdraw that money at retirement, you’ll have to pay taxes on those withdrawals.
Roth IRA
She’s more of a Tito’s on-the-rocks kinda gal… absolutely painful to drink now but will feel like a champ tomorrow. A Roth IRA doesn’t provide tax savings today but when you go to withdraw at retirement you won’t have to pay taxes on those withdrawals.
How do I start?
You can open an IRA account at a bank or a broker. The money in an IRA is meant to be invested— you can invest in things like stocks, bonds, and other assets. I use Ellevest but feel free to go with whatever you feel most comfortable with! I highly recommend going with a Robo-advisor because it picks the investments for you and adjusts them automatically based on your goals. No work on your part! We love that.
*In some cases, a Traditional IRA may be the way to go
First things first. Why the extra “o”?Because we want you to be more than rooted. You’re extra roooted.
What does being “roooted” even mean?It means being aware of the immense impact money has on my life and on the world around me. I think the trickiest part is putting that awareness into practice. Save, spend, and invest in ways that align with your values.
What is roooted anyway?We’re a newsletter and community dedicated to making money cool. For most people, when thinking about finance, “cool” is not exactly the first word that comes to mind. We’re trying to change that.
