Roth IRA Millionaire 💸😎: How to Get Tax-Free Money Explained (2018)

100 Comments

  • I'm 26 and I'm just starting to learn about personal finance. Unfortunately, they didn't teach us this in school and my parents although they're great, don't know much about personal finance and don't really know how to help me. I feel like I'm getting such a late start and I'm already in a good amount of debt because of poor decisions. When I finishbgraduate school I'll have about 30K in student loans, and I just took out a vehicle in which I'm paying 40K with an 8 percent interest rate. STUPID. Anyways, any ideas on how I can get started. Would it be wise to start a Roth IRA now and then start attacking my student loans? Any advice from anyone would help. I want to be a different position than my parents who live paycheck to paycheck with almost no savings.

  • Interesting! Thanks for sending me this link. on Friday I’m jumping into a Roth IRA!! I’ll put in about $100 every month and then when I get my income tax I can put in the $5,500 and then focus on other investment opportunities. You the man Mr. Rose!!

  • Hey love the video!! I have a couple questions… So let's say I put the 5500 per year for 30 years, that would be 165.000 thousand right? Then 30 years later it has become about 1Mill , how much of that is lost to inflation in proportion to todays dollar value, and question 2, do you know if this is possible outside U.S? I currently live in Chile, known for it's bad pension, retirement systems, cheers and thank you for the info!!

  • Question, I have 401k with fidelity through my work place, I have tossed the Roth idea around with betterment. My only concern is what happens if betterment disappears as a company ? Where dose my money go? Should I just open a separate Fidelity Roth account? Thanks. New subscriber here after lurking a year.

  • Did no one notice the example (at about 9 minute and 30 seconds in) of putting in 100 dollars a month actually scaled at 1000 a month in the graphics? So the example has a discrepancy of 10x.

  • What is the earliest age that you can start with Roth IRA? Do you have to be employed? Can you invest on behalf of your children, so that when they get to the age of 18 continue putting in money to their Roth IRA. Thank you very much for all of your videos, Love them all

  • Hey not trying to give you a hard time, honestly just trying to fully understand… If I were to only contribute $5500 a year to either a Roth IRA, or a 401(k), are you saying that the tax benefits are still with the IRA Roth? Perhaps I am in a higher tax bracket (but low enough income to still contribute to the Roth) I paid taxes on the money already that is going into the IRA Roth. Now if instead I were to contribute $5500 exclusively to a 401(k), when I retire and I withdraw my yearly expenditures, I may be in a lower tax bracket, thus paying lower taxes overall. Am I way off here? I’m just trying to understand

  • Hi Jeff,
    I had a situation that came up the other day that maybe you can help give me insight on. A customer came into my work the other day and we got to talking about the stock market. I made a comment that I have started doing my own investing through an online broker. He instantly cautioned me to be careful because they bet against you. I didn't have a lot of time to question him more on this. I started to do some research on it but I'm still confused. From what I'm reading it causes a person to lose 90% of the time. I just don't get this betting against me. How do I know if the place I'm with does it, why are they doing it, should I learn how to do it myself and not to use a broker to buy stock. I feel stuck and I'm nervous to continue to invest. Please help.

  • My dad had a Roth IRA set up when I was 18 years old. I ended up maxing out the $5500 the for the first few years, not totally understanding why or what the purpose was. I CAN NOT STRESS HOW HAPPY I AM WITH THE DECISION. As Jeff explains, the compounding interest will make a huge difference if you save for years and years! Phenomenal content on a topic everyone should know about.

  • Hey Jeff, investing in a Roth IRA sounds like a great idea and I am very interested in doing something like this but I am curious to see what the difference would be from a traditional IRA or 401K where your saving money on the font end by not paying the taxes vs a Roth IRA when you pay taxes before you put money in but not when taking it out. If your getting a lower income tax by dropping a tax bracket and using a traditional IRA/401K and your saving money there how does that compare when paying taxes and then submitting into a Roth IRA.

  • Hey Jeff, would you recommend someone like me, a young individual just entering the job world with very little experience in investing, to create a Roth IRA at a robo-advisor, such as Betterment, until I become more comfortable with investing. Then later on transfer the money elsewhere, such as Ally invest, to manage myself?

  • i get the roth ira but i dont get the investment part of it, like can i just put 5k in there each year and it will automatically grow? or do HAVE to buy shares? am confused i am 19 years of age please

  • Very informative video. You’re helping me understand entrepreneurship better as well as finances👍🏾 I recently became an entrepreneur. Bout to start my class so I can get licensed in what I do🙌🏾

  • I had a vanguard 401k plan with my company and opted for them to manage it for me. they did such a great job. mafe alot of money. however our company was sold and now we are with a brokerage firm that sucking the life out of my hard earned money. will decrease the input and open up a vanguard roth ira. just love their customer service. they do not make you feel dumb. no matter what questions you may have.

  • I like the video but isn't the data skewed a bit since you are comparing a pre-tax 5,500 to a post-tax 5,500. Assuming you put 10% a year on 50K, traditional would save the 5K and be taxed at the end while a roth would be taxed right away and start saving at 3,750 (25% tax bracket * 5K). Now, I completely agree that you can put a max of 5,500 in a roth IRA but that is post-tax which would really be 7,333.33 – 25% taxes so you technically are saving more compared to the 5,500 traditional cap you can put in an IRA. But, if you match that 7,333.33 in a tradtional 401K you'd equal out if taxes are the same from now and when you retire. Just would like some insight or thoughts on this as a diversification tool to hedge against future tax rates or if you can math it for me to clear up my understanding.

  • Hi Jeff, I love your videos. I'm learning so much in an unfamiliar world! I took your advice and opened a Roth at my local bank but the interest its earning is pennies! Do I need to do something else besides just fund it with the annual 5500? You mention 10% compound interest and i dont' get how that happens? Do i need to open another Roth somewhere else and close this one?

  • I’m so EXCITED! I just turned 20 and I opened up a ROTH IRA a couple months ago, and I just can’t wait till retirement and see where this money ends up.!

  • If I start my Roth IRA at Betterment can I transfer it over to Ally free of charge after a year? I want to save for a home payment for when I am 40 and I am 26 now, would betterment be my best choice?

  • So I'm really confused here. I just opened a Roth IRA, how does the money grow? I have Charles Schwab.. Do I invest into Individual stocks, or put into a target date fund? 27 btw.

  • I opened my Roth a month ago. $40 a month (1%) haha, but I still have my traditional (where my employer matches) thats at 5%. My goal for the next 11 months is to get my Roth contributions up to 5% as well. Within 5 years I want to max out my Roth contributions. I just need to pay off my debt first.

  • Great vid. I have a Roth IRA but not getting near 10%. Don’t get how it’s safe to tell people if they have a Roth they should expect a 10% return.

  • You can do a rollover from a traditional (Im under P.L) , and later on when you move up the tax bracket switch over to a roth ira to avoid the tax at the beginning, qualify for tax deductibles, save more money in the first (1-3 years) deposits. Oh you do need the 5,500 for a traditional to qualify, right, or is it as much as you can afford. I do know the Roth takes any deposits.

  • Hi I'm a new subscriber from the Philippines. I really don't know anything about investment and still learning about such things. Is this a better option than Mutual Funds? Or do you have any suggestion? I've never heard about Roth IRA anywhere here. I think I must start investing on something else I'm 24 and haven't started anything yet. Please reply thank you.

  • My father in law made my husband open an Roth when he got his first job at 14. To encourage him to save his father told him he’ll match whatever he puts away in his IRA. I think that is just a good strategy to teach a kid to practice good saving habits. My husband is now in his late
    30s and set for retirement. I’m totally going to do the same when we have kids.

  • I’ve been contributing to my Roth IRA since it started in the 90s and it’s over $500k so it’s possible in 30-40 years.

  • Hey guys, I'm 42 and just started my Roth at Chase bank. I plan on maxing it out for the next 25 years to add with my 401k later down the road. I just have one question. Is ONGAX (ticker) a good mutual fund to invest in? If yes or no please explain for me. Thanks guys.

  • Jeff! Help me out here… You’ve introduced me to the Roth IRA. I’ll fully understand after I watch this probably at least 5 times. Also, can I pull my money out of my 402k, and put it in a Roth? (That sounds like a dumb question) … but also… my daughter is 4. She’s done AMAZING saving change and birthday money for college in her piggy bank…. actually it’s a unicorn piggy bank 🦄 🐷…unipig… anyways, I want to put her money in something that she will earn the largest amount of interest possible. I need the smartest suggestion possible!

  • I went to TD today to try to open up the Roth IRA and they was telling me that a CD would be better cause you get better rates. I haven’t decided yet but I was wondering if you could help me out? Im only 24 yrs old and trying to expand my investments

  • I am doing 100 a month into mine right now, and 200 a month starting next year. I am sticking what I hope are mostly stable dividend stocks into it and going to keep an eye on it every 3 months to make sure the companies are staying stable. I probably should only do something like Vanguard ETFs or something similar, but I will see within the next year as I learn better. But I am pretty excited. I have 20 years left until age 60, so I hope to still have a nice amount in it by then.
    Of course over time, I will add more per month as my income rises. At least it will still be better than in the past when I never invested at all.

  • Thanks for the info! Question – can you have more than 1 Roth IRA, ie Betterment + Ally for example? If not, and you find that you like a different IRA a few years down the line, are there penalties for pulling your money to switch? I'm going to stop procrastinating now (!)…and want to make the right decision. Thanks again; great content!
    ~Amy D Lux

  • Hi Jeff, what if I want to retire early? I'm 38 and I want to retire at 48, I am going to save 75% of my income for the next ten years. So if I invest my money in the Roth IRA, will if have to pay taxes if I do the 4% withdrawal , to live on????

  • Good content, but annoyingly disruptive in trying to capture audience attention. I had to stop watching and write this comment. 🙁

  • What makes it even more confusing is that there is a "Roth IRA CD" that is like a savings account that earns interest. So, I think it would be appropriate to make comparison between a Roth IRA and Roth IRA CD.

  • Great video!! Quick question.. what do you think of AT&T? I’m thinking is a great stick for it’s dividends? Long term?

  • I just closed my savings account with Bank of America and Chase and opened a ROTH IRA account with Fidelity, thank you Jeff. I suscribed.

  • Wait, $5500 a year with 10% times 30 doesn't add up to $1M.
    That's $16,500 gain.
    And $165,000 saved over 30 years. Unless there's something we're not adding here.

  • At anytime can your investment in Roth RIA go to shit? Say if the economy goes down I have known some people who had tons of savings in their 401k but when the economy went down so did their funds

  • If I'm SUPER late and only have 13 years before I retire, what's the best investment vehicle to get?

  • Uh….Mista Rose what would you do if you worked for Walmart for 17 years and you have only 25,000 in a typical 401K? How can I turn it into a Roth Ira without penalties, fees & taxes? A person at my local bank told me to leave it alone I'm better off. If I put it in the Ira Roth wouldn't they consider that I cashed it out and charge me for income taxes? Even if I'm putting it into something else? What would you do? Remember I'm not a kid anymore.

  • Good info Jeff. Im still learning but Im getting started. Thanks for all the good advice. God bless.

  • There's are two important points you are not mentioning in detail. 1. You ARE paying taxes if you invest in a Roth IRA but you are paying the taxes up front, on your income. 2. The advantage of the IRA is that arguably, you could have more money to invest in it up front because of the deferred taxes and hence have more money compounding earlier. Yes, if you are investing the exact same amount in either you will get the results that you mention but that may not be the situation for the average person. I think this is an important point you kind of glossed over.

  • What o don’t get is where the interest on the Roth IRA comes from. Do we put money into the Roth IRA and this money is put into stocks that we choose? How does it work?

  • Do you think Acorns platform is good way to use for their ROTH IRA? I recently became a member few weeks ago and putting at least $100/week

  • I wonder if I can have different ira accounts at multiple places? Like ally financial and other company’s, and put 100 dollars in each account every month . Is that possible? Meaning I’ll have 3 sum million dollars at retirement?

  • I'm a bit confused. You mention that you don't have to pay taxes on the Roth IRA compared to traditional and 401k, but you are paying taxes on the initial money you are putting into it right? So with traditional and 401k, you are not getting taxed initially yet getting taxed upon pulling your money out; and with a Roth IRA, you are getting taxed initially but not getting taxed when you pull the money out? How does this not balance itself out and ultimately make it the same? Seems like either way you are paying taxes at some point no matter which route you choose.

  • im almost done with my 3-6mths of emergency fund. after that ill start building into my Roth IRAs! (22 years old)

  • Just looking for clarification on your illustration of a ROTH vs. 401K at the 7 min 26 sec mark. You show a 200,000 "tax savings" (difference after 30 yrs (1 million vs. 800,000) but you are not taking into account the total tax saving a person would have seen by doing the traditional 401K. I think I would be interested in seeing how much that $200,000 is reduced if you factor in the tax savings over those 30 years.

  • Does a 401k match, despite taxes at the end, still make more money than a ROTH IRA with no retirement taxes? People say take the match because it’s free money which is true but I feel like the Roth is a steal. Not sure, please advise. I can put the $100 monthly in no problem at age 22. Employer matches 6% for their 401K.

  • The argument here is not clear. Compound interest is multiplicative, AS IS THE TAX RATE. So $100 invested pre-tax and saved for 20 years is the same as $70 post-tax invested, if the tax rate is still 30% at the time of distribution. The thing is that most people expect to be in a higher tax bracket later in life so paying the taxes now in the lower bracket will probably save you a lot of money in the long run.

  • I heard the concept of Roth IRA in school and I was under the impression that it was an account that you put money in and it gains with interest over time. Where I'm confused is when you start putting these investing terms like mutual funds and ETFs, can the Roth IRA still be effective as a savings account without even touching those ideas. In a sense can I just use it as an account and put money In it and gain money that I would not have otherwise?

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