Practical Investment for Real Life: The Roth IRA
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Practical Investment for Real Life: The Roth IRA

The Roth IRA has some handy withdrawal features that let you get your money in a snap if you really need it.

If you can defy the reign of the owners of the means of production at a great enough rate to save some extra money, and you can reach the end of the month with some spare cash, you may have considered investing that surplus amount in a long term investment. Long term investments are excellent, because they offer an interest rate of five to twenty or more times higher than a standard savings or checking account. The problem with one of these investments is that they are often very restrictive, and it can be difficult to get your money in the event of an emergency.

This conundrum often means that people are left confused about whether or not they should invest their money. This confusion leads to frustration, procrastination, and finally dismissal of the long term investment idea altogether. This sad reality ruins the chances of many at a decent retiurement; it is important to understand that each day, month, and year that you delay starting or paying into your long term investment significantly reduces the potential end yield of your investment (the amount of money you will have when you pull it out after retirement).

Chances are that many of us do not spend a significant amount of time directly thinking about our future, but even those who do can still be surprised by unforeseen events. I encountered the investment conundrum myself recently. Although I was fortunate enough to be able to start a long term investment by age 20, I was not always able to make the maximum contribution, as I was attending college until recently and unable to work steadily. Six months ago, however, I did graduate from college, and I was able to work and save up some money. Just before I left for military training, I had to consider whether or not I wanted to put most of my savings away. I also ended up developing a need for money quickly in order to pay housing, because the military only reimburses housing after soldiers pay it in off-post housing situations.

Fortunately, I chose to invest in a Roth IRA. The Roth type IRA allows you to deposit money worry free, because it can be withdrawn at your maturity period without any penalties. Your maturity period occurs at a rate that you set (usually 6, 9, 11, 12, 15, 18, or 36 months), and you can avoid all fees during this period of about one or two weeks. At other times, you must pay a $25 bank fee and 10% of the withdrawal, but this is relatively limited compared to other investment schemes. Withdrawing is also relatively easy: you must simply get a withdrawal form from your bank's investment bureau, fill it out, notarize it, and fax it back.

If you return your funds back into the investment within 60 days, then you can still keep that amount of money in your investment. The door closes after that, but you can always contribute towards the next fiscal year's contribution. It is important to note that you can only withdraw contributions and not earnings (interest) without accruing penalties. This is rarely a problem early on, when contributions are 90% or more of earnings, but it must be noted when the account begins to mature. In short, the Roth IRA offers an applicable investment scheme that contains realistic opportunities for individuals of all budgets.

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Comments (2)

I've had a Roth IRA since they first became available, but this information is new to me. Good to have it.

My husband and I both have a Roth, It is important in this day and age to be able to get to the money if you need it, this way you save and invest and you have a fall back plan if needed