The Best Way to save for retirement
Starting to save for retirement as a teenager is one of the smartest money moves you can make! Here's how to get started:
- Open a Roth IRA
This is a special retirement account where you put money in after paying taxes. The amazing thing is that when you take it out in retirement, you pay NO taxes! You can open one as soon as you have earned income (like from a part-time job).
- Start with Index Funds
When you put money in your Roth IRA, invest it in low-cost index funds that track the whole stock market. Companies like Vanguard and Fidelity offer these, and they're perfect for beginners.
- Use the Power of Time
If you invest $100 monthly starting at age 15, by age 65 you could have over $1 million (assuming a 10% average annual return)! This is because of compound interest - your money makes money, which then makes more money.
- Get Free Money from Future Jobs
When you start working full-time, many companies offer 401(k) plans with 'matching.' This means they give you free money when you save for retirement. Always take this free money!