You've got to start NOW

I wanted to talk about starting NOW. Being that I am considered younger I have excused myself from having to plan for things really far in advanced. In fact, I will test this. Knowing that my audience probably is younger as well please help me and test your reaction to my next statement. Today I am going to talk about planning for your retirement. If you are anything like me you kind of turned down the volume just a little bit.

That is my point, I am all for 5 year plans, 10 years plans, and maybe even a 20 year plan. But planning for something 40 years away is ridiculous. Well, it really shouldn't be and I can convince you. Check this chart out.

The Adventures of Sigmund and Alberto

Who had the better plan, Sigmund starting NOW, or Alberto waiting til he was "established?" Sigmund had a plan and followed it. It was hard for his first few years, but he benefitied from it the next 40 years and while those first few years are hard, that is what maturity is. It might be "hard" to set aside money right now. But let me challenge our definition of "hard." We have every basic need met (food, clothing, shelter, and transportation). This is more than most of the world gets. So if we have all that stuff met, what is so hard. I am sure that if we really evaluated where our money goes, it should be EASY to set aside $1500 a year.

This is what being an adult is. Children do what feels good, adults devise a plan and follow it. What you do now does effect the future, you might as well make a plan.

The roth IRA is a great tool that can help. This is a tax free growth tool that the US government as given us. For the year 2007 the maximum we can put in our Roth IRA is $4,000; in 2008 it goes up to $5,000. Just in case you don't know what this means: Normally when you invest in a mutual fund for retirement when you take the money out you have to pay taxes on it because you made money. Same reason why we pay income taxes from our job. However, with the Roth IRA when you check out that chart of Sigmund and Alberto, they do not have to pay any taxes when they take the money out at age 65...it is cash money.

You can open your roth IRA through any brokerage firms or any online brokerage places like E-trade or Ameritrade. I recommend http://www.zecco.com/ because it is just like e-trade but there are no transaction fees. Check into it, but before you invest you want to do research on which mutual fund you choose. I will go more in detail but make sure you go with something that has a long track record of success. Don't go after anything that is new but has skyrocketing returns. More on investing tomorrow.