When to invest in IRAs is a question I asked myself many times in my early 20s. I kept hearing about Individual Retirement Accounts (IRAs) and them being something I “should” open. But I didn’t understand what they were until I was 26. And I have been maxing out my Roth IRA every year since.
Years ago when I was working as a tour guide, I was feeling exploited and exhausted. I knew this wasn’t a lifestyle I could maintain into old age and wanted to do something to set myself up for the future. Luckily, I had a friend who was a financial advisor and was kind enough to sit me down for free and explain things to me.
I didn’t know anything about investing, but it was really eye-opening to realize that I didn’t have to be making a ton of money to start investing.
The most important factor was to just freaking do it.
So to answer the question of when to invest in IRAs? The answer is NOW. Start doing it today. Even if it is a small amount of $20, $50, whatever you can afford. Don’t overthink it. As long as you’re making earned income that you are reporting to the IRS, you can open an IRA.
An IRA is a type of investment account that allows you to save for retirement. There are different types of IRAs and each has different tax advantages. Click here to learn more about investing in IRAs (Traditional vs Roth) in more detail.
The goal of an IRA is to leave that money in there for as long as possible. Time is the most important factor.
The earlier you start, the better off you will be in the long run. It takes years for the money to grow. Once you open and fund your investments accounts, you can automate it so that you can set it and forget it. And you can just go on living your fabulous life while literally making money in your sleep.
Yes, it’s scary. But think of your future self. Think about how great it will be to have options and not have to struggle later in life. You are setting yourself up for success by doing the hard work today so that you can reap the benefits down the road.
If you have a bunch of cash sitting in a savings account, consider investing in so that it doesn’t lose value to inflation. Of course, you first want to make sure to leave enough for your emergency fund. An emergency fund is the backup money you may need in the short term. You should think of your IRA money as untouchable. This money is set aside for the future and should be left alone to do its thing and grow over the years.
When you are ready to invest in IRAs, you can easily set up an account yourself at a brokerage firm like Fidelity, Vanguard, Charles Schwab to name a few. If you have an ITIN, you can open one.
I’m most familiar with Schwab because I was a stockbroker there and still use it myself today.
Many brokerage firms offer robo-advisor funds. The robo-advisor automatically picks your investments for you based on your inputs. You take a survey and tell it your risk tolerance and retirement goals. The AI then optimizes your investments and boom you have your IRA setup.
I also have a FREE investing workshop where I walk you through the details of opening and investing in an IRA. Watch the Investing in IRAs masterclass here!
Remember, if you are thinking about when to invest in IRAs, take the leap and get started now. Your future self will thank you.