Investing is about keeping the current value of your money (minimize capital loss) while substantially increasing its value over time. We know that inflation, taxes, and bad investments eat away at your capital, so learning about ways to minimize risk and maximize gains always helps.
One particular option that more millennials are looking to opt into is that of Roth IRA.
Here are the top three reasons why millennials love Roth IRAs.
1. Minimal Commitment
Millennials don’t have to worry about pulling out their initial capital, unlike in a traditional IRA. While it’s true that you should keep your retirement money, as precisely that, retirement money, there are times when individuals might want to pull out their initial capital. Thankfully, a Roth IRA won’t punish you and levy additional withdrawal taxes for pulling out your initial money.
Investors that seek withdraw money before fifty-nine and a half note that they see penalties of income tax on the capital pulled out of the IRA, in addition to another 10% withdrawal fee, (it’s like dealing with a cryptocurrency exchange!)
Guess what?
With a Roth IRA, you get to withdraw your initial capital whenever you want and not have to pay extra on those withdrawals.
There are still a few stipulations in early withdrawals, but they’re not as rigorous as a traditional IRA.
2. No Taxes When You Pull Money After 59 1/2
A Roth IRA provides savers with the feature of withdrawing income tax-free when done after they’ve hit 59 1/2.
But why?
Well, all your capital is taxed before it goes into the account, so earnings grow tax-free with a Roth IRA. A traditional IRA is different; you’re taxed when you pull your money at the appropriate time.
3. Pull Your Capital When You Want
A Roth IRA allows investors to keep their money in their account for as long as they want. Investors in a Roth IRA are not subject to a minimum required distribution like traditional IRA investors. Also, add more capital to your account as long as your working.
That’s Why Millennials Love Roth IRA’s
Millennials love Roth IRA’s because it gives them the freedom they want to invest and save while also protecting themselves in times of a downturn or personal emergency. They don’t have as many restrictions in a Roth IRA and can benefit from its many different features. It might be a low hassle and simple way to responsibly save for retirement.
