How to Start a Roth IRA Investment

Roth IRA investment is a great investment vehicle to build wealth for retirement. You invest after tax money in a roth IRA account. The money grows tax free. Since the growth amount will be much higher than the invested amount over the long run, roth IRA investments are much better than tax deferred investments such as regular IRA or 401K. The following steps guide you to start a roth IRA investment.

Instructions

1. 

   Determine if roth IRA is for you. With roth IRA you don't get a tax benefit on the money invested. You pay upfront tax for a large tax free gain during retirement withdrawal.

2. Decide on the type of investment you would like to do in your roth IRA. Roth IRA is just a place holder. With that money, one can invest in CDs, stocks, mutual funds etc. Type of investment depends on your goals and risk appetite.

3. Start the roth IRA investment by opening appropriate accounts. Based on your investment type you can open multiple accounts with different institutions.

4. Choose FDIC insured institutions for CDs in roth IRA investments. They offer principal protection through government guarantee.

5. 

   Open roth IRA account with a mutual funds company if your investment choice for roth IRA is mutual fund. You can set up regular investments to build your wealth for retirements. Don't go with brokerage firms for mutual funds.They charge you a fee to purchase mutual funds in the roth IRA account.

6. 

   Select a brokerage account to trade stocks and ETFs in the roth IRA investment. Keep in mind that roth IRA doesn't compensate for any investment losses. But your investment gains will be tax free if withdrawn after 59.5 years of age.

Tips & Warnings

• You can withdraw the principal part anytime without penalty. However you cannot withdraw the gain before the age of 59.5 unless you pay penalty.