You Should Already Have a Roth IRA

No, really, if you're young, you qualify, and you don't have one yet, you should run, not walk to your nearest brokerage! I opened mine up today and am really kicking myself for not having done it before.

Here's all you need to qualify:

• be over 18
• have an income under $95,000 (for a single filer in 2007)

That's it! So if you're reading this, you probably already qualify.

This I already knew. The part that makes me stupid for not opening one earlier is this:

• You can have any investments within a Roth IRA. This includes CDs, money market accounts, mutual funds, ETFs, individual stocks, etc. Literally anything that you might have your regular money in, other than a checking account.
• Your earnings grow interest free. This is great even if you're choosing safe options like CDs and money markets, but you can also avoid short-term capital gains tax this way if you're into the whole day trading thing. Score!
• You can withdraw your contributions any time for any reason with no penalty. This means that you can have your money work for you tax free for a while, then take it back out if you need it - and your earnings are still yours, tax free, until you retire.
• Or, better yet, you can take out interest and earnings with no penalty for major medical expenses, home purchase, or college. And let's face it, what are most of us saving for anyway?

The only catch is, there's a maximum yearly contribution - $4000 in 2007, which goes up to $5000 in 2008, so you can only get all of these great benefits on a limited amount of money. There's also the income max, which you might be exceeding before you know it if you're in a fairly lucrative field. Which is why you should start now - and I should have started 4 or 5 years ago. Oh well, better late than never!

E*Trade's Roth IRAs have no minimums and no fees if you get statements all-online. Their trades might be a bit pricier than others ($12.99) but I don't trade much, already have other accounts with them, and get $5/trade because my employer's stock purchase plan is administered through them, so it works for me.