Graduated Learning: Life after College

I got my degree, I got a job…now what?

Opening an IRA: No Excuses March 28, 2012

Filed under: Personal Finance — Stephanie @ 12:06 am
Tags: , , ,

When I was younger and didn’t feel like doing the dishes, I’d make excuses.  The top excuse usually was “I don’t know how to do it!”  Of course we know that’s a ridiculous lie.  And I’d still have to do the dishes.

We all make excuses.  It’s too hard!  I don’t know how to do it!

No.  No more excuses.

I’ve talked before about how it’s a good idea to open an IRA.  And I’m especially keen on the Roth IRA as a good way to diversify my tax liabilities when I retire.

So, I’m here to show you that there are NO EXCUSES.

Disclaimer:  I’m not a financial advisor or other money professional.  I’m just a blogger.  But I want you to pay attention to what I say anyway.  You don’t have to.  But that’s all I can offer.

Excuse number 1:  I don’t have any money to do it!

No.  You do.  You just don’t realize it yet.  Depending on what company you end up opening an IRA with, you’ll have a certain minimum initial or repeating investment.  If you don’t have enough for the initial investment, start stashing away $10 or $20 in a savings account.  Maybe you’re getting a tax refund this year?  There’s some money you can use!  When you build up enough, go for it.  As I said, it depends who you open an account with, which leads me to excuse number 2…

Excuse number 2:  I don’t know how!

As I mentioned before, that’s a lame excuse.  And if you honestly don’t know how, guess what?  It’s easy.  You pick a discount brokerage or bank (I’ve used Fidelity, I know Vanguard is highly recommended, I welcome other good suggestions in the comments).  Check out their website to find out minimum investment requirements, fees, benefits, etc.  If you’re still confused, call them up.  Tell them what you want to do, find out what is required of you to avoid fees, taxes, etc.  Then do it!

Excuse number 3:  I don’t want to lose money!

Guess what?  NOBODY DOES!  You don’t go to Las Vegas hoping to “strike it poor”.  Yes, investing in the stock market (and in bonds, ETFs, etc.) has risks.  There’s no guarantees.  That ridiculous 2008 downturn?  I remember it too!  But here’s the thing.  An IRA is a really good idea.  You’re putting money away for your retirement.  There are tax benefits to having an IRA.  And if you follow the theories of John Bogle, buying low-cost index funds and invest over the long-term, you’re pretty likely to come out ahead over the long run.  And if you consider that keeping money in a regular savings account doesn’t really keep up with inflation, the market is a good way to go.  Which leads me to:

Excuse number 4:  I don’t know what to invest in!

As I said before, I’m not a financial advisor.  As they said in this Marketplace Money interview, the most important part is just starting that account.  You can start by contributing whatever you can (up to $5k, or $6k if you’re over 50 years old) each year.  Your best bet to start is to invest in a low-cost index fund or life cycle fund.  As you build your account, you can start learning more about investing (by reading books, magazines, blogs, listening to podcasts/radio shows), and diversify as you see fit.  If you want, you can always talk to a fee-only certified financial planner or advisor to get some advice.

So.  What do you think?  Any other excuses you can come up with?  Anything I got wrong here or left out?  Where do you find your investment advice?  Let me know!


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