This is the third part of the Roth IRA retirement that I am working on. Instead of writing another post on this topic, I decided to refer you to JD’s similar posts at Get Rich Slowly Blog about Roth IRA. He has two very interesting posts that you may find helpful. The last post on his series are questions and answers about Roth IRA, so I am also tuning in on this. The following are GRS post:

You can also tune in on the the fourth part of my very own Roth IRA series - Other Alternative Investment Choices For Your IRA, which will be posted in the future.

Some Keypoints To Remember: 

- When saving for retirement, you should always start building an emergency fund because the last thing that you would do is to touch your retirement money when there is an emergency such as major house repairs, car breaking down, medical expenses not covered by insurance, etc.

- Most of us, probably, are enrolled in some kind of retirement at work such as the 401(k), 457, 403(b), or pension plans. Although opening a Roth IRA is really a good idea, but in reality, most of us don’t have anything leftover after we factor in retirement, mortgages, car payments, day to day expenses, credit car payments, etc. The folllowing are suggestions by PF101 that I found on the Get Rich Slowly Forum as far as prioritizing which area of expense/savings to tackle first.

Conventional wisdom is that most people should invest in this order:

  1. 401k to match
  2. pay off all high rate/consumer debt
  3. max out Roth
  4. max out 401k
  5. contribute to taxable accounts

- The Roth IRA is a perfect starter retirement investments for your kids who normally wouldn’t be eligible to a 401k.

- With an IRA, you have control on which mutual funds companies or stocks you want to invest in; unlike a 401k wherein you are limited to whatever your company selected. You can also invest in non-traditional investments (self-directed IRA) such as real estate, business, or even cows in case you want to diversify your portfolio.

- IRA’s are limited to $4,000 per year while 401(k) are maxed out at $15,000.

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