Retirement account as a college student?

As long as you have enough money to pay your tuition and other expenses, then starting a retirement account while in college seems like a great idea to me. Compounding of interest/capital gains is a very powerful thing and the longer you have your money invested the more it helps you. Starting at age 20 vs. age 30 gives you a big advantage in accumulating wealth.

It is important though to make sure you do not need that money for basic expenses because there are significant penalties if you withdraw money from a retirement account before you reach the required age.

Put the money into a Roth IRA account. There are NO penalties for withdrawing the money you paid into a Roth account if you need it for an emergency. The beauty of a Roth account is that all the interest, dividends and appreciation it earns in the next 40 years is tax free when you take it out at retirement time.

i'd placed the money right into a Roth IRA. the money is merely no longer deducted now yet will improve tax loose for no less than 40 5 years (a large income of those money owed). the suitable position could be stocks. even although they don't look doing nicely, it truly is suitable to keep paying for at the same time as issues are down so at the same time as they flow again up, you could have massive efficient factors tax loose. there is not any consider getting existence coverage now because you aren't any more making a lot money and no one is relying on the income that you're making. in case you want the money for something quickly, a money marketplace fund may be the suitable concept. A money marketplace fund has higher charges of interest than a standard price low priced charges fund. you'll hit upon them at brokerage money owed or maybe some banks.

It's a good idea IF you have earned income (that's required to contribute) and IF you are really willing to lock that money up for the next 40 years or so. Do not make the mistake of using an IRA or similar account for short-term savings goals.

Steph

Just put the money in to a savings account or mutual fund.... don't get fancy.

Soccerref

100% by far the smartest thing I have seen posted on here in a LONG time. Not only is that possible....but that is an EXCELLENT idea.