RC from Think Your Way to Wealth, tagged me with the Single Step Personal Finance Challenge” created by Mrs. Micah. The challenge is simple yet powerful – “Find one step you can take to make your financial system better or more organized.”
My single step personal finance challenge is going to be to open up a Roth IRA account this year. I have been reading about it a lot in a number of blogs and media lately and it sounds like a no brainer investment. I just need to get around to researching the best option for me and filling in the required paperwork.
A Roth IRA is basically a special type of Individual Retirement Account (IRA) that provides tax-free growth. Unlike a standard 401K or IRA account, you put money in after tax. However all your asset growth is tax free (if you hold if for 5 years+), but the real kicker is that all your withdrawals are tax free as well! So you don’t need to worry about changing or increased taxes when you retire. As a result, it’s the simplest – and potentially the most effective – sheltered account imaginable. That’s why there are some limitations with investing in it.
The Roth IRA contribution limit is $5000 (or $6000 if you 50+) and is adjusted based on your income. If you are married filing jointly you must earn less than $169,000 to be eligible for making any contributions. For single filers the top income limit is $116,000. You can get all the details and rules for a Roth IRA from this IRS publication. If you know of any more good information sources leave a comment with a link to the relevant article. I know I have to do more detailed research on the rules and investing options before I make the investment. Given the flexibility and substantial tax benefits, it is an investment I must make and that is why it is my single step personal finance challenge.
Thanks for the tag RC, and Mrs Micah for the concept. Paying it forward, I am going to tag some recent commenter’s from my blogroll: Curt from Penny Jobs, and the bloggers behind MoneyEnergy and pfstock. I also liked some of their recent articles so am going to tag the following others from my blogroll : Krystal from Give Me Back My Five Bucks, G Blogmaster at CAN I GET RICH ON A SALARY and the brains behind Trees Full of Money.
Trifecta of Hundreds milestone
After getting serious about this blog a few months ago by writing more frequently and participating more actively in the personal finance and investing blogosphere, I reached a few mini-milestones over the last week. 100 RSS readers, $100 in blog revenue for the month and 100 posts! Thanks to all the readers, fellow bloggers and Google (blogger and search) for making this possible! [Update 2015] – I now have 10,000 readers, over 2K a month in revenue and over 1000 posts!