16 yrs old Go for the totally FREE IRA account at my local bank?
Hi,
I have a stable job and Im 16 I was planning to get a $1000 market account and some $500 CDs. I am a big SAVER I NEVER have to spend my money cause I worked hard for it.
My parents wont let me invest online nor would they let me open accounts at other institutions. Now im stuck at my local bank for now.
I know, I read and took a little dig in finding a little info about IRAs. Its insured by the FDIC up to $250,000 and it can only be open when one is 59 years old and its TAX FREE. Never pay taxs when you open and there is nifty fees to open when one reaches into their IRA prematurely.
1) So, here this brings to my question should I get a totally free IRA account that has no minimum balance at my bank?
2) Why should I get it I might die before I reach age 59?
3) Whats the whole purpose of invidual retirement accounts doesn’t it destroy the purpose of 401K’s, pensions, social security?
5) How does traditional IRAs and Roth IRAs differ?
If I answer #5, it might explain the rest. A traditional IRA is when you deposit money and you pay taxes on it at the time you deposit it. You let it mature and when you’re of age and w/d from it, no taxes then.
A Roth IRA is the opposite, you put money in it w/o paying taxes on it until you withdraw it. There are some penalties, but also exceptions to early withdrawl such as college tuition, and you get a higher interest rate over a standard savings account.