How do you start a Roth IRA? First of all, you need some actual extra cash lying around. And you won’t have that if you do not know how to budget and save money. There is no substitute for smart, disciplined saving. The risk comes later, when you have learned how to maximize a dollar. Then you can become a high-flying investor, with lots of funds to play with.
But first you need to save up enough money each month to not just start a Roth IRA, but also fund one on a regular basis. Most banks need you to have a minimum of $500 to start a Roth IRA and then you should set up regular contributions to the account, in order to have enough money to invest. Automate your monthly savings to your Roth IRA, so you do not have to think about it.
The benefits of a Roth IRA are in the future. The contributions that you make today are from after-tax dollars and you cannot deduct them from your current annual tax return. But you are going to be able to take tax-free withdrawals from a Roth IRA after you turn 50 and half. That is a great benefit to have once you are in your later life. The less taxes that you pay as a retiree, the better.
Today, you need to start saving for one. So that means cutting down on eating out and cooking more of your own meals. That means going out to the bars less often and putting that savings aside. That means clipping coupons for the grocery store, so you can stretch a dollar as far as you possibly can. There is nothing more important than saving money so you can be comfortable when you are older.
One way to save on your grocery bill is to find alternative sources of protein. Steaks taste great and they can fill you up, but they can also drain your bank account. Learn about recipes for beans and whole chickens and less expensive cuts of beef, like chuck roast and pot roast. Once you can master flavorful recipes for rice and beans and other modest foods, you won’t miss going out to eat. Or miss cooking yourself a nice steak on the grill every week. Plus, it can be a great way to stay healthy.
And once you amass enough capital to start a Roth IRA, you need to learn what to do with all that money. Invest it. Read some books on investing and figure out what style you are comfortable with. If you want to trade as a day trader, the Roth IRA might not be the best place to do it, but it can provide a safety net, so that you can pursue your interest in trading at a faster pace. As long as you are careful, you can be successful at a day job with a conventional Roth IRA, while also having a sideline in day trading. Learn how to manage your risk and find enough money to play with.