I want to give my little brother his very own IRA retirement account as a college graduation present. Just what every new grad needs!
He just started a new job and is working on creating a budget that fits his $513 a week salary. One of his main goals is to get his car on the road, but I’m gently trying to persuade him to buy a monthly bus pass and contribute to an IRA retirement account. This may well be his quickest way to become a millionaire. (In case you wondered, he said my post about his new budget was “legit.”)
I waited far too long to establish an IRA (mid-20s) and regret I did not begin contributing as early as possible. In fact, I don’t know of any age minimum to start an IRA. Why not establish one with your first job?
IRAs are valuable for their tax advantages. The money you contribute to a traditional IRA is pre-tax; ROTH IRA contributions are post-tax but never taxed again. (More on the .) The longer your IRA money has to grow, the bigger it gets. Just like a seed. Plant it too late, and it will never reach it’s full potential.
I had hoped to put $100 into my little brother’s IRA but as it turns out Charles Schwab requires a $1,000 minimum deposit and Fidelity requires $2,500 to start. These requirements can be waived if you set up a monthly automatic deposit, but I do not have the power to do that for him.
Instead, I’m going to offer him the first $100, which I’ll give him once he sets up an auto-deposit IRA. (Fidelity requires $200 a month auto-deposit; Schwab’s minimum monthly deposit is $100. Both firms have links from their homepage to open an IRA).
For more info on setting up an IRA, including how to invest your IRA, read Wealth Pilgrim’s post on . He knows his stuff!