• Roth IRA – My First Investment Account

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    We’ve joined over 140 other bloggers to promote the Roth IRA Movement. Thank Illinois Certified Financial Planner Jeff Rose for this awesome idea!

    How We Found Out About Roth IRAs

    According to my statements, my Roth IRA was opened in 1996. I was in high school at the time and got into a good amount of trouble for a teenager, so I was grounded a lot. Some of those Friday nights were spent with my mom, aimlessly flipping through channels for something to watch. One night, we came across a show on finances, with a host being a fiery woman with the name that wounds like MOVIE DOORMAN. It was she who introduced our family to the Roth IRA.

    We completely bought into the numbers that the financial personality was throwing at us: if we contributed the maximum amount (which back then was $2,000) for a few years, then by the time I was to retire I’d have a GAJILLION DOLLARS for me to by a private island and retire. She didn’t say exactly how the money would multiply, but that didn’t matter to us. So my mom opened up an account for me and put in $2,000. She gave me free reign as to what I could do with it.

    I didn’t have a single clue as to what I should have done. So I did what any slacker teenager would do: Nothing.

    Getting Started With My Roth IRA

    Fast forward a few years and my mom had contributed an additional $500, while I did nothing. She called me one summer day when I was in college, and told me to pick some investments. I logged into the investment brokerage, and I stared at the screen. I. Knew. Nothing. So I did what any Generation Y/Millenial would do: I called the customer service hotline for help.

    When I was connected with the rep I told him the history of the account and that I had no idea what I was doing. The guy was nice enough to stay on the phone with me for about an hour while he explained the basics of mutual fund investing – large caps vs small caps, stocks vs bonds, mutual funds. I am supremely grateful that he spent so much time with clueless me. Honestly, I don’t know if what that guy did was even legal.

    When I got off the phone, armed with the very basic knowledge that I could obtain about investing, I went and made my first investments: ASCVX (which was originally owned by the bank I was with at the time) and FSLCX. Woo!

    My Roth IRA Today

    While those weren’t the brightest of investments, it got me started. The promise of a GAJILLION DOLLARS by the time I retired was again being pursued. Over the years in my Roth IRA I owned individual stocks of GE, CVS, and AMD, along with some other winners and losers.

    Today, my Roth IRA is a part of a comprehensive family retirement investment portfolio. While I haven’t updated our list of holdings in our Roth IRAs since 2007, they do still have the same investments in them – a REIT and a bond fund, both which round out our portfolio.

    Looking to the Future

    We’ve unfortunately not contributed to our Roth IRAs in a few years as we’ve increased the amounts we put in our employer-sponsored retirement plans. We would like to change this in the future as tax-free growth is something that we should be taking advantage of and we would like to remain tax-diversified.

    One future possibility for our Roth IRA is to help fund a first/investment home purchase. Current regulations allow us a lifetime withdraw limit of up to $10,000 for the purchase of a first time home. If we both did this, then we’d have $20,000 in real estate, or about 17% of our portfolio. It’s a fantastic benefit of having a Roth IRA, but we must weigh all the options to see if it is right for us.

    Do you have a Roth IRA? How have you used it in your life?

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