I am a social worker and dont make much money. I would like to invest more since i am now 37. I have a 403b at work and only put away 100 per month.
I know you talk alot about IRAs and would like to know how to open one, where and how much should i deposit to start.
Terry Says: Well, it can’t hurt to have more retirement savings. First, let me ask if your employer “matches” your contributions to the 403(b) plan? If that’s the cae, you’re getting “free money” and instead of opening an IRA, you should increase your contribution to get the matching contribution.
But assuming there is no match, and you want to open your own IRA, here are the basics.
First, you should accumulate at least $1,000 — because that’s the minimum most mutual fund companies want to open an IRA — along with a commitment to add at least $50 or $100 a month to the account by automatic deduction from your checking account each month. (You might be able to open an IRA with a smaller amount at your bank – but they will certainly charge fees for such a small account).
Then let me just make this simple. Call T. Rowe Price at 800-638-5660. Tell them you want help opening your first IRA. And tell them you want it to be a ROTH IRA — which is available only to lower income people (I’m sure you qualify). The “roth” part means you don’t get a tax deduction for your contribution, but that all the money grows and comes out tax-free at retirement.
Tell them you have $1,000 and you want to invest in the T. Rowe Price Equity-Income fund. (I suggest that because you need exposure to growth, but in a conservative way. Full Disclosure: I have owned that fund for many, many years.) They will help you fill out the papers or the online application. You’ll need your checking account number to set up the automatic deduction plan. Don’t worry; they will work with you to get this set up over the phone.
You should understand that if the stock market falls, the value of your fund shares will fall. But over the years, if history holds true in the future, you should come out ahead. And since you won’t be using this money for at least 30 years, just stick to the plan — never stopping your regular investments. Over the long run this is a good move for your financial future.
PS Please post again when you get this done! I’ll be wondering if you follow through! Terry