Today was fantastic! I had Bible study, work went well, and I'm opening up a Roth IRA, as I write!
I was hoping to share with you screen shots with step by step instructions but my screen shots are not being what I imagined. While I work on this, I'll leave you just a small description:
I opened a Roth IRA with T. Rowe Price. I invested in one fund. It's an aggressive growth fund, and I feel that I will be working at least 40 more years that I should be able to ride out any bumps.
Even though I didn't have the money to make an initial required investment, they would waive the rule if I set up an Automatic Asset Builder with at least $50 per month.
I'm looking forward to being creative with what I earn - I want an emergency fund, a 10% savings fund, an opportunity fund, a tax-deferred fund and a tax-free fund. What are my purposes for all these different funds?
The emergency fund is nearly complete and it's only for emergencies - car breaks down, my hair falls out and I need a wig, etc ($9.4k)
The 10% savings fund is pretty simple - I take 10% of my gross earnings and put them in a savings account. I'm not sure what I want to spend it on, but I'm certain that one day I'll want a new car or make a down payment on a house. I really want to make sure I'm getting in the regular habit of saving at least a portion of what I earn. ($1.00 - just started)
The opportunity fund is for extra cash that I didn't spend on usual expenses, so if I feel like treating myself, I can, guilt free ($1.00 - just started)
My tax-deferred fund is my 401(K). I wanted a retirement fund that grew through contributions that are not taxed until I retire, in case I'm in a lower tax bracket when I retire than now + 40+years in the future. ($5k)
My tax-free fund is my newly created Roth IRA. And just the opposite as the 401(K), I wanted a retirement fund in where the contributions are already taxed, so if I'm in a higher tax bracket when I retire, I don't want all of my money being taxed at a higher rate. ($0.00 - just created)
I wanted to minimize my risk of being taxed now vs being taxed later.
I'm getting pretty tired, so tomorrow I'll talk a bit more about my life plan and an example of why an opportunity fund totally rocks!