When you ask people "what should I do to make myself rich?" they always give you a list something like this:
- Pay off your credit cards
- Pay off any other high interest loans (i.e. not student loans)
- Contribute as much as you can to your 401(k) if you have one, maximizing your employer's match if possible
- Open a Roth IRA
That's from memory, I might be missing a step somewhere. But the point is, they always arrive, eventually, at the hallowed Roth IRA. Bow down to the glorious Roth IRA.
I have a Roth IRA, and at today's interest rates... why bother? I made an initial deposit many years ago, and I haven't put another cent into it, because for a while CD accounts were more convenient as I was saving up for a house, and then interest rates had plunged so far as to make such a thing pointless. My Roth IRA has an interest rate of 0.15 percent. Jesus, my savings account at BOA has a rate about half that (~0.07 percent). I could put every ounce of my savings into my IRA, have it locked up for the next thirty years and be unable to make use of it, and thereby make a couple extra bucks per month. Give me a break.
So: Roth IRA, myth -or- just a myth during the current poor economy? Because they're definitely a myth right now.
Same goes for CDs. You can shuffle your money around like a madman, in and out of CDs and IRAs, all for the sake of an extra $25 annually. Or you can go like Drewbie and play the stock market, I guess, but I hate gambling.
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