 So you want to become a millionaire don't you? Let's be honest a lot of us want to become a millionaire probably everybody out there watching this video including my buddy Bob back here you want to become a millionaire? Well I know a lot of you guys want to become millionaires in the simplest way you can do that is using a Roth IRA to your advantage so we're going to be talking about what a Roth IRA is and how you can start one and why should you start one in this video so let's get into it. So basically guys all a Roth IRA is is a retirement account vehicle that allows you to put in post income tax money money you already paid your taxes on into this account where it can grow income tax free meaning the money you put in all the compound interest that you gain from that money the dividends all those years of growth once you pull that money out you don't have to pay a single dime to Uncle Sam in taxes so the one restriction here is you can't take out your money until you are 59 and a half years old so let's say you're 22 years old you're going to have 37 years of straight up income tax free growth if you start contributing right now into your Roth IRA and the limit for how much you can contribute per year is $6,000 right now in 2019 so this is something super important and let me expand on this a bit so let's say you started out your account with that $6,000 limit that you can contribute up until you're 50 and let me just add this in while we're at it when you're over 50 you can contribute actually $1,000 more to $7,000 so $7,000 is the limit when you're over 50 but if you're under 50 $6,000 is as much as you can contribute per year to a Roth IRA so let's say your current principal right now is $6,000 and you're maxing it out every single year putting in the additional $6,000 let's see how long it's going to take you to become a millionaire simply with a Roth IRA so let's say you're putting in $6,000 per year you're maxing it out let's see how much you're going to have in 20 years compounded annually let's say a very simple attainable 7% interest rate so in 20 years your money is going to grow to $286,000 409 and 17 cents here and let's say you're 22 years old right now you start your Roth IRA and you start to maximize the contributions and you have 37 and a half years until you can take out that money at a 7% interest rate compounded annually how much are you going to have in this case you're going to have $1.1 million simply by putting in your money into a Roth IRA $6,000 per year at a 7% rate and let's say you're a good investor and above average investor and you're making 12% you're going to have something more like $4 million so this is the power of compound interest growing your money at a tax free rate with a Roth IRA account so when you're investing with a Roth IRA you can pick different stocks index funds ETFs within that account that is the Roth IRA when I first started investing years back I thought the investment itself was the Roth IRA but that is just the investment vehicle right so I want to make this point clear to you guys all it is is an investment vehicle it's an account where you make investments in it right you can pick stocks let's say for example you can pick Apple Johnson and Johnson Coca-Cola Pepsi you know blue chip companies that pay dividends you can really pick whatever you want within that account and that money the gains the dividends the compound interest grows tax-free so let's talk about some more benefits so a Roth IRA is actually super beneficial to those that are young right people that are young and they're not making as much money as let's say an older person right let's say you're 20 years old and you're only making $30,000 per year you're obviously going to be in the lower income tax bracket right you're not going to be paying as much taxes that's some as somebody that's making $100,000 per year and this means that you can invest more of your money let's say you're paying 15% in taxes that post tax income you can put it into the Roth IRA and you can take advantage of this tax-free compound growth at a young age and let's say you start to rise up the corporate ladder you're going to start making more money you're going to let's say make $100,000 per year you're obviously not going to have as much money to invest because Uncle Sam is knocking at your door hey hey there Uncle Sam I'm here to take more money you're going to be paying more money in taxes right so a couple of more things I need to mention here about the Roth IRA there are some limits so if you're making let's say really the limit is $120,000 if you're making more than that you can't contribute to a Roth IRA because that is the income limit for a single person but let's say you're married the income limit I believe off the top of my head is around $195,000 so if you and your spouse are making more than that combined you can't contribute to a Roth IRA but there is an option for you guys out there called a backdoor Roth IRA which is something that you should go do some research on if you do make more money than those limits I'm not going to be talking about that in this video because it's a little bit more complicated a little bit more in depth and I want this to be more of a simple video so those are some limits to a Roth IRA and let's talk about some more so another thing worth noting with a Roth IRA is if you need that money if you need to withdraw some of that money you can actually withdraw the money you contributed without paying a penalty and without paying additional income tax you just can't take out any of the interest any of the growth on that money out without paying a penalty right so let's say if you're under 59 and a half you're not at the age where you can withdraw the money and you want to take it all out you're going to have to pay a fat penalty I think it's about 10% and you're also going to have to pay additional income tax on that money which completely just destroys the entire point of starting a Roth IRA account so that's pretty much the gist of what a Roth IRA is in under 10 minutes guys and let me just do a quick rerun for all you that stuck to the end of this video so I can really nail it in your head so all a Roth IRA is again is a tax advantage retirement account where you pay income tax up front you pay you know income tax on your money and you put post income tax money into this account where it can grow completely tax-free where you can withdraw that money liquidate the account at 59 and a half years old without paying a dime to Uncle Sam so if you are a young person out there watching this video I highly recommend you to open up a Roth IRA account you can do it with Fidelity you can do it with Vanguard TD Ameritrade there are a bunch of different companies out there that offer this investment vehicle and again it's an investment vehicle it's not the investment itself and you can buy stocks and grow this money 100 income tax-free so you can retire when you're 59 and a half even if you retire before that you will have the peace of mind that when you turn 59 and a half you're going to have a couple a million dollars in that account completely tax-free if you did invest your money right if you did the research and you continued putting in the maximum throughout your entire life so I hope you guys did enjoy this video if you did feel free to go down below and hit that like button it really does support me and supports the 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