Don’t make this critical mistake when it comes to your Roth IRA! 🤯 #shorts

This video is based on a mistake I see way too many people make. I recently discovered that a close friend had made this mistake - and for the last 15 years he thought his money was growing in his Roth IRA, but really it was just sitting in cash.

Here’s the mistake people make:
They’ll open a Roth IRA, fund it, and then assume that they’ve completed all the steps. The critical forgotten step is that once you fund your Roth IRA, you actually need to decide what to invest the money in (i.e., stocks, ETFs, mutual funds). If not, your money will just sit there collecting minimal interest.

Assumptions made for this video:
You start at 18 years old
You contribute $6 a day (aka $2190 per year)
Expected rate of return: 8%
Retirement age: 65
At retirement your Roth IRA balance would be $1,071,199

Now at that point, you’d only actually have contributed $102,930 (so all the rest is the growth aka power of compounding interest)

That’s why the other person sees that they only have $102,000 in their account, because it was basically just sitting as cash in their Roth IRA since they never actually took the final critical step of picking what to invest it in.

If this was helpful, you’re really going to enjoy my podcast to level up on your finances & life! Search “Erika Taught Me” on Apple Podcasts, Spotify, YouTube or wherever you get your podcasts to dive even deeper into conversations about money, business and success with me. Start with Episode 28 (“How Investment Advisors Rip You Off”) to learn about investing.

[TrapShooter]

The way things are going in the US, if you are in your 20s now a million $ at your retirement age might buy you a cup of coffee.

[iM_cRaZy.]

"So, I'm not a millionaire?"
"No... But I am!"

[MrRikkiRocket]

Erika didn’t listen to Erika properly.

[vtheb]

This video might sound cheesy to some but there was a time, not so long ago, when I was not aware of this either. Thank you for providing the basics to people. Starting right is the hardest and the most crucial part.

[usflin]

This applies to ALL types of investment accounts, not just Roth IRAs! Make sure the money gets invested and is not still sitting in a holding account.

[killersentra]

IF you checked back in with your friend in year 47.... I would say your not friends. 😂

[DewyRodriguez-hrvi]

Thank you Erika! Priceless information they don't teach in school for a reason!

[DC-sevr]

Yes girl idk why people don’t talk about this. I learned last year

[bmuns]

Your videos are succinct and extremely helpful to others. You are a good person.

[bradkroboth]

I've been contributing to my Roth IRA mutual funds and CDs for a long time, pennies made a few $$s each year

[RH-kics]

That was me when I first used Fidelity for IRA. I thought the money already was in the investments because when I put my money in it said “contributions” though I have yet to invest anything. That was tricky 😅

[angelrobinson]

I need a better paying job, to spare that & pay taxes 😢

[gettysel]

Bro. She has the most beautiful smile 😁

[pyromaniac]

we're millionares.
loaf of bread is now $500

[Aztecadr]

That happened to me on Fidelity. I realized after a year. I have it invested now.

[nedkelly]

Suggestion for you Erika, if you have not already done it. Demonstrate the difference in putting the maximum allowable tax deferred amount in an instrument on the first eligible day vs. the last. If you put $5000. in each year on Jan. 1 vs. on April 1st of the following year for the same tax year, and do this every year, the difference is huge after 40 years.

[thegr]

Fair warning here: I'm being pedantic.
It's technically not tax-free, ROTH you just pay the tax up front and not upon returement usage. So if you're setting $100 per paycheck aside, you're paying youre current tax bracket out of that $100 before it's invested. That's why ROTH is tax-advantaged, _not_ tax-free.

[willmallory]

THIS happens to many military people in TSP.

[Sapphodreams]

Wow, I am learning so much useful information in your videos! Thank you so much, Erika!

[Tdog]

Becoming a millionaire when I'm old and crusty; I fail to see the point