the ladyboss's guide to investing: a step-by-step guide on how to open a Roth IRA

Photo Credit: Jazmin Quayn

Photo Credit: Jazmin Quayn

It’s been awhile since my last post – life has been CRAZY this past month (you know how that goes) – but I’m finally back at it, people, which means that you should be back at it, too.  Let’s do a brief recap of what we already know about being a badass, independent woman.

  1. If you want the life you envision while snuggled on your couch at night scrolling through Pinterest, you have to take control of your money.  A closet full of shoes is not an investment (although you can invest in Jimmy Choo stock if you’d like).

  2. First order of business is to contribute up to your company match in a 401(k). Free money is the best kind of money, and you shouldn’t be willing to give that up.  Remember, low-fee mutual funds (like index funds) are where it’s at…and where your money should be.  At least in the beginning.

  3. After that (or if you don’t have a 401(k)), you want to put your hard-earned cash in a Roth IRA until you meet the annual limit ($5,500 per individual).  And that brings us back to this post.

I’ve said it before and I’ll say it again, if you aren’t investing in a Roth IRA, you are a missing out on a good deal.  A great deal.  A fantastic, marvelous, stupendous deal, like finding a brand new pair or Ray Ban’s at a thrift store.  Why?  Because while the government taxes you on every other dollar you earn (the injustice!), all those thousands you can potentially earn in your Roth come back to you tax-free.  And depending on your tax bracket, that could be a 20% or 30% savings.  I’d take that discount any day.

Here’s where we cross that bridge you’ve all come to in this scenario:  actually opening a Roth for yourself.  Now, I know it seems like a major (and slightly intimidating step), but setting one up is literally as easy as creating a new Gmail account – and hey, if your grandma can do that, then you can definitely do this.  Especially since I’m going to take you through the process step by step.  So grab your cup of coffee, wine, or favorite brew and settle in for a few minutes.  That’s all it takes to make that first step towards that early retirement.

Now, before we start, I just want you to know that I chose TD Ameritrade because I already had an investment account (non-Roth) with them, and for simplicity sake, I wanted to keep as much of my crap in one place as I could; however, there are a lot of other brokerage companies out there that you can open a Roth with, and just because I’m showing you how to do it through TD Ameritrade doesn’t mean you have to use them.  Betterment, for instance, is one that I continually hear good things about.  Do your research and figure out which one best suits your needs – and in the meantime, read the rest of this post to see how easy the process can be.  Ok? Ok.  Let’s get to it.

STEP 1:

Go to www.tdameritrade.com and select “Open a New Account” at the top of the page.  The screen below will then pop up.

td1.jpg

STEP 2:

Select “Roth IRA’ from the account type menu on the left of the page under the “Most Common” tab.

td2.jpg

STEP 3:

Select “Buy, hold, and occasionally trade stocks, mutual funds, ETFs, or bonds” from the left menu.  The second option is for those who are going to be buying fairly often (i.e. daily or weekly), and that won’t apply to most of you reading this.  It definitely doesn’t apply to me – ain’t nobody got time for that.

td3.jpg

STEP 4:

Enter personal information – this is where you’ll enter name, address, SSN, etc.  Easy-peasy.

td4.jpg

STEP 5:

Verify the information you just selected.  Again, uber simple.  You've done this before in your online Target shopping cart.  Don't pretend you haven't.

td5.jpg

STEP 6:

Read the agreements (if you have a few spare hours).  Or just check the box.

td6.jpg

STEP 7:

In order to buy investments, you have to transfer money from your bank to your TD Ameritrade (i.e. brokerage) account.  This is basically asking where you want your money held once it’s in your brokerage account before it’s actually invested in mutual funds or ETFs.  I suggest selecting the “FDIC-Insured Deposit Account” because this will give you the same protection as your bank would (i.e. even if TD Ameritrade tanked, the government would reimburse you up to $250,000 of your lost cash.  Note, this doesn’t include money lost on investments – only the cash you have sitting uninvested in your account).  Because I highly doubt the cash you leave uninvested in your Roth IRA account will be more than that $250K threshold, this is the best option for you.

td7.jpg

Alright, ladies, there you have it!  Once you go through these steps, you will be the proud owner of a Roth IRA – I can’t emphasize enough how much of a necessity this is in order for you to set yourself up well for retirement.  Seriously, if you want to be able to take weekend getaways to Cabo and afford weekly brunch with the girls, you need to get on this.  Fast.  As always, if you have any questions now or along the way, I’m just an email away!

Stay tuned for the next post in this series, where I show you how to start investing within your Roth.  Whoop whoop! 

Photo Credit: Vero Photoart

Photo Credit: Vero Photoart