Don't be scared.
I tend to get a little over-zealous when editing and several of my comments are just about clarification. Feel free to take any of my suggestions with a grain of salt. If something I wrote doesn't make sense, let me know. A couple of posts that I've written that may be helpful: What's so great about a Roth IRA?
and a response to a reader question How do I open an IRA?
. This is a great, helpful article and I look forward to seeing the finished product.
1 - I would move the "two types of accounts" section above the "why put your money" section and then specify that in this article you will be dealing solely with RIRAs unless otherwise noted. In that same section:
- "Money inside these IRAs grows tax-free" I would take this out since it's kind of confusing and you address the tax issues below.
- "With a traditional IRA, the money you invest may be tax-deductible (depending on your income, and depending on whether you participate in an employer-sponsored retirement plan such as a 401k), but the money you pull out at retirement
is taxed at your current rate." see addition in bold.
- "With a Roth IRA, the money you put in has already been taxed, so the money you withdraw comes out tax-free." I would change it to something along the lines of: ...you do not get a tax deduction on the money you put in, however the money you withdraw...
- "When you use a non-retirement investment account, you’re taxed on your income before you put it into the account, and you’re taxed on the earnings when you withdraw them." I would change to something like this: When you use a non-retirement account you contribute post-tax money. Depending on what you are invested in, you may also be taxed along the way on dividends and capital gains distributions as well as being taxed on the earnings when you sell your investment.
2 - in your "Why put your money into an IRA?"
- For this whole section, I would specify whether you are talking about a Roth or a Trad? Since you haven't described the two different types yet, even though your article is about Roths, I would still use the term Roth IRA instead of just IRA. Or use RIRA, just to be clear.
- "In order to invest with an IRA, you must have earned income." unless you are a non-working spouse and you file jointly in which case you can still contribute to an IRA (of any type) as long as your spouse earns enough to cover the total amount of contributions.
- I would briefly outline the income limits or direct them elsewhere to see them
- "You must contribute by the tax deadline each year." I would make this more specific to avoid confusion. Something along the lines of: You have until tax filing day to make your contribution which means you have until April 15, 2008 to make a contribution for 2007.
3 - in "where to open an IRA"
- Vanguard only requires $1000 to invest in the STAR fund which is a great balanced fund.
- It makes me nervous that you are suggesting sharebuilder...It's not always the great deal it sounds like, particularly for small investors. I'll refer you to my "why i hate sharebuilder" blog post
My new favorite brokerate is Firstrade since they DRIP for free, have low fees, low/no minimums and lots of free funds to choose from.
- More questions to ask: Do they offer auto contributions and what are those limits? Do they allow free DRIP?
- ING does offer IRAs
- You might mention T. Rowe Price. It's my top mention for people with little money. They have a program that allows $50 to start the account if you set up regular (not even monthly) $50 auto transfers.
Great post, look forward to reading more.