If you have teenagers who are starting part-time jobs, now may be a great time to introduce them to investing — and one place to begin might be the Roth IRA.
A Roth IRA is a popular retirement savings vehicle, but it can also be used to help pay for college, although withdrawals of earnings used for education may be taxable.
In 2023, up to $6,500 per year can go into your child’s Roth IRA, provided the amount contributed doesn’t exceed their taxable compensation for the year.
In fact, you could match their contributions up to the limit to provide an incentive for your child to invest.
Helping your teenager get started with a Roth IRA gives you a chance to explain the value of putting time on your side when you invest.
And because a Roth IRA can be funded with stocks, mutual funds, or other securities, you can discuss the different risk/reward characteristics of various types of investments - the kind of knowledge that all investors should have.
Once your teen’s first paychecks start coming in, consider bringing up the Roth IRA - you may well be opening the door to a lifetime of consistent and informed investing.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor John Dickerson. Member SIPC.
