A Roth IRA is a tax advantage investment account where
- You contribute already taxed money
- Investments grows tax free
- You pay ZERO taxes when you withdraw
- You can withdraw ANY contributions at any time, penalty free
- You can withdraw the growth of your contributions after age 59.5
- The max you can contribute in 2026 is $7500. ($8600 if you are over 50).
Who can fully qualify to contribute to a Roth IRA?
Anyone who has taxable income whose modified adjusted gross income in 2026 is less than ...
- $153,000 as a Single or Head of Household filer or
- $242,000 as a Married Filing Jointly couple. (Or Married Filing Separately as long as you did not live with your spouse at any time during the year).
Let's say you decide to open a Roth IRA, contribute the maximum of $7,500 this year, and invest in an Index Fund that tracks the S&P 500 or the Total Stock Market.
Here is what could happen to the $7,500 you contributed and invested over time (without adding another penny).
Year | Investments
2026 $7,500
2033 $15,000
2040 $30,000
2047 $60,000
2054 $120,000
As you can see it will grow and double every seven years, since it's invested in an index fund that tracks a big portion of the stock market and stock market (in general) doubles about every seven years.
The $7,500 is now worth over 100K of tax free money after 28 years!
What would happen if you did this every year for 28 years?!
By investing $7,500 per year in a Roth IRA, in 28 years your Portfolio will have over a Million dollars of tax free money.
But Don't Forget One Very Important Thing...
Investing in a Roth IRA (or any investment account) is a 2-Step Process.
Step 1: Make a contribution in cash.
Step 2: Then buy investments with that money inside the Roth Account.
For Example: Here is a Real Look Inside My Roth Account
Hope this Monthly Wealth Talk clarified any questions you have about Roth IRAs! If you are a Wealth Club Member you can find more information on Roth IRAs inside the club here and here! If you aren't a member but want to join, start here.
Mahi
PS: Any questions about this topic and anything else you've been learning inside The Wealth Club membership? Please ask away in the Q&A Forum of The Wealth Community.
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