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Open Roth IRA

In order to open a Roth IRA account you will clearly need to have gone through several processes. These will have involved you determining the length of time you are planning to have your investment run, the starting balance and likely contributions you will be able to make, the type of investment you prefer to focus on, and whether to go through a bank, a subsidiary or independent broker or mutual fund.

It will also have been important to check the IRA rates available from the different providers, since these will vary quite considerably, and depending on the term of your investment, can have a significant impact. It will also be important to look carefully to see what fees might be charged, either in setting up the account or throughout its life. In some cases these fees are well worth the money, but others may prove to be too costly in comparison to the end result.

If you are new to investing, and are looking to open a Roth IRA account as your first step down the road of investing in your future, then it will be important to prepare for this venture properly. Good preparation doesn't just mean working your way through the stages mentioned briefly in the first paragraph.

To begin with, committing money to a long term investment is a serious business. It is important to bear in mind that although the money you pay in is yours, and you will be able to access it if necessary, this may well be a very costly thing to do. If you are under the age of 59 and a half and your account hasn't been active for at least five years then you will be looking at paying income tax on the distribution, as well as a 10% penalty fee.

In order to avoid this, make sure you have plenty of cash saved elsewhere that you can dip into should an unforeseen problem occur a little way down the line. Cars break down, medical bills need paying and it isn't a good idea to break open a Roth IRA account for these purposes if you can help it. Try to put about $1,000 in a savings account where it might not be earning as much as it would in your Roth IRA account, but it will be immediately available with no penalties should you need it.

If you have a certain amount of debt that you are trying to pay off, try to clear this first. You'll always have to prioritize your payments towards your debts over your IRA contributions, but this puts you into a tight spot. Instead, clear the debt as quickly as you can, preferably by increasing your payments.

Once you have cleared your debt, then immediately switch to contributing the same amount of money to your IRA account as you were towards your debts. You won't notice the difference as far as disposable income is concerned, but you'll be building up an excellent retirement fund rather than paying off old bills - a much better feeling, with no sudden reduction in monthly income.

One of the hardest aspects people find when trying to open a Roth IRA account is deciding who to go with. There is usually so much choice as far as roth ira investments types, terms and such like are concerned, but as to who to invest with - that can become quite a challenge. Some financial institutions have strengths, but often they have weaknesses too, and at the end of the day it will very much be a personal decision. Perhaps you know someone who has already invested with them, and a personal recommendation will certainly help to reassure you.

When you have chosen a suitable broker, make sure you check whether they have a minimum investment contribution, or minimum contributions throughout the term, and what fees might be applicable.

If you enjoy discussing the investment options with them, looking in to whether to invest in stock, mutual funds or even real estate, you might even consider the idea of a self directed Roth IRA account. This can be both an exciting opportunity, as well as a way of reducing fees and increasing the potential return.

However, this will require you to make important decision which could seriously affect the outcome of your investment, and so it will be doubly important to discuss this possibility with your investment broker or financial advisor and make sure that you feel confident in the support and advice you are likely to get.

But then what about the actual opening of the account? This is the easiest part of all! It's really no different to applying to open a normal bank account or credit card. There are a few simple forms, which often are available for you to download, and then you can either mail them or fax them to the broker.

You'll need your social security number, bank account information, employer's details and of course the money for your initial contribution. With this information, you will find yourself the proud owner of an open Roth IRA account within about half an hour - and the rest is down to the market! (or should that be 'up' to the market?)