Need investing help!?

Question

ok im 14, i know sounds crazy

but im thinking about retirement and people have told me that i cant start a 401k till i get a job so they said save up till im 18 then open a "ruth" account. whats that? also

and is it true that if u get fired or quit then the money the company u put into ur 401k is taken out and only your money if left in?

and is there different types of 401ks like if u stay with that company for 5 year the money is urs ect.

Answer 1

It is never too early to start wondering about investing and money,

A Roth IRA (Independent Retirement Account) is a retirement account that you set up with an investment firm.  It is not associated with your job, hence the name "Independent" Retirement Account.  You may have an IRA in addition to any retirement accounts you set up with your employer.  Unfortunately, you must have earned income from a job in order to contribue to a Roth IRA.  You must also be 18 years old.  So, if you are under 18 or are not employed or not self-employed, then you cannot start a Roth IRA.

A 401K is a retirement account set up with your employer,  You can contribute money, and many times your employer also contributes money on your behalf.  At most jobs, you must work for a required amount of time (like 5 years) before you earn the right to keep the money that your employer contributed.  This is called "being vested".  So, in most places, if you quit or are fired before your vesting period is up, you lost the money they your employer contributed.  However, you always get to keep your own contributions plus any earnings from them, regardless of how long you work at a job.

You can learn more about investing from my free downloadable book at http://www.invest-for-retirement.com or from http://www.investopedia.com

Answer 2

That's correct, can only have a 401k with an employer. A ROTH can be a good ideal. But, you also have the option of a Traditional IRA as well. The difference is that one the ROTH you contribute money that has already been taxed, and any earnings that you make on your investments are tax free when you take the money out. With the Traditional IRA you contribute pre-tax money, meaning that you can use the amount you contributed as a deduction when you file your tax's. And, when you take the money out of the traditional IRA you are taxed. But you have to be 18 to do either.

It's good that you are involved with investing at such a young age. One type of account that your parents can open for you now is a UTMA or a UGMA. These are custodial accounts, where you can invest in. They are not retirement accounts, but you can invest your current savings instead of letting it sit around.

Also, with the 401K, the company can take back the money the contributed. It all depends on there "Vesting Schedule", this is where they say if you are here 2 years 20% of the money the company contributes is your, 5 years 100%, etc.. It all depends on the company.