Austin is a city of young people, but I'm the only one I know who actually has his own Roth IRA. Even if your workplace is offering a pension plan or a 401(k), it still makes sense to start investing in an IRA.
If you don't carry a financial calculator with you at all times (and I can't understand why you wouldn't), then why don't you mosey on over to a web-based savings calculator, such as http://www.calculatorweb.com/calculators/savingscalc/shtml . Save it on your iPhone.
Once you're on your internet investments calculator, play around with the numbers. If you are, say, a 30-year-old Austinite (and who here isn't?), then you know you will have 30 years until you are allowed to withdraw funds penalty-free from your Roth IRA. So play around with 30 years on your calculator to show yourself how rich you could be 30 years from now.
Initial Lump Sum Investment: $100
Monthly Savings: $100
Interest Rate: 12%
Term of Investment: 30 years
Then click "Calculate," and you will see that you will have $356,586.34 in your Roth IRA when you turn 60. Wouldn't you love to have over $350K at your disposal? Well, you can - just set aside 100 bucks a month.
But maybe you want more than a measly little $350K. Change the lump sum and monthly savings to $300, still at 12%. What does that give you after 30 years? That's right: over $1 million!
So sell that stupid car of yours, ride to work in the new Austin train, open a Roth IRA and put those $300/month car payments to much better use: towards becoming a millionaire! Then you too can live in the beautiful new Austonian condominiums!
There are many other great things about being young and opening a Roth IRA. First of all, most of us are only just getting started in our careers, so we likely have lower salaries than our older colleagues. Don't let that get you down - use it to your advantage! You see, because we make less, the law allows us to put more into our Roth IRA than those who make higher salaries; rich people are not allowed to contribute such ostentatious amounts as $300 per month into their Roth IRAs. Also, we can be more aggressive with our investing than older people. While older folks will want to invest their IRAs in harmless mutual funds that yield low-but-steady returns-on-investment, we have time on our side. Go for those more aggressive, 12%-style mutual funds in your younger years. With those kinds of funds, your balance will suffer some times and it will shine during others. But you have 30 years to go, so ride it out and get ready for that 12% average that will lead to a cool million.
Of course, no one knows what will happen with the stock market, so nothing is guaranteed. But why not keep the hope alive? After all, if you really need that money, you are allowed to take out what you put into your Roth at any time (you just can't take out the earnings without paying penalties), so in a way, it can be a sort of emergency fund for you.
I know it kind of sucks to have to wait 30 years for something like this. I used to be one of the naysayers myself. Why would I want $1 million when I'm 60 years old? Can't buy videogames if I have arthritis, can't go to the movies if I have cataracts in my eyes, can't get an expensive haircut if I'm bald, can't take a colostomy bag with me to a South-by-Southwest concert.
First of all, I don't consider people old until they're 70, so I guess we'll all get to enjoy our millions for ten years' time, which is pretty awesome.
Second of all, what do you think is going to help you when you're that age? Social Security? Come on - it will be long gone by that time. You will need that money if you want to retire. How many times have you heard crazy old people gripe about how they'll never be able to retire? You don't want to be one of those people. Work if you want to at that age, not because you have to.
Time is money, and we Austinites have many years ahead of us to make our millions. Older people don't have this same luxury, so take advantage of it and embrace it as if it were a shiny new sports car. Except, unlike a silly old car, this investment is much more likely to be worth something 30 years from now.