What is a Roth IRA?

Well im reading an article on how to plan for the future, im 19 so i guess the earlier the better. It says "If you put $100 a month into a Roth IRA or no-load mutual fund fromt he age of 25 to 65, with the average rate of return, you'll have a million bucks when you retire." Is that at all possible or true? is there any risk of lossing the money? like what is a roth ira exactly, an investment? or?

I used to be an investment advisor, and I would tell people that any type of IRA is like an umbrella, that shields your investment from taxes. Under this umbrella, you can invest in most types of investments (CD's, stocks, bonds, and mutual funds are the most common). In general, the longer your time horizon, the more aggressive you should be with your investing, because you have plenty of time to weather any downturns in the market. Since you're 19, you should probably go with a good stock mutual fund (but know that it will go down from time to time, that's just how the market goes. Historically, over the LONG TERM, stocks have averaged about 10% growth per year).

A Roth is a type of IRA wherein you get no tax deduction in the current year, but your money grows tax free (in a traditional IRA, you get the tax break up front, but then you have to pay taxes on the growth when you take it out in retirement). Since you're young, a greater portion of your account balance in retirement will be earnings, not contributions, so I would recommend the Roth.

I hope that helps--good luck!

Roth ira,you put in money now without deducting contribution from taxes,you withdrawl after retirement age with no taxes owed.It's invested in funds of your chosing,so returns fluctuate with market.I don't think a million is reasonable,but I know if you contribute from age 20 to 30,and I start at 30,when you stop,I'll never catch up with you...

Yeah, you put in post tax money, meaning you paid the taxes now, and you draw it out at retirement tax free. If you earn 10% percent interest, you will double your money every 7 years. So, yes, it's possible to have a million at retirement.

As a financial planner, I will tell you that a Roth IRA is an after tax retirement investment whereby you CAN lose money. There are management fees attached to Roth IRAs like there are to any investment, however, when you pull money out of your Roth IRA (after age 59 1/2) it will be tax free because you were already taxed on the front end (putting taxed income into it). Since you're in such a low tax bracket, earning the least amount of money in your life, it's better to be taxed right now rather than later (IRA). No one can guarantee that you will earn $1M by the time you retire so don't believe it. Sounds like that book is using an average of a 12% return. You have to invest smart but most people buy high and sell low (the opposite of what you ought to do but it's a 'follower' mentality rather than a 'leader' mentality) so the returns end up lower than the guideline returns (as you read in that book) so just be careful. I've had clients double their money in a year BUT that's an exception to the rule. 9/11 wasn't predictable either and look what it did to the market...people lost half their portfolio with a blink of an eye. Hope that helps!!