• Google Buzz

There is a simple recipe to successful investing strategies meant to build your retirement fund… start early and don’t touch it until you retire.

Help your teenagers realize this and you’ll successfully prepare them for a wealthy retirement.  Try this on for size:  a sixteen year old with a summer job (working  four summers in a row) can invest the earnings in a Roth IRA.   It doesn’t have to be complicated, invest in a low-cost equity portfolio and let it grow until they turn 67 years old when they can remove the money tax-free and they’ll be a retired millionaire.

Just $2000 A Summer for Four Summers

Can your 16 year old clear $2,000 in a summer job?  They sure can!  At $8 an hour, a teenager would have to work around 250 hours to earn $2,000 before taxes- so even if you were to estimate 350 hours over a three month summer period- that’s less than 117 hours a month; or approximately 29 hours a week.

With $2000 over 4 years invested into a Roth IRA, your sixteen year old could become a millionaire upon retirement.  (If mom and dad… or some other doting relative decides to contribute to their earned income, the outcome would be an even greater amount!)

Roth IRA’s earn tax free income for as long as the money is in the account.  If you wait until after the age of 59 and a half, you can withdraw the money tax-free as well.

If you invested the $8,000 earned over the four summers into a Roth IRA; investing in common stocks with the average compound rate of 10.7%, your account would grow to be over $9,300 at the end of the fourth year.  Your sixteen year old would now be 20, and probably in college or just heading out on their own.  Keeping the money in your Roth IRA invested the same way, and with no additional contributions, would result in the following:

  • Over $25,000 at the age of 30
  • Over $71,000 at the age of 40
  • Almost $198,000 at the age of 50
  • Over $540,000 at the age of 60
  • Over $1,100,000 at the age of 67

Not only will your sixteen year old have started their first million before the age of 21- but they didn’t even have to be a genious to pull it off.  They just had to keep their hands out of the piggy bank until the age of 67 to enjoy it.



 Related Content: