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Originally Posted by gar1976
You need to look long-term, no matter how painful your losses are in the short-term. The market has rebounded fairly well since then, if you kept your money in.
There are a lot of theories about young kids (under 20) chipping into a roth IRA for a couple years, and then ignoring it. Do the math on $4-5,000 compounding at 8-10% annually, with no taxes due. Over 40 years. It's fairly large, which is why if you start early, becoming a millionaire is not really that difficult. I don't know if I'd do that, though, since Social Security was originally promised to be tax-free as well when it was "sold" in the 30's.
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I have kept my money in, and I'm getting no where near 10% return. Are you seriously getting that high of a return?
In fact, my money hovers at or below the principal amount--and has been for the past three years.
Here's a handy calculator I searched out:
http://www.moneychimp.com/calculator...calculator.htm
I don't know if you meant 5K contributed annually, but if you just invested 5K in one shot, got the highest return quoted (10%), and let it sit there for 40 years, you would wind up with slightly over 226K--a far cry from being a millionaire. Not even enough to place a down payment on a house in 40 years, actually. You would probably be better off investing the 5K on a down payment toward a house today, would be my limited opinion.
Keep in mind that if he was talking about contributing 5K annually, that's nearly $500 per month. If you have that left over and you are around 20 years old, you don't need my financial advice
