For you people who have teens, here is a great way to help them out down the road. Of course, it depends on your kids and how mature they are ... I know had my parents done this for me, I would now be overly grateful. But, alas.. they did not. It also depends on your own financial situation.
There is no minimum age requirement to contribute to a Roth IRA. The child must have taxable compensation income. Even if the child makes so little that they don't even have to file a tax return, they still can contribute to an IRA up to the amount of earned income they had. This means, you could contribute to an IRA for them up to the amount of their income, or the IRA maximum contribution ($4000 for 2005 and 2006), whichever is greater.
Now, the one harsh side to this as a parent is that this money is THEIR money. It is in THEIR IRA and as soon as they have come to the age of majority (18 or 21, depending on your state), they legally can do what they want with their IRA. So, hopefully in the 5 or so years since you started this, you have placed a strong sense of savings into your child and they will be wise and continue to contribute to their IRA, or at least not touch it until they can continue contributing to it.
The benefit of this is phenomenal down the road. A very minimal investment now will reap amazing rewards down the road in even the most modest return scenario. Considering the amount of time they have to spread out their risk and the ability to take on higher yield/higher risk investment opportunities and you increase the rewards by large multiplication factors. If they contributed nothing else for the rest of the time till retirement, it would still be difficult to match their returns if they start somewhere after 25. However, if they were to start again at say, 25, and pick up, their nest egg at retirement would be nothing short of astonishing.
Starting early is the key. I'm glad I did. I only wish I had started even earlier than I did with more money than I had at the time
. I'm upset that I had a lapse of several years in there where I didn't really contribute nearly enough. Setting up an IRA is not difficult, and if you have an amount drafted from your bank once a month, it is extremely easy to manage and doesn't feel nearly as burdensome. I enjoy going each month and updating my portfolio and seeing how my savings have grown - or shrunk as the case sometimes is. As it stands, I'm 29, and am glad I at least still have many years to contribute and take advantage of the good 'ole wonders of compouding interest.
I personally use Principal (Princor Financial - principal.com) and find them very friendly and helpful. I don't know their minimums, but I suspect around $1000 is probably their minimum for opening an IRA account. Look around and do your research on the net. Start with something you are comfortable with, and if your investments go down, just look the other way and forget about it for a year. If you are earning a steady income, consider doing an automatic monthly investment of as little as $100 a month. You'll be amazed what this will do for you down the road. This also gives you the benefit of dollar-cost-averaging which is extremely important for balancing out your risk in the market and leveling the playing field so to speak on your returns. You might get lucky every time you go to put in $1000, but you might not just as well. If the market is doing really well when you make that 1k investment, you are going to get a lot less bang for your buck in the long run.
Alright, I'll shut up... good night