May 27, 2024

News and Political Commentary

Suze Orman Says You Have A ‘Golden Opportunity’ To Make Your Kids Millionaires With This Simple Yet Little-Known Investment Strategy

2 min read

In an era where building generational wealth and securing a better future for the next generation are at the forefront of many people’s minds, financial guru Suze Orman offers a simple yet powerful suggestion: the Roth IRA.

Orman emphasizes the potential of a Roth IRA to significantly impact a young person’s financial future in a July 2023 blog post. She said, “You have a golden opportunity to launch them to their first million dollars.”

She illustrates the long-term benefits of saving early and consistently, noting that a young erson saving $2,500 annually for 50 years could amass over one million dollars tax-free, assuming a 7% annual return on their Roth account.

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Orman suggests an approach to encourage young people to save for retirement, recognizing the challenge of convincing them of its importance. She proposes offering a matching contribution to their Roth IRA, which can be a powerful incentive. She points out that anyone can contribute to someone else’s Roth IRA as long as the recipient has earned income and emphasizes the value of starting the habit of saving early.

To make the concept of compound growth more tangible, Orman recommends using online calculators to visualize how consistent savings can lead to significant wealth over time. She stresses the importance of starting early to maximize the benefits of compound interest.

For those under the age of majority in their state, Orman mentions the necessity of a Custodial Roth IRA, where an adult initially owns the account until the young saver reaches the age of 18 or 21, depending on state laws. She advises starting with a total stock market index mutual fund or exchange-traded fund (ETF) for a diversified investment strategy and underscores the distinction between saving and investing.

2024-02-08 15:01:41

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