Connect with us


TikTok Exposes a Major Roth IRA Mistake You May Be Making

News Agencies





TikTok is hit or miss for accurate advice on finance topics. Although the “#finance” hashtag has amassed over 989 million views, there is just as much bad advice as there is good. But one user shared a tip that went viral after she revealed a common investing mistake that she had fallen prey to.

“I invested in a Roth IRA for over two years, every single month, and it took me dating someone in finance to realize that I had never invested anything,” she said in the clip. “I had just deposited money. I never bought a single stock.”

The clip received about two million views with comments flooding in from others who had made the same mistake. So how does this happen? What are the consequences and how can you avoid the same mistake? Let’s discuss. To avoid simple, yet costly mistakes such as this, seek out a financial advisor that can help you cover all of your bases regarding your retirement and investments.

What is a Roth IRA?

A Roth IRA is an investment vehicle used commonly by young investors for their future retirement savings. With this particular type of individual retirement account, you contributing after-tax dollars to do the initial funding, and since you already paid taxes upfront, there are no income taxes when you withdraw in retirement.

So even though you don’t receive a tax break initially, the money you save on taxes after you retire is where you see the benefit. Put another way, you pay taxes on the seeds, not the crop.

There are some other benefits to the Roth IRA:


  • Compounded investing and growth

  • Allowed early withdrawal for qualifying life events (buying a home, education, etc.)

  • Withdrawals at 59.5 with no tax penalty

Of course, there are some drawbacks:


  • General early withdrawal results in a 10% penalty

  • Holding a Roth IRA for less than 5 years results in income taxes

  • Roth IRAs have an income cap

A Common Mistake With Roth IRAs

Possessing a Roth IRA is generally a great sign that an investor is committed to his financial security after he retires. But even good intentions can yield poor results without the proper actions. In the TikTok case, the user opened a Roth IRA and put money in without selecting any stocks to invest in. This is known as making a contribution but failing to invest, basically using it as a bank account with no interest earning on the deposit.

While seasoned investors may agree that this is a rookie mistake, it’s one that does happen more often than you would assume. This is yet another reason why financial literacy is important and necessary. Even implementing the basic knowledge of opening a retirement account can fall on deaf ears if a deeper understanding of how your money grows and compounds is not known.

The result– potential years of contributions with no investing gains.



How to Use A Roth IRA Properly

One of the reasons Roth IRAs remain a popular form of investing is that they are generally easy to understand, open and fund. No matter where you choose to open your IRA the basics of the process are about the same:

  1. Choose a financial institution to open a Roth IRA: Finding a place to house your Roth IRA can be as simple as a Google search. It is truly a personal preference, but you do what a provider with low fees, great customer service, FDIC insurance, and an easy-to-use platform that makes contributing as hands-off as possible. Roth IRAs are commonly a “set-it-and-forget-it” investment tool, but there are options where you can be more hands-on if you choose. Explore the best Roth IRAs.

  2. Open and fund your Roth IRA: Typically, this can be done solely online, but some institutions may require a face-to-face visit. This is another reason why you want to select a provider with an intuitive website and platform. Having to hunt for what you need is an added frustration to avoid. From here, you should be able to follow the prompts, attach an external account and fund your account through ACH transfers.

  3. Choose your investments: Step three is why we’re here. If a Roth IRA is a “savings vehicle” then investing is the gas to fuel it. Without investing, your money isn’t working for you, just sitting idle and being eaten by inflation and/or fees. Your investment selection is another personal preference and can include target-date funds, index funds, ETFs or individual stocks.

Feeling lost on this step? We highly recommend speaking with a professional to get you started. They can help you set up an investment strategy that works for your financial goals.

4. Continue contributing: Check to see if your institution requires minimum monthly   contributions. Regardless, your investment will go much further if you continue making   contributions regularly over time. As we mentioned above, there is a contribution limit of   $6,000 per year for those under 50 and $7,000 for anyone 50 and older.

Bottom Line

A Roth IRA can be a great accessory to supplement your retirement savings toolkit. Other popular investing drivers include tax-deferred accounts like 401(k)s and traditional IRAs. Whichever you choose, just take the time to double-check that you’re actually investing and putting your contributions to work. Don’t make the same mistake the made a user go viral on TikTok.

Tips for Your Retirement Savings

  • Financial advisors specialize in helping clients invest for retirement, which makes them great partners for anyone looking to boost their retirement savings. Luckily, finding a local financial advisor doesn’t have to be hard. SmartAsset’s free tool can match you with up to three advisors in your area. Get started now.

  • Roth IRAs earn the most if you start young and add to them consistently for decades. But if you already have a retirement account, you can convert your money to a Roth IRA.

  • If you’re managing your own investments, it’s important to have a succinct plan in place for where your assets will go. Try using SmartAsset’s asset allocation calculator to figure out a plan that fits your risk profile.

Photo credit: ©, Photo credit: © Dodonov

The post TikTok Exposed a Major Mistake You May be Making in Your Roth IRA appeared first on SmartAsset Blog.

Continue Reading

Breaking News

World9 mins ago

Shanghai hit by COVID protests as anger spreads across China

By Brenda Goh SHANGHAI (Reuters) – Protests simmered in Shanghai early on Sunday, as residents in several Chinese cities, many...

World19 mins ago

Details: 47,028 new confirmed cases of new crown in South Korea totaled 26,937,516 cases 888,011,000,110,888 Yonhap News Agency, Seoul, November 27. According to a report from the South Korean Central Anti-epidemic Countermeasures Headquarters on the 27th, as of 0:00 on the same day, South Korea had 47,028 new confirmed cases of infection with the new coronavirus (COVID-19) compared with 0:00 the previous day, and a total of 26,937,516 confirmed cases . The number of new cases in a single day decreased by 5,760 from the previous day, increased by 1,030 from a week ago (20th), and decreased by 1,414 from two weeks ago (13th). The average number of new confirmed cases per day for the past week since the 21st was 54,119. Among the new cases, there were 46,958 cases of community infection and 70 cases imported from abroad. There were 39 new deaths, a decrease of 13 cases from the previous day, and a total of 30,369 deaths, with an average fatality rate of 0.11%. There are currently 481 critically ill patients, an increase of 3 cases from the previous day. (Finish) [Copyright belongs to Yonhap News Agency, unauthorized reproduction is strictly prohibited]

Yonhap News Agency, Seoul, November 27th. According to the South Korean Central Anti-epidemic Countermeasures Headquarters on the 27th, as of...

World19 mins ago

Guoxiang men's world team competition Chinese team won the championship

Xinhua News Agency, Jerusalem, November 25 (Reporter Lu Yingxu and Wang Zhuolun) The Chinese team defeated the Uzbekistan team in...

Sports19 mins ago

‘A disgrace to football’: Carlos Queiroz demands Jurgen Klinsmann resign from Fifa after Iran comments

Klinsmann made negative comments about Iranian players’ behaviour towards the referee during their 2-0 win over Wales

World38 mins ago

One person killed in shooting in Cornelius, police say

One person has been killed in a shooting, according to the Cornelius Police Department. Police said they received a call...


Editor Pick’s

Latest Entertainment

Entertainment8 hours ago

Dua Lipa shares recording studio photos with Rolling Stones frontman Mick Jagger

Dua Lipa shares recording studio photos with Mick Jagger. (Photo: Michael Tullberg/Getty Images) Is there a Dua Lipa and Rolling...

Entertainment8 hours ago

Dwayne Johnson Says He’s Grateful for Thanksgiving with Family: ‘We Count Our Blessings’

LOS ANGELES, CALIFORNIA – NOVEMBER 03: (L-R) Ata Johnson and Dwayne Johnson attend the World Premiere of Netflix’s “Red Notice”...

Entertainment9 hours ago

Queen Elizabeth Knew Her Time Was Running Short, ‘Had No Regrets’ Before Her Death, Book Says

FEBRUARY 02: Queen Elizabeth II is photographed at Sandringham House to commemorate Accession Day, marking the start of Her Majesty’s...

Entertainment9 hours ago

Pregnant Chrissy Teigen and John Legend Celebrate Thanksgiving with Luna & Miles Ahead of Next Baby

chrissy teigen, john legend Chrissy Teigen/Instagram Chrissy Teigen and John Legend have lots to be thankful for this Thanksgiving. The...

Entertainment10 hours ago

Irene Cara, Oscar-winning ‘Flashdance’ singer and Fame star, dies at 63

Irene Cara, the Oscar-winning singer best known for performing the theme songs to the legendary films Flashdance and Fame, has...

Entertainment11 hours ago

Bob Dylan Says He ‘Regrets’ an ‘Error in Judgment’ in Selling Machine-Signed Art and Books: ‘I Want to Rectify It Immediately’

Bob Dylan issued a rare public statement Friday night to admit that he “regrets” having made “an error in judgment”...

Entertainment12 hours ago

Kimberly Stewart Shares Sweet Thanksgiving Photo of Her and Benicio Del Toro’s Daughter: ‘Thankful’ Kimberly Stewart/Instagram Kimberly Stewart/Instagram Kimberly Stewart celebrated Thanksgiving with her mini-me by her side. The actress, 43, spent the...

Entertainment18 hours ago

Madonna Shares Rare Snap With All Six Of Her Children As They Celebrate Thanksgiving Together

Madonna has revealed she had a lot to be grateful for this Thanksgiving after spending the day with all six...

Latest Sports

Sports39 mins ago

23-year-old Kylian Mbappé could overtake these Pelé, Ronaldo and Messi World Cup records

The France forward is in legendary company.

Sports59 mins ago

Mike Sainristil on flag planting: ‘I was thinking about that since January’

It's seen as a sign of disrespect to the opposing program but Mike Sainristil's decision to plant the Michigan flag...

Sports1 hour ago

Why Alabama football coach Nick Saban has a cut on his face during Iron Bowl

CBS cameras caught Alabama football coach Nick Saban walking around with a sizeable cut on his left cheek during the...

Sports2 hours ago

How can USA qualify for the World Cup last 16?

How can the USA qualify for the last 16 of the World Cup and what do they need against Iran...

Sports2 hours ago

College football scores: USC hosts Notre Dame

USC still has College Football Playoff aspirations, but they have to get past No. 15 Notre Dame in order to...

Sports3 hours ago

Nebraska signs Matt Rhule to 8-year deal as football coach

After six straight losing seasons and more than 20 years removed from its 1990s heyday, Nebraska is turning to Matt...

Sports3 hours ago

Jim Harbaugh discusses the origins of the trick play against Ohio State

Neither were the coaching staff, as head coach Jim Harbaugh told reporters after the game that the Wolverines had "emptied...

Sports3 hours ago

Ja Morant tweets about quiet Klay Thompson critics with Warriors’ star shining

Ja Morant doesn't usually side with the Warriors, but on Friday night, that changed.

Technology Hot News

Is Elon Musk Really Going to Buy Twitter? Is Elon Musk Really Going to Buy Twitter?
Technology1 month ago

Is Elon Musk Really Going to Buy Twitter?

Elon Musk, the owner of the electric car company Tesla, CEO of SpaceX, and the richest man in the world,...

WhatsApp services were affected across Pakistan, restored after 2 hours WhatsApp services were affected across Pakistan, restored after 2 hours
Technology1 month ago

WhatsApp services were affected across Pakistan, restored after 2 hours

WhatsApp services were affected in various countries of the world, including Pakistan, and India due to this users were facing...

Bitcoin vs Litecoin: A guide to understanding cryptocurrencies Bitcoin vs Litecoin: A guide to understanding cryptocurrencies
Technology1 month ago

Bitcoin vs Litecoin: A guide to understanding cryptocurrencies

Cryptocurrencies currently occupy an odd place in society. They are no longer the super niche bizarre currency beloved by tech...

Personal data of people is selling on Google Play and Google Ads Personal data of people is selling on Google Play and Google Ads
Editor Picks2 months ago

Personal data of people are sold on Google Play and Google Ads

It’s been two to three years since Google has been unknowingly hosting multiple apps from malicious actors who sell personal...

Protonmail is down a second time in the past 24 hours Protonmail is down a second time in the past 24 hours
Technology5 months ago

Protonmail is down a second time in the past 24 hours

An end-to-end encrypted email service Protonmail is down a second time in the past 24 hours, netizens reported on social...

What's better for the student: a tablet or a laptop What's better for the student: a tablet or a laptop
Technology6 months ago

What’s better for the student: a tablet or a laptop

Some analysts argue that computers have outlived their usefulness. There is some truth in this: PC and laptop sales are...

Tesla founder Elon Musk holds the Twitter deal temporary Tesla founder Elon Musk holds the Twitter deal temporary
Technology7 months ago

Tesla founder Elon Musk holds the Twitter deal temporary

USA: Elon Musk, the founder of companies like Tesla and SpaceX, can actually buy anything in the world. Last month,...

How Zafar Supari is utilizing his ability on Snapchat? How Zafar Supari is utilizing his ability on Snapchat?
Technology7 months ago

How Zafar Supari is utilizing his ability on Snapchat?

Pakistan: Zafar Supari a public figure, businessman, and social media sensation has crossed one hundred thirty-three thousand 133k subscribers on...