Here's a Super Sexy Notion - Get Rich Slowly (part 1)

Working hard is a surefire way to get ahead, but there's a limit to how much that'll help you build generational wealth. Working 20+ hour days isn't sustainable. Don't get us wrong, we're not saying to quit your day job. But, there are plenty of things you can do, besides working 24/7, that can help build your wealth.

While we can't help you turn your crochet hobby/side hustle into an Etsy sensation, we do know a thing or two about building lasting wealth via long term investments, and we're here to help. While getting rich slowly is not as sexy as getting rich quick, it's a lot more effective.

Get your money right first

Before you start building wealth, take a minute to get the basics in order:

• Pay off any high-interest debt.
• Build an emergency fund, so you're not scrambling at unexpected expenses.
• Do yourself a favor and build a budget.

What is an IRA?

Individual Retirement Accounts, or IRAs, are a type of tax-advantaged investment account used to save for retirement. They are not tied to your employer, so they are one of the easiest ways to get started. Depending on the type of IRA you choose to invest in, you will receive a tax incentive. No matter what kind of account you choose to open, some basics are standard across all IRAs.

Early Withdrawal

Penalties for early withdrawal are standard across IRAs. Because these are retirement accounts, they're meant to be long term investments. The good news is, with plenty of time for your compound interest to add up, small contributions can grow to something substantial by the time you retire. If you start small and make regular contributions, you can afford to shell out big bets on bingo night. The bad news, if you have to withdraw money before the age of 59 1/2 there is a withdrawal penalty of 10%, so get your emergency fund started before you begin contributing.

Investment Types

You can choose from several different investment types, including stocks, bonds, ETFs, and mutual funds. These offerings will vary depending on where you decide to open your account.

Contributions

Contribution Limits

The contribution limit for IRAs is $6,000 a year, but if you are 50 or older, you can contribute up to $7,000 a year as catch-up contributions. Contributions are limited to $6,000 (or $7,000) a year total to all IRAs in your name. So if you have a Traditional IRA and a Roth IRA open in your name, you can only contribute $6,000 total split across these accounts.

What are the types of IRAs?

There are two types of IRAs that individual taxpayers can set up: a Roth IRA (individual retirement account) and a traditional IRA. The main difference between these two types of accounts is how they're taxed. Money put into a Roth IRA has already been taxed, and contributions (the money you put into the account) are not tax-deductible. However, you can withdraw money without paying taxes.

Roth IRAs also have income limitations. Individuals who make more than $124,000 a year can make only reduced contributions. Individuals who earn more than $139,000 a year are not eligible to contribute to Roth IRAs.

Traditional IRAs are funded with pretax dollars, and contributions allow you some sort of tax deduction. So, if you contribute $1,000 into an IRA, your taxable income would decrease by $1,000. The catch is you pay income tax when you withdraw money from a traditional IRA once you have retired. Traditional IRAs also have required minimum distributions (RMD). Once you reach 72, you will be required to withdraw an amount proportional to the account's size. If you do not withdraw this money, you can expect a tax penalty of 50% on the amount of the RMD.

There are also two other IRA options. Small business owners can set up SIMPLE IRAs, and self-employed individuals can open SEP IRAs.

Getting Started