I am poor but want to fund my Roth IRA but am worried about the economy

[Anonymous]

I get a nice tax refund because I work and have a child. I usually put the majority of it into my Roth IRA, which, you need to understand, is a lot of money for me.
My teen works part time and I started a separate one for him as well.
I am almost 50.
This year I am pretty worried about the economy long term. There are no RMDs thankfully so in theory my money can just sit there… unless totally wiped out?
But I am so scared of the risks. It took me a lot to even start investing.
Anyway, should I still put money into my IRA this year? I think yes but I need smart, successful people to tell me this. Or to tell me to add to my CDs/savings which I also have.
And on a separate note, does it make sense to put anything into my kid’s account or should it all go to mine and then he can inherit it anyway.
Note: in any case the contributions will be under the limit for 1 person (I can’t afford investing 7k per year, unfortunately).
Thank you for any guidance.

[Anonymous]

Do you have 6 months of savings in case of job loss? Then absolutely yes. And you can withdraw principal from Roth, if you need it. I think you're asking is the stock market going to crash to zero? You know the answer is no.

Put it into your own account, not kid who won't be retiring for 50 years.

[Anonymous]

Erin Talks Money on YouTube

[Anonymous]

Kid can put own money in theirs but 529 might be better.

What kind of investments are in your Roth? How risky? Are you diversified?

[Anonymous]

How much do you make? How much do you have saved? When do you plan to retire?

But I think you know that you should fund your IRA. Maybe invest in an international fund (I have 50% of my money in VXUS). But most likely you don't need this money for another 10 years. If that's true, you should have no worries at all about investing in the stock market.

[Anonymous]

Anonymous wrote:Do you have 6 months of savings in case of job loss? Then absolutely yes. And you can withdraw principal from Roth, if you need it. I think you're asking is the stock market going to crash to zero? You know the answer is no.

Put it into your own account, not kid who won't be retiring for 50 years.

Yes I do have the savings for 6 months and I have other income if I lose my job which will cover rent, so it’s easier to survive. Unemployment should cover the groceries and then some. Rent payment help should also be available if push comes to shove so I’m not worried about being homeless and starved.

Yes I was worried the stock market would crash and not recover for years if not a decade, but you’re right, it does sound implausible.
Thank you!

[Anonymous]

How poor? Do you pay federal taxes? Do you have a 401k? Do you have an emergency fund? How much retirement do you have?

[Anonymous]

Anonymous wrote:Kid can put own money in theirs but 529 might be better.

What kind of investments are in your Roth? How risky? Are you diversified?

I have a small 529 for the kid as well, and I was putting “my” money into the kid’s Roth, while he spends most of his but also helps me out some (more of a symbolic gesture).
I figured I could spend some of my Roth on his college if need be (but he should be pretty well covered by grants).

[Anonymous]

To add, my Roth is mostly in the fund’s version of the S&P 500

[Anonymous]

Anonymous wrote:How much do you make? How much do you have saved? When do you plan to retire?

But I think you know that you should fund your IRA. Maybe invest in an international fund (I have 50% of my money in VXUS). But most likely you don't need this money for another 10 years. If that's true, you should have no worries at all about investing in the stock market.

I don’t think it’s relevant how much I make. Just know that 7k/yr is a lot of money for me. I have savings worth 6+ months, as well as family who can help if needed, so that’s covered. I am planning to take the SS benefits at 67 but work until 70 to increase it, but this is just a plan of course.

You’re right, I don’t think I’ll need the money in the next 10 years.

[Anonymous]

Buy Apple, Netflix and Nvidia.

[Anonymous]

Anonymous wrote:How poor? Do you pay federal taxes? Do you have a 401k? Do you have an emergency fund? How much retirement do you have?

I don’t have a 401k, I can barely finance my Roth IRA (and no matching at work for 401k).
I do have an emergency fund and my income tax liability is zero. It’s the credits (EITC and CTC) that make it possible to fund my Roth.

[Anonymous]

Okay thank you I’ll out the money into Roth, thank you everyone for working with my fears!
-OP

[Anonymous]

You don't need a 401k, CDs, 529, or traditional IRA.
Continue with the Roth IRA, but for you, there's not much difference between Roth and regular investment account.
Look into taking SS at 62 and working part time, so your investments can grow.
It's fine to invest in ETFs - VOO, QQQ, VTI in regular investment account. Those investments are for retirement and for emergency fund at the same time.
If you bought VOO at $250+, what difference does it make if you sell it at $500 or current price in emergency? It's still way more than CD or HYSA would have been.
I also don't have tax liability. Haven't for years and I probably won't have in the future.
I invest my own money, which has taught me so much. I have very high risk tolerance. Had I let the bank invest for me, I wouldn't even know my risk tolerance.
Market going down is a good thing. That's where the money is made.
Don't pass your fears about the market to your child. My kids know individual stocks and ETFs to buy and hold long term. Your should too.
Older DC is in college. He works, will pay for his own college as well max out his Roth IRA. Because he is young, we are buying growth stocks in Roth IRA. The stocks can be sold any time within the Roth if needed.
Young people need to be in grow stocks as they have lot of time to recover from downturns (they last under 2 years).

[Anonymous]

You got tax refund in January??