If you haven’t already, make sure to contribute to your 2022 IRA!
What better way to ring in the new year than by contributing to your investment accounts. We are so excited to share that we just maxed out our Roth IRAs $6000 each, for a total of $12,000!
This post may contain affiliate links; please see our disclaimer for details.
A Roth IRA is an amazing FIRE friend to have on our fire journey.
Before sharing our investment choices, let’s walk through some important information first!
The 2022 contributions limit for Roth and traditional IRAs is $6,000 if you are under 50 years old or $7,000 if you are 50+. You must have enough earned income to cover the contribution.
Example: If you only made $1000 in 2022, you can only contribute up to $1000 to your IRA in 2022.
In 2022, the annual income limit is $144,000 for single and $214,000 for married filing jointly. This means if you are above that income, you will not be able to contribute to the IRA.
The deadline to max out an IRA each year is typically the same as the filing tax return deadline – April 15.
For example, you can still contribute to your 2021 IRA up until April 15, 2022.
Table of Contents
What is a Roth IRA?
A Roth IRA is an Individual Retirement Account where you can contribute after-tax dollars.
Contributions and earnings can grow tax-free. Withdrawals of the money can be tax-free and penalty-free if certain conditions are satisfied. For example: if you are the age 59½.
Why choose Roth IRA?
When you open an IRA (Individual Retirement Account), you will have 2 choices: Roth IRA or Traditional IRA.
We come from different walks of life and are in different financial situations. It’s important to know the differences between a Roth IRA and Traditional IRA before choosing one (or both).
My wife and I chose the Roth IRA because we don’t want to worry about taxes when we retire.
The thought of being a tax-free millionaire in the future is exciting. After paying off our student loan debt of 56K, we started to max out our two Roth IRAs for a total of $12,000 a year.
Where to open a Roth IRA?
There are many different places to open an IRA, but we highly recommend using M1 Finance.
M1 Finance is a great investment opportunity with its robust yet simple app. There are ZERO commissions or account management fees.
Deposits $1,000 or more into your M1 Invest account within two weeks of signing up and get a cash bonus of $30-$500 to that account.
It is not just a trading stock brokerage account but also offers an IRA option that allows you to invest in your retirement.
We highly recommend using M1 Finance to open a brokerage or retirement account! M1 Finance can undoubtedly help you on your financial independence journey.
Our Top Three Investments in our 2022 Roth IRAs
1) VOO: Vanguard S&P 500 ETF
The goal of the VOO ETF is to track the performance of the S&P 500 Index.
The expense ratio is very low is 0.03% so far.
As of 12/31/2021, the average one-year return rate is 28.6%, 3-year return is 26.03%.
2) VTI: Vanguard Total Stock Market ETF
The VTI ETF aims to track the performance of a benchmark index that measures the investment return of the overall stock market.
The expense ratio is also very low at 0.03% thus far.
As of 12/31/2021, the average one-year return rate is 25.64%, 3-year return is 25.76%.
3) FZROX: Fidelity ZERO Total Market Index Fund
The goal of FZROX is to provide investment results corresponding to the total return of a broad range of U.S. stocks.
The expense ratio is very low at 0!
As of 12/31/2021, the average one-year return rate is 26.01%, 3-year return is 25.81%.
“There will be good years and there will be bad years, but the compounding will continue on unabated.”
Pietros Maneos
Compound interest is one of the most wonderful things in the world. Start investing early; no matter how small, and you will see how miraculous those investments grow over time.
Thanks for reading! We’d love to see which investments you have chosen for your IRA(s) in 2022!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
