An education might be one of the most expensive things you’ll ever spend money on, and as a student, that’s really scary. It’s not just tuition— there are tons of other costs that add up. Think housing, food, transportation, textbooks, club fees, etc. And if you’re like me and eating a lot of instant oatmeal and PB&Js, budgeting more of the money you do have doesn’t sound all that appealing. Often, one particular account is touted to young investors; the ROTH. I’d heard of the account, and had a few hesitations. But with some further insights, I found that a lot of my concerns were invalid. Here is — The ROTH IRA: A Student Perspective.  

1. “It’s a retirement account.” That statement certainty threw me for a loop. There was no way I was even thinking about retirement! Not when I was eat/sleep/breathing employment.

But the reality was that I did have an income, and I was able to save some of it, thanks to financial aid, scholarships, working extra hours, and my best attempts at frugality. The max contribution for a ROTH in 2017 is the amount of income earned, or $5,500 (whichever is less), and to open the account, there is no minimum.

This sounded like just loose enough of a commitment for me to hear my financial advisor out, and when he moved on to compound interest, contributing as much as I was financially (and legally) able, didn’t seem so bad.

2. “I can’t fit another entry in my planner.” So how was I supposed to possibly concern myself with remembering to contribute to the account?

Good try, but most accounts can set up an automatic deposit. This is really the best way to proceed, because students have enough deadlines to keep track of. Setting up a ROTH IRA contribution schedule is only going to benefit in the long run, and with automatic contributions, there will be even more free time…to study.

3. “It’s like locking up my money and losing the key for 40 years.” Turns out this isn’t true, either. A ROTH has a few exceptions that allow for early withdrawal of money with zero penalty. My favorites? It can be used to pay some qualified expenses racked up from higher education, and in addition, a withdrawal of up to $10,000 can be put toward a first-time home purchase. Say goodbye to dorm life.

White Oaks Wealth Advisors offers financial planning services and wealth management for multi-generations, so if you want to open a ROTH, or know a student who would benefit, visit the website.

Jenna Pitoscia, White Oaks Wealth Advisors — Marketing Intern 


The foregoing content reflects the opinions of White Oaks Wealth Advisors and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns.

Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.