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4 MYTHS BUSTED: How to Conquer your FEAR of investing in a Roth IRA

For those of you who don't know what the Roth IRA is, it's a retirement account that allows the majority of those who earn under a certain income (currently under $114000 for single filers at the time of this posting) to contribute $5500 every year (or $6500 a year if you have less than ten years left until retirement) until they reach the retirement age of 59 and a half.

However, many people have these crazy ideas in their head that it's not safe to put their money in a roth ira. Here are some of the fears people have:

1) What if I have a medical emergency and need to access the money before I'm 59 and a half?

MYTH BUSTED! Believe it or not, you can use the money in your Roth IRA to pay for unreimbursed medical expenses that exceed 7 1/2% of adjusted gross income (AGI). Besides, I don't know how about you but when I keep money in my savings or checking account, I'm more tempted to spend it for petty things like a sandwich upgrade. Keeping the money in an account where I am not incentivized from withdrawing from means I'm much less likely to touch it.

2) What if the stock market crashes? I'm afraid to invest in stocks! Etc.

MYTH BUSTED! Yes, the stock market is scary and it has tanked on a few occasions, but if you are investing for something as long term as a RETIREMENT, then you have nothing to worry about. First of all, if you invest correctly (cough cough, simply invest in an aggressive growth mutual fund or income & aggressive growth fund if you don't know what you're doing) and don't do something ridiculous like investing in just a single stock, then more likely than not, the amount will rise in the long run. The key is to DIVERSIFY your portfolio. Historically, the S&P 500 has returned just a little under 12% a year in the past century (you may have seen me mention this a few times in my other blogs). The worst mistake you can make is to let the fear of investing mobilize you.

3) What if I need to buy a house and am short just $10000 or some other small amount?

MYTH BUSTED! You're allowed to withdraw from your Roth IRA for a first time home purchase of an amount up to $10000.

4) What if the government change tax laws and the way retirement accounts work?

MYTH BUSTE... Well actually this is a possibility, but the chances are VERY VERY SLIM. In the entire history of the United States, the government has never took back on a promise related to a payout of a retirement account and any related taxation. Besides, if this happens, there would be a HUGE RIOT. Chances are, this is an unfounded fear.

So what are you afraid of? Everyone who doesn't have a six figure job should invest in a roth IRA. I mean EVERYONE. Don't let fear paralyze you. Besides, you were just going to spend that $5500 you wanted to put in the account on some random person you met at the club, weren't you?