Comment by hattmall | Hacker News Reader

Comment by hattmall | Hacker News Reader

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An important part that could have been beneficial would have been to add, "today".

I had a class where the teacher did something similar, but she showed that if you started a ROTH today and contributed only the 4 years you were in college and then stopped forever. You would have nearly the same amount of money as someone who started 1 year after they completed college and invested every year until retirement.

Ultimately she was encouraging us to take out student loans and invest it or use any excess scholarship money to max out a ROTH IRA. She even advocated for investing all student loan money and opening credit cards tp actually pay for college, making minimum payments until graduation. Then moving away to a LCOL country and learn the language for 8-9 years while remaining in school taking 1 online class a year and travelling the world on student loans and not to worry about starting a career until 30 and start paying once you are back and start a job.

The today does matter but just did the math on that and your teacher was whack.

The gap is so big I’m going to be imprecise and won’t matter.

A Roth allows 7k a year I believe. So 4 years of school, 28k total.

Let’s be generous and say you start with 30k at age 18. At 65 you’ll have 700k.

I started at 26, my salary has been increasing at 6k a year average. I don’t max it out, but hover around 10-15%, I get a 100% match on up to 7% of my salary. I’m 10x ahead of the 18yo on the same projection and 5x ahead 10 years earlier.

Not even going to get into the interest rates and how you’re fucking up your finances tremendously for the rest of your adult life

I'm not sure what numbers you are using / getting, you didn't show the math. But if you start with 30K at 18. You would have ~$800,000 at 65.

If you start at 30, and put in $600 a month, each month, until 65. You would have ~$1,088,000.

Yes, in the end you get more, but that is with contributing for 35 years each month, vs just contributing in the beginning. I know those aren't the exact numbers that would be relevant because it was actually making the annual contribution for 4 years, not the lump sum. But the numbers were similar, yes you have more in the end, but you could also have a reasonably similar amount without actually working and contributing for 35 years.

ROTH IRA contributions have to be from earned income, though. The rest of the advice is of the same quality, imho. Beware!

Yeah, that was covered, it was an entrepreneurship class so one of the first things we learned was how to start an LLC and pay ourselves at least enough to get the EIC and to make sure we had enough years to qualify for Medicare. I remember one of the examples was about how Donald Trump licenses his signature and pays himself a royalty everytime he uses it or something similar.

There are limited ways of acquiring money that can be contributed to a Roth IRA, this way is not one of them

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