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Retirement & Investing

Retirement and investing for beginners: Roth vs traditional IRAs, how to start investing with little money, and whether a financial advisor or robo-advisor is worth the fee. US-focused, with notes for other countries.

These retirement investing guides show you how to start saving for the long term, even with small amounts, and how to use tax-advantaged accounts so more of your money keeps growing. The details are mostly US-specific, covering IRAs and 401(k)s. In the UK, pensions and ISAs play a similar role, and other countries have their own accounts and rules.

Start here

  1. How to start investing with little money, even $50.
  2. Roth IRA vs traditional IRA: which is better for you?
  3. How to invest in an S&P 500 index fund.
  4. Pros and cons of a financial advisor.
  5. Robo-advisor vs financial advisor.

Key concepts

Tax-advantaged accounts

A 401(k) is a US workplace retirement plan; many employers add a match, such as 50 cents for every dollar you contribute up to 6% of salary. An IRA (individual retirement account) is one you open yourself. Contribution limits are set by the IRS and usually change each year, so check the current figures on irs.gov.

Roth vs traditional

Traditional accounts generally give a tax deduction now and tax withdrawals in retirement. Roth accounts use after-tax money, and qualified withdrawals are tax-free. The better choice depends largely on whether you expect your tax rate to be higher now or later.

Starting early

Time does much of the work through compounding.

Example: Suppose you invest $200 a month at a hypothetical 6% annual return. Over 40 years you contribute $96,000 and could have about $398,000. Over 30 years you contribute $72,000 and could have about $201,000.

Getting help

Robo-advisors manage a diversified portfolio for a low annual fee. Human advisors cost more but can help with complex decisions. Check any advisor on FINRA BrokerCheck or the SEC’s adviser search before hiring.

Risk note

Investments can lose value, and early withdrawals from retirement accounts can trigger taxes and penalties. Returns in these examples are hypothetical. See the personal finance hub for more.

Retirement & Investing: frequently asked questions

How do I start investing for retirement?

If your employer offers a 401(k) with a match, contribute at least enough to get the full match. Then consider an IRA and choose low-cost, diversified funds such as index or target-date funds. Automate contributions so they happen every payday.

Should I choose a Roth or traditional IRA?

A Roth often suits people who expect to be in a higher tax bracket later, such as early-career workers. A traditional IRA can make more sense if you want a deduction now and expect lower income in retirement. Eligibility depends on income limits set by the IRS.

How much should I save for retirement?

A common guideline is 10% to 15% of pre-tax income, including any employer match, starting in your 20s or 30s. Starting later usually means saving a higher percentage. Online retirement calculators can give a target based on your age and goals.

Can I invest for retirement with little money?

Yes. Many brokers and IRA providers have no minimum and offer fractional shares, so you can start with $25 to $50 a month. The habit and the time in the market matter more than the starting amount.