Roth IRA
A retirement account you fund with money you've already paid taxes on. It can grow and come out tax-free in retirement if you follow the rules. You need income from work to put money in.
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Related words
- Compound interest
- Interest you earn on your interest. Over time, it makes savings grow faster and faster.
- Diversification
- Spreading your money across many different investments so one bad one can't sink you.
- Index fund
- A fund that buys every stock in an index, like the S&P 500, so you own a small piece of all of those companies. Fees are usually low.
- ETF
- Exchange-traded fund: a fund that holds many investments and trades on the stock market like a single stock.
- Mutual fund
- A fund that pools money from many investors to buy stocks, bonds or both.
- 401(k)
- A retirement savings plan you get through a job. Money usually goes in before taxes, and some employers add extra money, called a match.
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