Here's a piece from the Motley Fool on the wisdom of contributing to an IRA:
An IRA is the best way to make tax-deductible contributions toward retirement. It's also the best way to enjoy the gains tax-deferred.
If you start this plan today, you could have a tax-deferred nest egg of more than $80,000 by 2016. And if you have 10 more years until retirement and let that money continue to compound annually (without any additional contributions), you could have more than $200,000. If you continue to make those $416.67 monthly contributions, 20 years of savings and investing will give you the tidy sum of $300,000.
These calculations are based on earning the market's historical 10% annual return. You can do that by investing in a low-cost index fund. But beware: not all index funds are the same. [some have much higher expense ratios than others]. If you inadvertently hold the wrong index fund for 20 years, you could be out more than $20,000 in the scenario above. That's a costly mistake that you'll do well to avoid.
My thoughts:
1. Yes, contributing to a 401k, Roth IRA, or IRA is a smart move for probably everyone. And you can even make your child a millionaire by using one.
2. Expenses need to be minimized for you to maximize your return. I prefer Vanguard Index 500 for my index investing.
3. There's no better time to start (or add more to) and IRA than today.
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