There is so much financial advice on the internet and social media, but what’s something you could do right now that will actually benefit you long into the future?
There’s one easy step you could take today that will drastically improve your financial future for the better in just a few minutes.
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Here’s the one easy move Dr. Jörn Kleinhans, a CFA and tax and investment strategist at Scorpio Tax Management, said will change your life forever.
Open This Account Right Now
The one financial move Kleinhans swears by is opening a Roth IRA. This is a retirement account that you can set up whether or not you already have a 401(k) through your employer. If you don’t, it’s even more beneficial, because it’s the first step to setting some cash aside for retirement.
“Time is the biggest advantage young people have and most Gen Z folks are leaving it on the table,” Kleinhans said.
The benefits of a Roth IRA is that your investments can grow tax-free and compound over time. The earlier you can start investing, the better.
“Starting in your 20s instead of your 30s can literally mean hundreds of thousands of extra dollars by retirement thanks to compound growth,” Kleinhans said.
Kleinhans recommended contributing between $50 and $200 a month to start. If you can contribute more, that’s great news, but be aware that there is a contribution limit of $7,500 for the 2026 tax year.
One piece of advice Kleinhans had? Take the guesswork out of your Roth IRA contributions.
“It’s practical to set up automatic transfers so the savings process doesn’t take monthly effort,” he said.
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To keep all of your money, you shouldn’t withdraw it before age 59 1/2 and at least five years after making your contributions, or there will be a 10% penalty and income tax. The combination of taxes and penalties for withdrawing from your IRA before that age varies, depending on whether the withdrawal is contributions or gains, and whether the former amount has been in the account for five years. If it has, you can withdraw those contributions free of penalty or tax at any given time, although it’s usually wisest to let them continue earning money in your account. Fidelity broke it down in detail if you’re curious.
The IRS lists numerous exceptions that let you withdraw gains before age 59 1/2 without incurring penalties and/or taxes. For example, if you use them to buy your first home, you can withdraw $10,000 in gains, provided they have aged five years. If you’ve become disabled, you can also access your money early. Other early withdrawals can be used for expenses that will be taxed as income, but won’t trigger the 10% penalty.
Ultimately, any financial moves should be done with research and confidence, but the only way to reach that precarious decision is to undertake the no-brainer of investing for your future today.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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