Introduction: How to Make $1,000,000+ by the Time You Are Retired ( Assuming You Are a Teen)
An easy way to put your hard earned cash to work to earn you money.
Step 1: Get a Social Security Number.
This is the official ID number you'll need before you can set up your get-rich investment.
Good news: Chances are your mom or dad already took care of this for you. (They have to enter your Social Security number on their tax return to claim you as a dependent.) All you need to do is find out what it is.
Hint: If you need to get a Social Security number, click here to get one.
Step 2: Head to the Bank and Open a Roth IRA
This special kind of IRA-- individual retirement account-- is your secret weapon. Unlike other kinds of savings and investments, the interest you earn might be completely tax free. That means you get to keep more of your money instead of handing it to Uncle Sam.
Hint: While there's no minimum age for setting up a Roth IRA, you might want to bring one of your folks along with you to the bank. They can help answer questions you might have with the paperwork
Step 3: Put in $10 a Week
It could be from chores around the house or an after-school job. The only trick is that you have to earn it. This is because the money that goes into a Roth IRA has to be taxable income.
Hint: You can claim your parents as your employer if they're paying you to do work around the house.
Step 4: Get a Folder and Find a Safe Place
Time for a little record keeping, just in case the tax man has any questions for you down the line. You'll need a safe place to keep copies of your records-- like the statements showing how much sweet moolah is piling up in your IRA.
Hint: If your folks have a safe deposit box, fire safe or other place with important documents, you could ask if you could keep your IRA stuff there.
Step 5: Think Long Term
There's a reason why the R is IRA stands for retirement. This isn't a get-rich-quick scheme. You'll be earning money over years and years, so be prepared to wait a while before you get to play with your million bucks.
Hint: You can take money out of your Roth IRA to do things like help pay for college, but you will probably pay a penalty for it. If your ultimate goal is to save that $1 million, you're better off not touching it.
Step 6: Do the Math
Based on an "average rate of return" of 11.5 percent (the average amount investments like yours grew between 1970 and 2006) and a retirement age of 65, your $10 a week will grow into (drum roll, please)...
Hint: If you want to see a cool graph of how much money you can make, try this online IRA calculator.
Step 7: Up That $10
Once you get a better job and can swing a little more than $10 a week, up your contributions. The more money you put into your account earlier, the better. This is because it's got more time to sit and grow.
If you put in $20 instead of $10, from age 16 to age 65, you could earn more than $2 million!
Hint: The maximum contribution you can put in each year usually goes up. In 2007, it was $4,000. Keep an eye on IRS.gov for changes.
Step 8: When You Are Old and Retired Withdraw Your Hard Earned Money
Head over to the bank and make your withdrawal. Then, enjoy yourself. Maybe fix up your house, get a new denture cleaner [=, or anything else you can think of. Enjoy!]