What you need to know about a Roth IRA

Roth IRAs can be mystifying with all the conflicting information out there.

Investments in Roth IRAs are quite simple to understand despite what financial ads that run during major sporting events would lead you to believe.

Roth IRAs are for people who have an income of up to $112,000 per year or married couples who earn up to $178,000. What’s great about a Roth IRA is that you do not have to pay taxes on it. No matter how much your investments accumulate, Uncle Sam doesn’t see a nickel of it.

There are several ways you can invest in a Roth IRA. You can set up a Roth IRA as a mutual fund, buy bonds or even invest in real estate. However, as of 2014, you can only invest up to $5,500 per year—$6,500 if you’re over 50 years old. It’s also important to note that you have to earn an income to be able to contribute.

To make investing easier, set up automatic investments to be deducted from your account. This will help you not forget as well as take away any temptation to skip a payment here or there.