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Ask Dave

What Is a Roth IRA?

Dave explains to Yolanda what a Roth IRA is and why it's a good way to save for retirement.

QUESTION: Yolanda wants to know what a Roth IRA is and also what a person close to retirement should do with their money.

ANSWER: The Roth IRA grows tax-free. In a good mutual fund, it will grow about 12% per year. If you put the same money in a regular IRA or a 401k, you’ll get taxed. So the Roth IRA is a great savings plan. Make sure that it’s invested in good growth stock mutual funds with long, proven track records. They will go up some years and down some years, but they will grow on average.