Well, you are about to read a good article that I have written on how to make a sound long term investment. I did some thorough research on Roth IRA and found these interesting points. Hope it sounds beneficial to you.

Earnings are completely tax free: Roth IRA will offer you something that no other retirement plan can offer. It has the ability to withdraw your earnings without paying taxes on it. When you decide to cash out on your retirement plan, you will earn all the money that you put on the investment plus the interests you have accrued all these years and it’s completely tax free.

Better than Mill IRA: In Roth IRA, the maximum that you can contribute is $4,000 annually. It is going to be raised to $5,000 in 2008 to account for inflation. The only drawback is that there is no tax deduction for your contributions. As long as you are interested to maximize your contributions, Roth IRA is a good choice for most investors. You get more leverage while filing taxes to your retirement savings. The only thing that you need to do is to stick to the plan to enjoy the maximum benefits.

Flexibility: Roth IRA is very flexible. There are different ways to utilize your investment. IRS will allow a $10,000 withdrawal from your Roth IRA if you are going to purchase a home for the first time. You can also apply your investment in Roth IRA for educational purposes. And if you are in a hard situation, you can withdraw the maximum permissible amount anytime without having to pay back like it happens in case of 401(k). But be aware that you might catch some minor penalties when you withdraw from your investment in Roth IRA.

There is no rule on minimum distribution: if you are old and retired and have other sources of income, you don’t have any restrictions from cashing out from your Roth IRA. You can always sit back and see your tax free investment growing each year.

If you think that in order to be financial successful, it has something to do with money, stocks, bonds, asset allocation and retirement plans, then it is not always right. Of course, these do matter in the long run, but let’s not confuse financial tools with the basic fundamentals. Everything lies on the preparation, planning, and the relationship that money has on the other aspects of life.

• Five basic financial fundamentals:

1) Set your financial goals: How do you want to be after let’s say 5 years or 10 years? You need to create action plans right from today in order to be able to achieve your goals and financial success. Just a simple calculation, if you want to save $1 million in fifty years, you need to invest $140 each month at 8 % return. What do you think?

2) Interactive communication: Get your family and friends involved. If one member of your family is spending more than what you are saving, it is having a negative effect on your total finance. If another member is spending as much as you are saving, the net progress is zero. To achieve your financial goals, everyone in the family needs to work together. You all can take different paths but your goals or the destination should be the same.

3) Commitment or motivation: If you are trying to do something, make sure that you know your plan of actions. Your chances to achieve your goals will be better if they are personal. If that means that you have to take baby steps, do it and reward yourself frequently.

4) Planning for the unexpected: Unexpected things can happen anytime and your financial road map or budget can get affected because of this unincidental event. Incorporate the unexpected expenses into your plan. You never know when a situation can turn bad but if it does, then you should have ways to come out of it.

Don’t stay far away from your personal happiness: Set your goals and when you finally achieve it, you have every reason to be happy. But there is no reason you can’t enjoy the road to get there too.

5) Action plan: Getting financial success is not a very tough job. Once you have your strategies and commitment in place, you can use your financial tools, such as investing and asset allocation to achieve your success.