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Your teen has a part time job and probably plans for new clothes, video games or maybe a car. However, financial planner John Vento says a better bet is to get them to think long term, really long term, by opening up a Roth IRA.

So why a Roth IRA? For one thing, with a Roth IRA, they won't be taxed on any interest their money earns, we're talking decades of interest. Convincing them to put their money away for Roth IRA, say for 50 years may be difficult, there are some numbers that may help. Let's say they contribute $5,000 a year starting at age 14.

"Assuming they earn five percent per year, by the time they reach age 60 they will have accumulated over $885,000 via Roth IRA" explains Vento.
That gives them a retirement income of $57,000 a year for the next 30 years. Up that rate of return to an optimistic eight percent and by age 60, they'll have $2.2 million!…all because of Roth IRA.

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If current income restrictions on Roth IRA's are preventing you from using one for your planning purposes, you should also be thinking about not just investment management but estate planning as well. Fortunately, one of the best Roth IRA benefits is that it can be utilized as an inter-generational wealth transfer tool. Time plus modest regular savings can equal significant wealth accumulation for the next generation.

That's why setting up a Roth IRA when your children or grandchildren are still young can be one of your best long-term planning strategies. Over a 50 year time horizon, even a relatively modest savings rate can produce substantial wealth. There are no minimum distributions required for a Roth IRA holder, and unlike traditional IRAs minimum distributions are not required once the owner reaches age 70 ½. Therefore, theoretically, a child could have held a Roth IRA his or her entire life, never having tapped into it, and then pass it on to his or her beneficiaries upon death.

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Many people think that stocks, bonds, mutual funds are the options to invest their individual retirement account (IRA). But the truth is that you have many other choices.

Your retirement savings can be done by a number of remarkable investment options like real estate or a closely held business. A stack of a few gold coins is also a good IRA investment option. You can buy gold and platinum coins with your IRA. But they are not good for every IRA as they do not pay interests or dividends. Since 1997, the IRS allows investors to use IRA funds to buy precious metals like silver, gold and platinum.

A private mortgage is another less-known IRA investment option. But, before doing anything with your IRA, you must make sure that it is allowed by the IRS.