Responsible Ways To Use A Monetary Gift
Use $5,000 to open a retirement account
There’s good news for millennials: they’re killing it in the retirement account game and apparently reached record highs in their holdings this past year. So if you come into $5,000, DeFreitas recommends opening such an account if you don’t already have one. Roth IRAs offer a nice tax benefit on the backend. While you invest after-tax dollars, from there, the money grows (compounding interest is very nice, by the way), and when you withdraw it, you do so with the money tax-free as you already paid taxes on the front end. That’s a nice break considering your tax bracket when you put in the money is probably much lower than it will be when you take it out.