Imagine that you’ve been diligently putting money away in your Roth IRA retirement fund for the last 10 years, as any savvy investor would do. Only when it’s too late do you discover that you’re out $9,000 … and didn’t even know it!

It’s an investor’s worst nightmare, and it happened to one of my readers. She told me that she had been putting money away into a Roth IRA for 10 years but never selected funds to allocate her money toward!

Instead, she treated the IRA as a glorified savings account and missed 10 years of investment growth with compound interest.

The worst part? The $3,000 she “invested” could have been worth more than $12,000 today. That’s a difference of $9,000 — and because it’s a Roth IRA, those earnings would have been tax-free.

The mistake is not entirely her fault, though. Very few experts are crystal-clear in telling you that you need to actually invest your money when you have a Roth IRA, or will even explain to you the differences between a traditional IRA and a Roth IRA. (The former allows you to invest pre-tax and the latter is after-tax, so depending on your circumstances it can give you a better deal on your investment.)

The good news is that it’s not too hard. You shouldn’t have to be a financial expert to have your money do the right thing, just like I shouldn’t have to understand how a carburetor works to drive my car.

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