ROTH IRA red up on it but still a little shaky on just how the money accrues. Thanks?

basically, you can only put money in a Roth IRA that you make at your job (or have to pay taxes on). What happens is they tax the money you put in when you put it in, instead of taxing it after you take it out. So say you put the full $4000 (max amount you can put in annually) in the account. they tax it at whatever the interest rate is. this is a good thing because say over the next 30 years you are able to make that money turn into a million dollars. In a normal IRA they would take your million in and tax it. You dont want that because at a 10% interest rate thats $100,000 that Uncle Sam is taking from you. instead of a few hundred. To make the money grow you invest the money in stock, bonds, mutual funds, etc. I'm 15 and I have a Roth IRA with $1,000 in it. The reason i have so little is because thats all i racked up working as a life guard this summer. I've taken that money and bought 7 shares of AAPL stock (the company that makes the ipod, in case you dont know). the money is now about $1,200 dollars. Choosing between stocks and mutual funds is an important decision. With a mutual fund you're only going to average the stock markets return, which on average is about 11% a year. With stocks you can make much more depending on how good you are. The difference between the 2 is with stocks you do everything and you spend your time with your investments. with the mutual funds, the mutual fund spends their time with your money on their investments.