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What's best to invest in for a Roth IRA? 21 years old here.

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What's best to invest in for a Roth IRA? 21 years old here.

Old 08-04-11, 10:57 AM
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EJ123
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What's best to invest in for a Roth IRA? 21 years old here.

I am certain about opening one up soon, even though I can only deposit 1000k for this tax cycle so far. The options are typically CDs, no-loads (?) mutual funds, bonds, etc... But the CDs are fixed rate and since I have a good 40+ years before retirement, should that be the best? Or since I am young should I do the no-load things and keep contributing as I get older?

Last edited by EJ123; 08-04-11 at 11:23 AM.
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Old 08-04-11, 11:16 AM
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At 21 years old, you want to be essentially 100% invested in the most aggressive stock funds available to you. You're right - you've got 40+ years before you're going to be withdrawing anything. Get thee funds into equity - now's actually not a bad time to buy because the economy has prices depressed a bit. Get a payroll deduction going so you automatically contribute out of each paycheck. If you're opening the Roth outside of work (I happen to work for a place where I could do a Roth IRA at work), have an automatic payment that puts a fixed amount from your checking account into the IRA, timed so it coincides with your paycheck. Everytime you get a salary increase, put part of it into increasing your Roth IRA contributions. The only time to stop contributing to your Roth is if you're ever able to open a 401K at work where they match some of the funds you contribute. Never leave free money like that on the table.
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Old 08-04-11, 11:29 AM
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Wells fargo would be the easiest to set up for me, but I encounter this:

Go with the wide and make my own choices?
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Old 08-04-11, 11:32 AM
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No load, indexed stock funds (eg. Index500 fund, total stock market fund) from the Mutual fund vendor of your choice (I use Vanguard-their fees are very low) and do what rlrct said.
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Old 08-04-11, 11:34 AM
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Can I get Vanguard stuff on Wells Fargo? What about investing in ETF moreover? I read Powershares PRF beat out the Vanguarg 500 by a few % points.
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Old 08-04-11, 11:59 AM
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Go talk to Fidelity....they will offer more options.
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Old 08-04-11, 01:30 PM
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Ok, what are you going to do with the money? If you are going to change your investments intermittently, then ETF's are better. If you are buying and holding, only rarely balancing your diversification ratios, then funds are better.

It is all about the fees.
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Old 08-04-11, 08:28 PM
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My 401K and IRA is through my work, using Fidelity. the 401K is restricted to company approved funds, but the IRA is open to investment in ANYTHING. That said, the no load index funds in the IRA are going to the easiest way to increase your wealth with little effort and no stress. Picking stocks and riding the roller coaster isn't fun, and in most cases, not prudent.

I use both 401K and IRA because my company gives me 2% when I put in 5%, and I also add another 5% into the IRA.

Another IRA benefit is that you can withdraw without penalty, up to $10,000 for your first home purchase. I just did this myself at age 27.
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Old 08-04-11, 08:38 PM
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Originally Posted by ModoVincere View Post
Go talk to Fidelity....they will offer more options.
This, or TD Ameritrade, e-Trade, Sharebuilder, or Charles Schwab.
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Old 08-04-11, 10:34 PM
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Check out the retirement forums. Those folks have studied your situation from every angle. They will freely give you their thoughts and advise.
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Old 08-05-11, 07:20 AM
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Check out Vanguard's target retirement funds. I have my Roth IRA in those. The money is reinvested over time to gradually reduce risk the closer you get to retirement.
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Old 08-05-11, 02:17 PM
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bet with your money your way. read a book.
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Old 08-05-11, 02:44 PM
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i would invest in physical gold if you can find a way to, pretty sure thing.
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Old 08-05-11, 03:22 PM
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utilities are usually a safe bet for long term stock purchases, as are stocks in the companies that run solid equity funds (utilities don't usually go broke & pay dividends on time, and equity fund companies pay themselves before thier investors). BUT, unless you plan to do a lot of research, stick to reccommended equity funds... much easier.
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Old 08-05-11, 07:05 PM
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Good for you for starting early. Q for you - are you doing this on your own or through an employer's 401K plan? If though an employer, they usually pick a mgmt compant that'll charge some high 'maintenance' fees. However, if they do any matching of whatever you put in (like 50 cents for every $1 you contribute) definately take advantage of taht - my example is an instant 50% return o your investment.

If you are on your own, this is a good idea:

Originally Posted by mikeybikes View Post
Check out Vanguard's target retirement funds. I have my Roth IRA in those. The money is reinvested over time to gradually reduce risk the closer you get to retirement.
The target funds start out with somewhat aggressive portfolios, then gradually (over decades) reallocate so you shift into safer bond and money market funds as you get closer to retirement. To help it out, also pick an equity fund (or index fund like the Vanguard S&P 500) that can give higher returns in the near future. You can gradually shift that $$$ into the 'target fund in teh future. Vanguard, Schwab, T.Rowe Price are all good sources for low cost (low mgmt fee) funds. Fidelity is a little high, and anything run be a bank or insurance company (Wells Fargo, Prudential come to mind) have high fees that'll cut into your returns.
 
Old 08-05-11, 08:00 PM
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As surfrider suggest, for low fuss decent return the target funds are pretty good and the low fee vendors worth attention.

The most important thing, though, is to start right now. Almost everyone can live just as well on 90% of their income as 100%.
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Old 08-05-11, 09:07 PM
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Originally Posted by MACRI View Post
i would invest in physical gold if you can find a way to, pretty sure thing.
Why You Should Not Invest In Gold In 2011

Among other things:
2. Gold Isn't Actually Immune to Inflation
Traditionally, gold has been considered a hedge against inflation. Therefore, as gold enthusiasts proclaim, now is a great time to invest. They claim that the money the Fed has been pumping into the economy will eventually create runaway consumer prices, and therefore, higher inflation.

But the facts do not back this up. To the contrary, inflation has actually been on a downswing. In December, 2008, it stood at 2.9%, and currently it is running right at around 1.2%. Therefore, gold enthusiasts are stuck with counting on a few other economic disasters to hit, which would justify their investments. Neither of these is likely to occur, and if the economy either continues at its modest growth rate or actually flourishes, it's bad news for gold holders. As an example, from 1980 to 2005 (a time period of steady economic growth), gold earned you a minimal return on your money, while other industries offered far greater returns.

...

5. The Gold Boom is Speculator Driven
Buying gold today is nothing more than a bet that someone else will want to pay you more for it tomorrow. Considering that the recent spike in gold is significantly driven by investor fear, rather than any solid economic indicator, this makes investing in gold even riskier. There is often no real value or basis for investing in gold.
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Old 08-05-11, 09:20 PM
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Originally Posted by shouldberiding View Post
everything is speculator driven.
it is a bet.

did you miss ben bernanke say that the reason banks hold gold is 'tradition'? he said gold is not money. listen to the Bernank. https://www.theonion.com/articles/dru...hborhoo,21059/

by the way, just letting you know that ben is from south carolina.

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Old 08-05-11, 10:00 PM
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I think that you should open an account with Gabelli Funds Management, these guys are excellent! The now go by GAMCO Investors, but still run by Mario Gabelli. Open an IRA and select a few of their excellent mutual funds, then sit back and watch it grow. I have Gabelli Asset Fund, GAMCO Global Opportunity Fund and the Gabelli Green Fund, all have been rock solid and did exceptionally well during the recession. Check them out, my account is 25 years old, has made a ton of money. https://www.gabelli.com/individual-investors.html
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Old 08-12-11, 06:19 AM
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Does anyone know the dates between the times where you can put 2011-2012 income to the Roth IRA? I get payed every 1st and the 16th, so do I put everything I earn from May 1st 2011 -April 1st 2012? For that tax year?
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Old 08-12-11, 03:19 PM
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Maybe you should pay off your student loans first.
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Old 08-12-11, 05:03 PM
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Originally Posted by EJ123 View Post
Does anyone know the dates between the times where you can put 2011-2012 income to the Roth IRA? I get payed every 1st and the 16th, so do I put everything I earn from May 1st 2011 -April 1st 2012? For that tax year?
You can contribute to 2011 tax year from Jan 1 2011 to April 15th 2012.

Whether you should pay the loan ASAP, or pay the minimum and invest the rest depends on the two interest rates. Sometimes you'll be ahead to invest more before paying off the loan.
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Old 08-12-11, 07:26 PM
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Originally Posted by fordmanvt View Post
You can contribute to 2011 tax year from Jan 1 2011 to April 15th 2012.

Whether you should pay the loan ASAP, or pay the minimum and invest the rest depends on the two interest rates. Sometimes you'll be ahead to invest more before paying off the loan.
Wait so there's overlap? How is the tax year about a year and a half?
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Old 08-12-11, 07:38 PM
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Originally Posted by EJ123 View Post
Wait so there's overlap? How is the tax year about a year and a half?
The tax year is Jan 1 to Dec 31 for most people. The IRS allows you until Apr 15 of the following year to make your IRA investments.
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Old 08-12-11, 07:52 PM
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Originally Posted by ModoVincere View Post
The tax year is Jan 1 to Dec 31 for most people. The IRS allows you until Apr 15 of the following year to make your IRA investments.
Thanks. Everyone here is very smart on this. I feel like an idiot and I'm 21. Maybe being 21 is the reason. Still hungover from my birthday
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