I have contributed $10,000 to my Roth IRA over the last 4 years it has grown to $11,800. $1800.00 in growth.?

Question

This seems like very little growth to me. Is this normal or should I expect more growth? My Roth is with Wachovia securities.

Answer 1

J_C is correct. If you've been steadily contributing, you're getting a gain averaging 11.1% a year, which is very respectable. If your figures include the period up to June M/E, you've probably been doing even better, since everyone got pummelled from mid-May through June. At a steady rate of 11.1%, your $11,800 would grow to $14,565 in 2 years, which makes Frank's offer of growing your money to $13,924 of rather dubious value.

Answer 2

18% compounded is about 4% a year. There are many factors in calculating your return, such as when exactly did you put the money, and did you put the 10k in lumpsum, and which funds and distribution. An easy way is to determine if you have good return is to compare it with the index. Example: The market was not doing well in 2002, but recently it is picking up. In 2002, S&P 500 depository receipts (SPY) dropped roughly 30 pts, and has since increased 40 pts.

While it is true that the stock market has not been stellar these past few years, a few sectors has been doing very well, ie: energy and small cap stocks. You can switch your funds to something that you think will do really well in the next few years.

Answer 3

If you had $10,000 in your Roth IRA 4 years ago, then your rate of return has not been very impressive. However, if you have contributed a total of $10,000 over the past 4 years, where, for example, 2 years ago, you only had $5,000 in the account, then your rate of return has been just fine.

Keep in mind that in general, the higher the rate of return you are shooting for, the higher the level of risk involved. If your investment timeframe is long term, then at the very least, you should place the money in an S&P 500 index fund. I would be surprised if Wachovia did not offer this type of fund, but in case they don't, of all the mutual funds companies out there, Vanguard has the reputation of having the lowest fees associated with their S&P 500 Index fund. One cannot predict future performance with absolute certainty, but historically this type of fund has had a rate of return of about 8%.

Answer 4

Consider that the market hasn't been all that stellar and that at the time you were investing, it may well have gone down before going up.

But ultimately what your ROTH is invested in makes a HUGE difference. What kind of mutual funds do you have in there?

Add that info to the description and then we can figure out if you have a crummy investment, or just one that may be too safe given the long term time frame.

Low risk usually equals lower long term returns, but.....high risk doesn't always mean good returns either. Moderate usually works out best.

Name your fund, then it will be easy to figure out why your gain is so modest.

Answer 5

With an IRA you will not see a lot of growth initially, but will pay dividends in the long run. Remember, this is a retirement account and you have to be patient. I would not be unhappy with $1,800.00. It also depends on the market and how you have set up the account. Aggressive or Conservative?

Answer 6

Actually, your return might be quite decent, depending on exactly what you mean. If you deposited $2500 a year, for 4 consecutive years, your finances would look like this:

July 4, 2003: deposit $2500

July 4, 2004: deposit $2500+11.1% annual return on $2500=$5277.5

July 4, 2005: deposit $2500+11.1% annual return on $5277.5=$8363.3

July 4, 2006: deposit $2500+11.1% annual return on $8363.3=$11,791.63

Let's say you have $11,800 today. That means that your annual ROR is a whopping 11.1%--not too shabby. At that growth rate, you will have $1,000,000 by 2039 if you continue to make regular $2500/year contributions. Of course, $1,000,000 isn't what it used to be.

Good luck!

Answer 7

18% growth in four years isn't much to be writing home about. Look at how it's being invested and in what...is it in an aggressive fund or a "safe" fund. You may need to change how your money is being invested, but you need to think about what your plans are with this money and how much risk you want to take on.

Answer 8

Yes, it is slow growth. Perhap, you should switch to growth stock funds.

Answer 9

I suggest you to fire your Financial Advisor and hire me (Obviously for FREE) as your Financial Advisor instead.

I can grow your $11,800.00 to $13,924.00 in 2 years or less.

Top 4 Answerer in Business & Finance. (Vote for me. I just need 200 more votes)

Answer 10

hbinv.com, i gave them my money 2 years ago and they guaranteed 11%, so far they paid way more than what was promissed.