What should I put into my ROTH?

Question

I just opened up a ROTH IRA but I am unsure about what to invest it. Can anyone help me!?

Answer 1

What should you put into your Roth? Money. What should you put your money into? How about some nice ETFs. Like Diamonds? No, not the rocks, but DIA buys the Dow Jones Industrials. Everytime you hear the stock market news on TV, you will hear right away how your money is faring. How about Spyders, SPY, which holds the Standard & Poors 500 stocks? How about buying one stock and holding the biggest* 100 stocks on the New York Stock Exchange? Then look up NY. Want to buy the best of the best dividend-paying stocks? Check out DVY. Want to get in on the ground floor for nanotechnology? PXN invests in the biggest and most important of the currently publicly traded players. Some things are easy and these are easy. Of course, they can go down, but they hold a number of companies, so while some are down, others are up. It all averages out. Good luck.

*by market capitalization, recent price per share multiplied by the number of shares outstanding.

Answer 2

To be honest, you have as many choices as the number of houses in your City. There are hundreds of thousands of choices where you can put money for your Roth. So many choices are really confusing. Wish we had just a few choices. Anyways, back to your question.

When you say, you opened up an IRA, it clearly makes one point clear that you are ready to commit an amount of money for long term growth. This is the money that you are saving for your retirement. That means, you want to protect it and also want to see it grow. Where you put it, depends on your age, your risk potential, your other investments and many many other factors. (See, life is really confusing when it comes to money).

Assuming you are 30-40 years of age and want to retire when say you are 65 years old. So, you have 25-35 years to retire. Or may be more! So, you should really thing long term and put your IRA in stocks. Bank CDs will give you 5% interest. But out of that 3% is eaten up by inflation. So, you end up with an effective growth of only 2%. And that is assuming that your CDs beat the inflation by 2% every year. That is not the case. There are times when bank CD rates can not cover up for inflation. So, eventually your money is very well protected (100% secure), but is not growing.

On the other hand, you can put your money in say a very hot stock. A new company which every one is talking about and whose stock doubles every other week. Here your money is not protected, but it is growing (hopefully).

You have to have a balance between this protection and growthe. Best and easiest way is to go with a Stock Mutual fund. Again there are thousands of choices here. To narrow down your choice, you can go with an index fund. So, say for example, you open your IRA with Vanguard, and buy any of their index funds. The fees is low, money will grow with market and is safe since it is diversified.

All said, it all depends on you. My only advice is to do your homework before you invest your hard earned money. But again, do not spend too much time in this homework. Remember Time is the biggest friend in your investment. So, earlier you start, the better.

All the best.

Answer 3

Your age is a factor. I recommend "no Load" funds. Invest in type:
1) 18 - 35 years old - equity growth funds.
2) 36 - 50, a mixture (or blend) growth and value.
3) Over 50 is tricky. How much are your retirement funds worth? How much do you need to retire? What age do you intend to retire at? If you are under 50, you have time to make a new decision.
4) Over 50 I would recommend growth and income funds.
5) Stay away from bond funds; inflation will eat you alive.
6) Roth is an excellent choice.

Answer 4

An IRA (or ROTH IRA for that matter) is just like any investment account. What you decide to put into it is your own personal preference.

If you decide that you do not want to be bothered much by monthly maintanance, you should opt for a mutual fund or buy a stock index. There are many paths up this alleyway that can provide secure (albeit low) ROI.

I usually purchase blue chip stocks and write covered call options with my IRA. But stock management is essentially what I do for a living, so it might behoove you to play it safer.

Answer 5

Like one person said ETF's are great 'cause you can divide your money up if you want to....otherwise, one year's IRA will probably only get you into one mutual fund... you can go for big American companies and safe investments: CFIMX ( Clipper Fund) or you can go into some mid and small companies with some energy:NBGEX( Neuberger Genesis Trust) or you can try solid real estate returns ( commercial/income props..not homebuilders) with FRESX ( Fidelity Real Estate) ...or go into global investments with Fidelity's Emerging Markets ( FEMKX)
Let any one of them work for you for a year or so ( and don't forget to contribute next year)...and you'll be able to spread money into wider investments later...
Meanwhile, check your quarterly reports when they come in...you can move into different fund if your not progressing the way you think you should...Just guessing for next year CFIMX should make 8-10%, NBGEX, a little more (depends on energy), Real estate should go up 14-19%...Emerging mkts over 20%
Don't take my word for it...or those particular funds, but those sectors, those areas ( with anybody's funds) SHOULD get in those general areas of return.
Good luck...keep socking it away..retire young and healthy and enjoy yourself.
And if you want to do the extra studying...look into thoe ETF's...and split your money into those different areas ( ETF's are very specific...but in a wide range of investments)

Answer 6

I trade stocks within my Roth and made a ton of money. I think picking INDIVIDUAL STOCKS is the way to go when you are young. When you hit 40 and beyond, maybe an EFT or a mutual fund.

Answer 7

Depend on how old are you and what you are willing to risk. For now I will just park your money in Money market funds which pays around 5%. Watch for Ginnemae bond fund. Everytime price dip, buy it. Most large mutural fund companise have this kind of fund. I will go with Vandguard mutural fund company. They have better and low expense ratio. Make sure no load. Ginnemae not only pay around 5% yeild, but also can gain price appreciation. It is also AAA credit rating. Good Luck with your future.

Answer 8

I recommend sticking with mutual funds. I lost almost my whole ROTH buying individual stocks, hoping for that big score that never happened.

Answer 9

Put it into a five year CD. Sure the rates are low. But the "Law of Large Numbers" a fundimental law of Economics states that the longer you put an investment, the more it will mulitply.

Answer 10

I would put a mutual fund in it that has to do with technology stocks. The future is all about tech.

Good luck and contribute to your retirement till it hurts to ensure you have a great one !!

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