I am 21 and I am thinking about putting some money away. Should I start a ROTH IRA or put it in a mutual fund?

Question

It is more or less for retirement and I dont need, nor will I touch thsi money. Thanks

Answer 1

It all just depends on what you might want the money for. Of course, saving for your retirement is always a good idea, but if you plan on using it for other things like buying a house, then mutual funds are good.

Answer 2

The Roth IRA is a good choice for your age. The $$ grows tax free - you won't owe any taxes when you take it out. You also can take early withdrawals without penalty on the principle that you've put in the account.

Once you start the Roth account you will have mutual funds within that account to invest the $$ in.

Answer 3

If your employer has a 401(k) plan, participate in it first. Otherwise, as long as you have earned income, you can start an IRA (conventional or Roth). Its an excellent idea.
Once you put it into an IRA, you generally can't touch it until age 59 1/2. The IRA can be invested in mutual funds or other investments of your choosing.

Answer 4

the 1st step is to take great element with regard to the employers journey; so placed 5% into the 401k first. Then placed as much as you could right into a Roth IRA, as much as the $4000 cut back. in case you're married, placed $4000 on your spouses Roth IRA too. Ask your business company in the event that they have a Roth selection on your 401k, this may well be a somewhat new selection, and extremely attactive for youthful workers. do no longer circulate to a economic enterprise on your Roth IRA. come across a good consultant or broking provider it relatively is honest, and placed funds right into a assorted, somewhat aggressive mutual fund. As your sources develop, you could diversify into greater funds. you desire somebody good that can assist you you're making the superb judgements in this section. in case you could earn 10% on straightforward, you have $500,000 tax loose at age sixty seven basically from this years $4000 contribution!

Answer 5

Forget the mutual funds, you won't really learn anything about investing. Open a scottrade account with a roth IRA, subscribe to morningstar, check out fool.com. Look at buying energy HES; OXY; MRO. Healthcare hcsg; JNJ, WLP; UNH. Some banks are cheap BAC; WFC; WB; JPM. Gold on a pullback AUY. HSY is cheap. Also some pipeline cos ETP; SUG; BPL; TPP.

Start small trade smart make money.

Good luck

Answer 6

Do both. You can invest in mutual funds inside a Roth account.

Buy no-load funds as opposed to load (commission) funds. I recommend opening a brokerage account with Charles Schwab for your Roth. That way you can pick from all the various funds out there, instead of going with one company or 'family' of funds such as Fidelity or Vanguard. That way, when you sell assets in a fund, you will have access to that money the next day to invest in other funds, instead of having to wait for the individual fund company to send you a check, and having to send another check to the company you want to invest with next. It also makes record keeping a lot easier.

Avoid brokers that charge commissions on what they sell (the load funds) like Merril Lynch and the other biggies. You can learn about funds at Morningstar.com, or if you don't know a thing and don't have the time or inclination to learn, you can hire a fee-based financial adviser to pick your funds for you. These advisers get a percentage of what your total investment portfolio is worth (usually 1% or less per year, paid quarterly, and deducted directly from the account) and they will earn more if they earn more for you, where the commission broker makes his money (generally 5% and up) at the time of sale and only makes more if you invest more through him. And that immediate commission comes out of the money you invest, so you lose the opportunity for that money to make you money.

Example: The commission guy puts $1000 into a fund for you. He's actually only putting in $950. The fee guy puts in the entire $1000. Assuming both funds earn 10% that first year, you can have either $1045, or $1100 (minus the 1% fee). Both load and no-load mutual funds have operating expenses that vary, anywhere from a quarter of a percent annually for the best no-loads, up to several percent annually for some of the load funds, and these will reduce your actual return accordingly.

In short, investing in no-load mutual funds using a fee-based adviser (or investing on your own if you learn enough about it) is the way to go. Good luck!

Answer 7

Another advantage of the Roth IRA is while the earnings are tax free until taken out, what you invest (your tax basis) can be withdrawn at a later date and used as a downpayment for a first time home purchase.