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Ducks2209

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Good Roth IRA options for a new investor or hands off investor
Hello,
I have some money in a savings account and seeing as how the interest rates are so low and dont seem to be going up any time soon...is a Roth IRA a good idea? If you what are some good options for a hands off investor.

Thanks

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If I could only choose one mutual fund, it would probably be Vanguard's Total Stock Market Index (Ticker: VTSMX).  This is what is called an index fund, which aims to mimic an index like the S&P500 or the Russell 2000.  In the case of VTSMX, you get both the S&P and Russell.  Index funds tend to beat the return of 80% of funds that are actively managed, so you can probably sleep better at night when you own one.

I'm assuming you don't need this money for at least 5, but preferably 10 years. That will give you time to ride out the invariable dips that the stock market goes through.  Also, Vanguard has the lowest expenses in the industry, and expenses are typically the differentiator for individual investors.

VTSMX does have a $3000 initial minimum, but that may be lower (or waived) for IRAs (or you could buy the same fund in an ETF).  You can then add lesser amounts as you go along, which I recommend you do so as to grow your account while also smoothing out the ups and downs I mentioned above.  Do this on the same day(s) of every month regardless of what happens.  If the market is down that day, you buy yourself more shares, and if it is up, you buy fewer.  Maintain that discipline, and you will always tend to buy low and sell (when you retire) high.  This is called dollar cost averaging.  Do this (DCA), and don't try to time the market.

Finally, read up.  Educate yourself, because I can't cover everything here, and you will eventually need to add other asset classes to the mix, most notably bonds.  This keeps you from having all your eggs in one basket.  Often when stocks are down, bonds are up, and vice versa (but not always).

Reply by
epsi

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Maybe this is just a fluke, but I invested in an Index fund and it's only provided a .58% return in about 4 months. It's by far the worst performing investment compared to my other managed mutual funds. So my question is what are the expectations on these types of funds? I originally invested in it because I heard the same things you mentioned above about them more or less mirroring S&P500 and thought this would provide a better return than my other mutual funds (which are providing anywhere between 5 and 13 percent returns in the same timespan). But this is obviously not true and I want to know if there is some other aspect about index funds that I am not seeing. I know the expense ratio is a bit less, but even including that, my other funds are still outperforming the index fund by approximately 10 times the return.

I know I shouldn't rush to conclusions with the very little amount of time I've given it, but I just want to know if I should expect a change in this fund any time soon, or if I should reinvest my money somewhere else.

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How are your finances?

Helpful to 2 out of 2 people

I don't know your overal financial situation. But if you are at a decent position to try to invest, then I would agree to ROTH IRA (you didn't mention about 401K). To my perception, it's better to pay tax upfront now and invest and have the money grow. Later on while collecting your retirement, you don't have to pay a single penny. So whatever you collect is 100% yours without intervention from Uncle Sam. 

I am paying 25% tax bracket with my income. Single. No dependents. Minimal lifestyle. I invest in a ROTH 457 Plan (goverment plan with no government contribution). AFTER BEING TAXED, I still put in a total of $1,000 a month and allocate my money into Index Funds in both International and US index groups. Don't know how long I can maintain that $1,000 contribution, but I'm sure I don't have to worry about paying taxes as I collect in my golden years. 

I went with INDEX FUNDS because of the very low adminstrative fees (maintenance fees or whatever fees they name it). Over the course of your investment, fees will take up a chunk of your total, that would reduce your principal. There's no guarantee how the market would fluctuate, although it beats inflation and savings interest at a bank. But why not go the route with the least fees and no taxation during retirement through Roth investment? It doesn't make sense to me mathematically. Fees + taxes = less money in your wallet during retirement.

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YOU CAN THANK SEN. BILL ROTH A REPULICAN STATE OF DELAWARE

I HAD THE HONER OF HELPING HIM WALK TO THE RR STATION THE LAST DAY HE WENT TO WORK IN DC AE

AND I'M A DEMACRATE 

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IRA's.................ROTH'S

Helpful to 1 out of 2 people

THE BEST WAY TO SAVE FOR THE FUTURE ................YOU HAVE TO BE WORKING AND YOU ONLY CAN PUT SO MUCH A YEAR ????????/

ALL SO I THINK AFTER 50 TILL WHENEVER CAN PUT EVEN MORE INTO IT

CHECK IT OUT!!!!!!!!!!!!!!

ROCKET

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life insurence

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Is it better to have life insurence or to have keep paying monly life insurence premiums and not gaining much interest in your investment.

roth ira? or somthing along that line

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