John G

You should be happy if you can average on the sunny side of 10% per year with some blend of stocks. Contra has been a decent fund over many years, with a long run average over 10% over decades. Recently, Contra fund has done very well.... but do realize that what happened last year is not much help in predicting this year. You can do any of these: 1. Pick one of the two and add to it. 2. Split the new amount between the funds. 3. Find a third fund that is not just a clone of these. The "picking" part is not nearly as important as folks believe. The most important parts are: sticking with your plan, funding to the max, not taking crazy risks on fads or single stocks, and most important of all letting time and compounding help you reach your goals. FYI: You do NOT have to stick money into a fund and never change anything for 20 years. You can move between funds or custodians, sometimes to rebalance or to change your risk level (such as increasing fixed income - aka bonds). Also, you are more likely investing for over 40 years (not 20) as you are very likely to live to age 80.

You search will find a lot of posts by me on this topic of choosing a custodian. Who to pick? There are many fine choices - banks, mutual funds and brokerages. If you are computer savy, you may want to select from those that are low cost internet companies. Some folks want a local "branch office", all of your local banks, plus companies like Etrade, Scotrade, Fidelity and Schwab have many offices.... Vanguard does not. You may want to choose a custodian because of the types of investments they offer.... but this seems to be less a factor now as almost all custodians offer more choices than you really want to think about. One caveat, there is a big difference between NO LOAD (no commission) mutual funds and loaded funds. Not all custodians offer no load options. Annual fees should not be the most important factor - but you will find a range from zero (often the internet firms with email notices) to $50 or more (typically full service brokerages). Annual fees can be waived upon request at some locations and are frequently waived if you exceed some balance threshold or have other assets with them. Why does Vanguard get mentioned so often? They have been the leaders in index mutual funds, and the company has a spartan approach to costs which results in ultra low annual expenses. They operate via 800 phone numbers, regular mail and the internet. The index concept says aim for overall market performance and keep the annual expenses low giving you a very attractive net. It is a system that works for many folks, especially since they spend less time monitoring their investments. Most new investors start with mutual funds. Reasons: instant diversification, $$ amount rather than share number purchases, less research time needed, and less monitoring effort. There are over 10,000 mutual funds and perhaps 1/2 of these are NO LOAD. You only need 1 fund initially - either an index fund or a broad based stock fund. At your age, I would lean towards growth stock funds, but you need to think about what works for you and your comfort level with risks/volatility. DO NOT SWITCH FUNDS OFTEN ! You don't want to fall into the trap of chasing last years winners. As a beginner, pick a fund that has a reasonable track record over 10 years. Past results are no guarentee of future performance, but this approach is likely to get you a steady performer and that builds new investor confidence. Maybe a year or two down the road, you will want to pick a second fund from the same custodian. TAX EXEMPT and INTERNATIONAL - Avoid tax exempt anything because a ROTH is already tax exempt... no sense accepting the typical lower annual return of exempt bonds. International is to be avoided primarily by folks just getting started because you need to know more to invest wisely. You can live your whole life and never invest outside the USA and do just fine. Money to deploy - If you worked and made over $4,000 last year then you should start by fulling funding your 2005 Roth before April 15 2006. You can also add the 2006 contribution. If you find that you can invest more than start building up a cash reserve fund... 15 to 20k would be a reasonable target. Beyond that - you can start thinking about starting a taxable brokerage/fund account. Long term capital gains are currently taxed at low rates compared with other income. Do NOT repay your college loans early as they typically have low interest rates. DO AVOID credit card debt - first because this shows that you are living beyond your means and second because the credit card interest rates are a big drain on your resources. Post again if I missed anything or you have additional questions.

Over funding of a Roth is not a rare occurance, and a mutual fund or brokerage should know how to handle the paperwork. I suspect that you are talking with a minimally trained clerk. Call the mutual fund again, but this time ask to speak to the IRA/Roth department. If you still have a problem. Post again and provide the name of the mutual fund.

I missed the deep in the money part... yep, that is different. I don't think the idea is workable in any practical sense.

I just re-read your last post. I am now wondering if the shares that you hold should be considered the same as the shares that are currently trading. I had assumed that they were the same. Perhaps not. It is not an issue that I can not resolve from the info I have found on the internet. You may want to correspond with the court or track down a lawyer who specializes in bankrupt companies. An hour consultation may be worthwile given the number of shares. You missed the window when you could have shown that the shares were worthless.

ElGuapo - I thought I was clear on my negative reasons: bid/ask spread is high, commissions, extra time to evaluate/track, higher level of expertise needed, etc.. It is not correct to say that all custodians allow option trading in their IRA/Roth accounts. In the last example that was posted, the author was only making a wager that the underlying stock price would change. He would be paying two commissions. Add the non-trivial premium cost for buying two opposing options at the same price. The trade risk rises if he buys options with a strike price gap such as using $22.50 and 25.00. In this specific example, the author is bet that the stock will change in price, but his Roth funding scheme requires the movement to favor the Roth option. What exactly is the underlying theory about this stock. None was given. This wager loses if the stock does not move sufficiently or if your timing is off. It also loses if the stock movement is insufficient to offset the transaction cost. Remember, one outcome is that the IRA side would be the winning position and the Roth "wager" would vanish. You are talking expert level trading and there are not many option experts that read this message board. My comments are aimed at both the individual question and the overall audiance. Using the twin option strategy as a method to reduce the tax cost of a Roth conversion seems to me very far fetched. I will error on the side of caution and say - don't try this. Option trading, because it is leveraged, can increase the volatility of your results. When you are using options, you are trying to be one step ahead of a more sophisticated investor... and the option market maker. Other than some jargon, the original question did not offer much evidence that this particular author should be using options. If anyone really wants to proceed with his idea... I suggest they try making money "on paper" for the next three months. Been there, done that, and "easy" is not the word that comes to mind. Background article on options my Michael J. Martinez (AP) edited for space NEW YORK - How do [brokers] make money in a sluggish, sideways market? With stocks expected to struggle for positive returns in the coming year, Wall Street will have plenty of alternatives for investors. Many investors will likely be reluctant to commit to major stock buys or even major sales in a go-nowhere market. The competition for investors' business will remain intense. "If you look at volume on the New York Stock Exchange and the Nasdaq over the last five years, there's been no real increase in the number of shares traded," said Richard Bove, securities industry analyst with Punk, Ziegel & Co. "In addition, proprietary trading has gone from 19 percent to 52 percent of that total. So you're seeing more competition for fewer individual trades." As a result, retail brokers who regularly interact with individual investors are expected to try to promote more options contracts in hopes of generating more business. These contracts can let investors make a little bit of money on a stock that may not move, or cover their holdings in case of a sudden downturn. "Options can be a very good vehicle for a variety of investors, but certainly, brokers will try to sell you on things that might not be good for your risk profile," said Randy Frederick, director of derivatives at Charles Schwab & Co. Inc. "Some options actually act as a hedge against falling prices, but investors have to be careful of more speculative trades." Do note the implied incentives of the brokerages in the above commentary.

Both in 2004. Yep, that causes a problem. It is your marital status on the last day of the year that matters. Call your IRA custodian and ask for the BACK OFFICE for IRA/Roths. They know how to handle this problem. You probably need to fax them a letter to get it all done the end of this year. Follow up and make sure they get it done. While the IRS might accept your dated letter, it is the actual transaction date that is supposed to be binding.

Nicola - I am not an accountant or tax professional, so I can't tell you what the IRS code or legal rulings are concerning you inside/outside trade proposal. (You could also make it more complicated by saying husband vs wife's trades.) On purely practical terms, the IRS is not likely to be aware of the trades. IRA/Roth trades are not reported in the ways that brokerage account transactions are reported. Often the accounts are with different firms. For many people, they are going in and out of stock positions in a fragmented way. If you did this once, I would not worry about it. If you intend to make it a habit, you better get some guidance from a tax professional aware of your specific circumstances.

Don't ya just love these "its easy" and "get rich quick" schemes! I have periodically used options over the past 20 years and am always amazed why people are fascinated by them. Options are designed for hedging and/or leverage. The average reader should not feel as if they are missing something if they don't know a put from a call, strangle from a straddle, or when to LEAP. If these terms are unfamiliar to you... then YOU MAY STOP READING AT THIS POINT and move to the next thread. The primary rule of investing is to understand your investments. A close second is to not get too greedy for abnormally high returns. Then there is that stuff about risk. For most, options don't score well on these three points. There are multiple problems with the two sided option proposal described above... and you already identified one - when the stock does not move. There are other obstacles. The first hurtle is that a reputable custodian will never allow you to make unlimited risk trades in either an IRA or Roth. This has come up often... no one has ever listed a brokerage that would allowed naked options for the average investor. More limited types of options such as buy a call or selling a covered call are more likely... but even these are not universally approved by custodians. The second hurtle, even if you could find a custodian willing to allow to do complex options, is your investment experience. I doubt anyone with less than ten years of investing experience would ever be allowed to do complex option/hedging transactions. Option trading often involves losses - and you can't write them off against other income when they are in a IRA/Roth. Remember, using options requires a substantially higher level of knowledge. Option trading also requries substantially more time for monitoring the market, executing trades and tracking results. And, just for good measure, remember that option commissions and the implied spread (the difference between the bid/ask side of the deal) are a much higher percent of the trade than with most stocks.

Thanks for an honest disclosure. Think of that $2,000 as tuition for an investing class. You do not need to sell the stock. Etrade is likely to charge you $10 annual maintenance fee and your account will go to zero. Writing off an IRA loss is complicated. As I am short of time this morning, I can't write it all out now. You can use the search engine to look up "tax loss" and find prior posts. It surely hurts to flow off $2,000, but if you realize you must know more about what you are doing.... and perhaps use mutual funds for diversification... then the lesson may help you more than it now hurts.

Thank you for posting additional information. Your previously posted facts did not have enough details. The acronym or stock symbol of SNTL leads in many directions and coincidentally two of them involve penny stocks, both involving bankruptcies! In the past this site has had oblique references to penny stocks that were clearly touts in disguise, so as a moderator I did as much fact check as I could. Bear in mind, there are two audiances for responses: (1) the single person who posted the question and (2) potential hundred others who read information here. My comments about penny stocks was posted for the second group. OK, so your question is related to the Quackenbush (Calif insurance commissioner) seized Superior National that was part of the worker's compensation problems in California. I have some knowledge about the impact on a few companies. It looks like the Superior National legal battle started five years ago. {I followed Fremont General for a while. They cut a deal to shed their liability to only get sued when Arnold's appointees took over the insurance commission, and only recently have they seen all claims dismissed.} SNLLZ is listed as "SNTL Litigation Trust W/DB", a pink sheeted stock that occasionally trades. There is little public information in standard investor resources. The last price was reported as $0.14, but note that pink sheet stock price or volume data is not reliable. Some sources suggest that the stock has traded erradically between $0.10 and $0.20 for the past year, with recent spikes in volume. You won't find information about this stock from Standard and Poors, Reuters, Argus, Goldman Sach or Morgan Stanley... such is the world of bankrupt companies in the pink sheets. You apparently want to use some IRS comment about the value of the company to determine the valuation in a Roth conversion. Sorry, that's not the way it is done. The valuation of a stock is not based upon what the IRS or a court might say, but rather the value placed by the market place. Apparently, this stock does trade on some days and there is a non-zero price. Some parties seem to think that there may be some upside value to the stock. Ideally you would like to see prices set by a more active market... but that's not the case here. You alluded to a potential for the stock to be worth $4 a some point. If that has a 5% probability, one year out, someone might be willing to pay $0.14 for the potential payoff. If any of the original holders of this stock are still around, they would likely be making tax loss sales right now. I agree with Schwab's position. SNLLZ is not dead, just nearly dead. I can't pull up the historical data on the original company stock prices, but a "zero" price at some prior date is not relevant. There is a current market price for the stock. {This happens a lot with bankrupt companies. Enron is now listed as ECSPQ and traded over 5,000 shares for $0.10 on Friday in the pink sheets} If you do a conversion, both you and Schwab is required by law/regulation to use the most recent stock price to set a value on the conversion. Schwab has a fiduciary duty and they are not supposed to be an advocate for your view on the stock value. If you think a future price of $4 is highly likely then paying tax on a $0.14 (more or less, you don't control the date of the conversion paperwork) could be profitable. If the future value is uncertain, why not leave the stock in your 401K? This way you would not be paying conversion taxes now for a stock that might subsequently have no value.

Whoaa Nellie! If you made the Roth contribution for 2004 (even in early 2005) but then got married in 2005? Then you don't have a problem. Each year is treated separately. The qualifications for you in 2004 are not related to changes in 2005. A legally created Roth with legal contributions is not effected by subsequent changes in your marital status, filing status or income. Once a Roth is established, it continues, even if your subsequent qualifications to contribute change. So, tell me you got married in 2005! If this is not true, post again with the exact dates of the various events. PS: Remember to update you beneficiary designations on IRAs, Roths, insurance policies, etc. now that you are married.

There are many parts to this story that do not add up. Trying to do some fact checking on the above question was extremely difficult because of divergent threads of information on SNTL and litigation trust. One takes you to a former sun tan lotion company with three employees that somehow is now in high security systems - and trades pink sheets for pennies - and not every day! The other direction uncorks a world of bankruptcy and court settlements that tracks back of workers compensation fraud in California.... and that has dates in 2002. I have some issues with the statements made - specifically about the IRS. First, the IRS does not set or establish the value of securities - markets do this. Second, the IRS does not determine if a stock can be legally traded - the SEC has this job. I doubt that Schwab would let you do a Roth conversion involving a non-trading stock. It is the job of the custodian to establish the value of the stock on the date of conversion and the phrase "not applicable" applies to a stock that does not trade. Although I can not reliably find the stock (it is likely pink sheets and there are many similiar symbols), if Schwab says it is trading, the value will be determined based upon the date of the conversion transaction. You, the tax payer, have very little control over the day the paperwork gets processed. I urge the readers of this post not to go looking into penny stocks for long term investments. This area is filled with toutists and more recently, the mob. There is ZERO reliable information on these companies. If you want to make wild bets, restrict it to more than $10 a year and try the track or the lottery. There are over 10,000 stocks of mini, mid and large cap companies in all sectors in just the USA for serious investors.

This is a question better asked of your spouse. I can think of only two small administrative factors: (1) you may want to check the mininum opening amount for some mutual funds, and (2) two IRAs usually mean two annual fees, and it may take longer to qualify both for fee elimination when you reach a asset threshold like 5k or 10k. Since fees can be zero, $10 or $20 I think a conversation with your wife is a tad more important. Don't forget to also discuss beneficiaries. There are some advantages for listing each other first and then with the second tier listing your kids. First to die could decline to accept the funds which would mean the secondary beneficiaries would get the assets. This is a rudimentary "toggle switch" that may help you with estate planning. Do NOT make all the investment decisions for your wife. At a minimum, get her involved in making mutual fund choices and monitoring the account. You may also want to consider using the monthly automatic checking account withdrawal to fund your IRAs using a "dollar cost average" approach. (Often custodians waive fees when you select this option)

I went wireless and broadband this fall after a lot of nagging from daughters and wife. System works great, should have done it long ago. BUT.... I find problems getting past security at this site on anything but the new system. There are four family computers I use at home or when I travel, plus the occasional public library / hotel system. Is there a connection between the log on system using email addresses and the email address associated with the computer you are using? I hope not. Any suggestions?

This site is not about "slaming". The moderators (I am one) have done a good job of making sure this site did not devolve into a Yahoo like message board. Normally you would want an advisor to know you before making suggestions. In this format, that means a lot of questions... the history of this site has shown that assumptions about authors are often wrong. Here are my questions: (1) Are you married or single? If married, do you file a joint return? (2) You said "I already have retirement through my job" - do you mean your expected retirement needs are likely to be completely met by those plans? If so, what is your goal for these additional savings? (3) Do you expect to have earned income during the ten years? (4) What is your investment knowledge and attitude towards risk? (5) What investment vehicles are being used for the retirement plans. (6) Do you feel that you have sufficient cash reserves for emergencies? Any high interest debt issues, like credit cards? (7) Current and future expected tax bracket or rough income range? and (8) Are there any special circumstances (health, college tuitions, weddings, etc.) that should be considered. Roth basics: Before anyone can suggest a Roth, they need to know that you qualify. This is a combination of having earned income, the adjusted gross income that your report on your 1040, and your tax filing status. Note, that a Roth can only shelter a modest amount each year ($4000 per individual, plus $4000 per spouse, plus $500 "make up" amount for those over the age of 50). So, you might be able to shelter $9,000 now and another $10,000 in January if you are married and qualify. If your additional income is a large lump or beyond this annual range, you should be considering a taxable investment account. Types of investments: The range is huge. This is where your experience level, where your current retirement assets are placed, your investment goals, and attitude towards risk are factors. You did not indicate when you might want to use these funds.... such as to boost your income in retirement, later in retirement, any specific goal (a sailboat, world tour, etc.), or just building your estate. For lots of folks, mutual funds make sense because you get a diversified investment and they require only a modest amount of tracking and record keeping. Since there are over 8,000 mutual funds - chosing one or two can seem bewildering. I generally recommend that folks choose from the universe of NO LOAD funds (no front end fees) that have modest annual expenses. Many investors choose index funds because of their ultra low expenses, low turnover, broad coverage and because they are willing to accept performance that mimics the stock market. Well, there are now hundreds of index funds.... and not all are great choices. Ultimately, in investing (Roth or otherwise) you are the key person. It is not wise to delegate the decision to others. No one faces the same motivations that you do - its your money. You make want to go the active advisor route, but that siphons off some of your performance. I believe that normal folks, if they are willing to spend a modest amount of time reading about investing and their choices, can take charge of their own investment decisions. Post again, and I will try to give you some pointers.

I started this reply in the morning but did not finish it until very late on Monday. I see that you deleted your earlier text. Let me know if you want the whole question deleted - as moderator, I can do that. My comments: First, congratulations on getting a very big start on your investments. Also, thanks for all the info. You only left out the possibility of children, the timing and how that might effect your incomes. I will assume that any changes a few years down the road. You are likely to be filing "married - joint", which means you are likely to be either in the phase out for Roths next year or possibly prohibited. Therefore, I suggest that you fully fund both Roths this year. I am not sure why you did not fund your Roths completely in recent years as you seem to be active savers. I would also suggest that you participate in the 401/403 accounts to collect at a minimum any match. On debt - you are in good shape. However, I would not count on "making money" on a house sale unless you currently own two houses. Generally, your initial equity from a first home will probably be needed for any home upgrade unless you are lucky enough to hit it big on the real estate bubble in some markets. (Wash DC comes to mind) Beyond the Roths (8K this year and more next year if possible) and 401/403 accounts, if you can still set aside additional funds then I would recommend that you consider a basic taxable brokerage or mutual fund account. You will need to track future changes in the tax laws governing income thresholds and tax rates on long term capital gains and qualifying dividends. Due to the mushrooming deficit, Congress is likely to tinker with the current rules.... 2006 and beyond. I would imagine that these taxable investments are going to be the likely source of funds for any franchise purchase. (I am curious if you have much experience or currently work for a franchise. I have no direct experience in this area, although I have done a lot of work in non-franchise start-ups.) You did not indicate a target amount you might need, but you seem to have the discipline to bank a healthy amount in three years. There are lots of Acorn funds and apparently at least three Z funds (international, select and regular?). I am not very familiar with this family of funds. These appear to be mid size growth funds, and I think I saw that some of them are closed to new investors. Performance has been significantly above average, so no problem there. No load and modest annual expenses. When your assets in this fund grow to between 20k and 50k, you may want to consider finding a second mutual fund perhaps a "value" fund. You did not say what your cash reserves look like. As you are getting a major bump up - it sounds like you are doing fine. Job security is not a big factor for teachers. School systems rarely downsize and there are lots of other locations that are always hiring. On the low end, you probably want to have about 30k in cash reserves. Some folks would recommend 6 months income...but in a era of home equity loans, signature loans and credit cards I think that most folks have some built in flexibility.

There is no one best answer to your question. Lets take short term trades. If you want to use margin, you are talking about a standard brokerage account. But, a short term trade that works in your Roth has no tax implication, nor bookkeeping and reporting issues which are advantages. Remember that any "trades" that lose money can offset gains if they are done in a taxable brokerage account - but you can not do this if they are done in a Roth or IRA. So.... if you have a great short term idea that has a very high probability of success and does not require margin - use your Roth. Options: You will find that custodians often restrict or even prohibit the use of options in a Roth or IRA. Covered calls are likely to be allowed because there is no unlimited libability. Naked options are generally not allowed by custodians. You can own REIT stocks in IRA or Roths.... like CARS (a REIT that owns auto dealership properties). Private real estate placements (partnerships, LLCs, etc) present more issues of unrelated business income, depreciation, etc. and are more likely suitable for your taxable accounts. Perhaps others can flesh this out further. Long term holdings: IF (and given the deficits and Congresses problems with the budget it is a big IF) long term capital gains stay low, the IRA (which gets taxed as ordinary income) looks weaker and the advantage of the Roth narrows. You asked a very big question. I only attempt to give you some viewpoints.

$10 a year is very low, only a few companies offer the zero option like etrade. I would not make an investment decision based upon the difference between zero and $10. In a few years, your IRA is likely to exceed the minimum threshold for account fees (5 and 10k are common break points). Also, some mutual funds waive some/all fees if you adopt a monthly automatice contribution from your checking account. You appear to be placing to big an issue on fees - I would think a lot more on what investment works best for you. Unless you plan to hold a variety of mutual funds or buy and sell stocks, working directly with Vanguard may be best if you are only selecting a single index fund. Remember, a few years down the road you may want to do something else and you can either switch among options at your custodian, or more your funds.

Sure, lots of folks talk about the Vanguard 500.... but it is up to you to decide what kind of investment vehicle is appropriate considering your: risk tolerance, understanding about how to invest, how much time you care to devote to "research" or monitoring, and retirement goals. The chief benefits of the V500 include: low admin fees/expenses, gives you the S&P500 version of market performance, and less time spent on research and monitoring. For many people, market performance is sufficient to meet their long term objectives. You will never have the "hot" fund, but will never have the worse fund of the year either. If that works for you at this time, then there is nothing wrong with going V500. You can always shift/diversify/split your assets at a later date.

The Guidant website is way way too simplistic. The IRS does not give a tax payer carte blanche to contrive any scheme they would like for their Roth. There are all sorts of rules on self dealing, ownership interests, maximum allowed contributions, types of investments, etc. that have been put in place because of Congressional guidance, historical precedent, auditability, and fraud provention (to name just a few). Often custodian will have additional restrictions that go beyond IRS rules.... generally for good reasons, especially when considering how the majority of taxpayers invest. Remember that Guidant is in the business of selling services, I don't see anywhere on their website that they will hold you harmless for stupid advice or illegal practices. Frankly, there was little "beef" at Guidant, mostly you get promotional statements. I saw no cautionary remarks about how some of their proposals could lead to a Roth being ruled invalid. And, no info on their fees. For all of the above reasons, I concur that you need to find a tax lawyer and tax accountant (maybe more than one) who are knowledgeable about what you might propose. They are going to ask lots of questions. If they don't like your answers, they will not endorse you proposal or sign your tax returns. Unlike a website, professionals have fiduciary duties and professional standards and are therefore a lot more accountable. If they suggest that you sign a "waiver" that your proposal is completely your idea.... hint, hint.... they don't plan to be held liable if the IRS rules the activities violate the rules and declare your entire Roth to be a taxable investment account. It can and does happen. So, spend some money and find local professional help before proceeding. There are legal ways to do many kinds of investments, but get someone local with experience to clearly define the boundaries, potential risks, etc. You did not provide enough specifics for anyone to confidently answer your question. Beyond that, I did not find a convincing arguement in your post for such a complicated arrangement. Often, you do not want your job and your retirement assets to be based upon the same business. Ask the Enron employees about the wisdom of all your eggs in one basket. What kind of partners would let a Roth hold 40% of the business. Is this a scheme to artificially goose the returns of the Roth. Perhaps your intention is to use your Roth as a source of funds, to keep your foot in the door so to speak. In a time when money is "on sale" and home equity loans, six digit signature lines of credit, refinancing and other sources of capital outside of Soprano's loan sharking.... why tap the Roth? You may want to study some of the responses on the following thread: http://benefitslink.com/boards/index.php?showtopic=30552 This fellow wants to start a hedge fund with the Roth owning a part.... These types of proposals raise major questions about their legality. It is highly unlikely that you can completely post all of the details to support an accurate response. This is why you will get multiple suggestions to find local professional help.

Qualification to contribute to a Roth depends upon a combination of total earned income, plus the combination of income and filing status limitations. Please specify your tax filing status (single, married filing jointly, married filing separately) and your approximate income. I will assume that you have more than 4k of earned income (wages, payroll). On choice of investment, there is no easy answer. I will assume that you have limited investment experience, but can you post your current age, when you hope to retire and if this is your only retirement plan (no company plan?). I can get a rough idea about your marginal tax bracket from your income/filing status but if you know your marginal rate post that too. Please explain when you opened the Roth and amount of your initial contribution and current balance. It would also help to have a general idea about you IRA assets and your profession. Sorry about all the prying, but the answer to your questions can vary depending upon you likely career path, retirement goals, etc. Vanguard is a well respected mutual fund operation, based in Pennsylvania. They are best known for their index funds and very low operating expenses. You can typically own most Vanguard (or any other funds) either in IRA, ROTH, 403B, 402K, Keogh as well as standard taxable investment format. You have apparently chosen Vanguard to be your custodian for both an IRA and a Roth. More than likely you could contribute to either account (perhaps over 90% of all adults would qualify for both). I tend to favor the Roth, all things being equal, because of the flexible withdrawal schedule, no future taxation and some potential inheritance features. If you are just getting started, having just the two mutual funds is probably just fine for a few years. Mutual funds are, by their nature, a diversified investment. An index fund should give you near "market performance", that is the result of the fund should closely echo the market the fund mimics (500 big US firms, all NYSE, 5000 biggest companies, etc.). I tend to recommend keeping things simple until you get the urge to evaluate another fund. Simple means less paperwork to track and potentially lower annual fees. Owning a dozen mutual funds if your assets are even 50k is kind of silly. There is a tremendous amount of overlap... they are all likely to own Microsoft! You compound the amount of time you need to track you investments which multiple mutual funds. Enough background.... I can say more after you post again.

In the internet era, keyboard = home. You could be anywhere in the world and be a consultant. You question is too narrow to be answered here, but as I am not one to pass the buck, I will post again. Since 56 years have passed since Alfred Gray started the first hedge fund, you should assume that someone has already figured out the angles. NYC is swarming with hedge funds, and half of them are not even 4 years old. While you still need a good tax lawyer and tax accountant, you might be able to start networking from these contacts: My experience has shown that the single best way to track down a professional (or data source) is to call the association for that industry. Just cut to the chase and contact: Hedge Fund Association 2875 N.E. 191st Street, Suite 900 Aventura, Florida 33180 USA Phone 202-478-2000 info@thehfa.org There is also a Texas HF association, so I imagine there might be one in NYC. There are also associations of hedge funds managers, women in hedge funds, etc. {sort of a dot.com type craze over hedge funds right now... most won't produce and die a fast death} General primer: How to Create and Manage a Hedge Fund: A Professional's Guide by Stuart A. McCrary Note Chapter 6 provides and overview of HF business models and Chapter 11 covers a range of regulatory issues. This book tends to focus on "best practices" and is a reasonable general reference. It does not look like it directly comments on your proposed scheme. 350 pages Academic coverage: Finance 890, a HF course at Wharton - Professors Geczy and Metzger, taught in 2004 Not aimed to your question, but a different line of inquiry that might prove productive. Tom Augenthaler at the Hedge Fund Center (tom@hedgefundcenter.com) - he has set up a website clearinghouse for hedgefund operators. No direct experience with this shop, my guess is that he is a one man band. More likely a networking source rather than a direct source for your question. Since your field seems to be energy related, you will find a non-energy shop more likely take your call.

Finding someone who is knowledgeable for your situation is going to take some time. I think I would start by talking with other folks running businesses in your area and asking who they use for tax accounting and legal work. That is only a start, because you need a lot more than someone to prepare a tax return. Your Roth proposal is complicated, and you probably should not assume that it is the best solution to your proposed business format. You certainly want to procede with your own DD and find a pro to ensure that your final format is bullet proof as the entire tax free status could be jepardy with a bad scheme. Post your city or state - it might help.

Lessons learned - new vs used ! Yep, it is nice not to have all those car payments. Some folks never really learn that lesson, so a plus for realizing it now. Accelerating your car payments is not likely to buy you much because the interest scheduling on auto loans is heavily front weighted. Do it only if you want to erase an annoying decision. School loan - This is a medium level interest rate. I would not speed up this repayment if you then racked up any other debts because they will be a higher rates. Call this purely discretionary - you can repay early if it irks you or you think you would spend the money otherwise. Given the amount of income you have, yes, I would suggest a Roth as you probably can fully fund it each year. As your business develops and if your income increases, you may want to investigate other options such as a pension profit sharing plan (if you are incorporated, with or without employees) where you can potentially shelter more than 4k. This Roth should be the foundation of your investment plan and try to fully fund it - - which is likely to make you a millionaire in your 60s if you can stick with the plan! If you have additional funds after funding your Roth, then I would suggest four possible directions: (1) plough money into your business to grow, add services or increase profit margins, (2) increase your "contingency" funds, (3) accumulate funds for a down payment on your first house, and/or (4) start non-retirement investing in perhaps another mutual fund. Which comes first or second and the timing is heavily related to your cash flow and business success. Stop by your local library and pick up a copy of the "Millionaire Next Door".... this is a very dry book, but it gives some interesting insight into how many folks become wealthy by "playing good defense" (controlling spending) and the role of business ownership. There is no best date to open a Roth. All things being equal, earlier is better because your money is in the tax shelter longer. One option to consider is to establish a automatic monthly deduction from your checking account. This means that every month a fixed amount goes into your Roth. On months when the stock market dips, you buy more shares. The concept is called "dollar cost averaging". If you can't fully fund your Roth up front (early January) of each year, then consider the monthly plan. An automatic deposit committs you to your plan and cuts down on your paperwork. I would set a goal of getting your 2005 Roth opened this month.... beat the year end and tax season rush. The 2K could be put into a short term CD to get a better yield, but it is such a modest amount that it is perhaps best left in a simple savings account. As you build up your contingency fund, you can "ladder" CDs, that is have multiple overlaping CDs with different expirations, so that in any 3 months or 6 months some cash would become available. As an entrepeneur, I would recommend that you focus on growing your new business. You will find lots of opportunities to add products, expand you territory, or move to higher margins. At some point, you need to also think about your personal medical coverage, perhaps some kind of disability protection. Good luck.