Growth Fund vs TIPS

[Guest dmalcolm]

I just started my Roth this year in a large growth mut fund. It is now worth less than I started with. I'm 52. Not knowing if lge growth will be good any time soon, is it possible to transfer that fund to a Roth (TIPS) fund? Are there tax implications or since it's going from one retirement fund to another it doesn't matter?

Also can you have as many Roths as you want? If so, is the $3000 max in each account or divided up among all the Roths?

Thanks,

Dave

[John G]

Maximum contribution is set per person not per account. $3,000 for most adults, $3,500 if you are over 50 this year. You may want to get Publication 590 from the IRS which explains IRAs.

You are allowed to transfer money from one IRA account to another. Often this is a switch within a mutual fund family. If not, then you should look to do a direct custodian to custodian transfer. You may be charge some fees for moving your funds or closing an account.

I would not recommend moving your money this year because your big cap stock fund is down. Most funds are down. We have just had two back to back negative stock market years which is rare. Moving assets to chase results is like driving by looking in your rear mirror only. Not a good idea. This dreary period will pass and stocks will eventually start moving up. Don't sweat the month to month results. Focus on the long term and stick with your plan.

In most decades you usually get one or two bad years. We went though a very long string of great years in the 1990s. But, over the past 100 years, good years vastly out number bad years and the movement up is on average stronger than the typical negative year. Why is a complicated answer, but in my opinion is linked to capitalism and free markets providing more hope to a better future. Investing is best evaluated on a very long run perspective of 10, 20... 40 years.

PS: After sitting on some cash for three months, I am again buying quality stocks and mutual funds.