Help us newbie's out!

[Guest iplay72]

OK April 15 is coming up really quick. So please give me some advice:

First little background. I DO want to take the time to look into my investment options and figure out what is best for me. I did Economics as one of my majors as an undergrad so I have some knowledge of investing. But I have been lazy and procrastinating so I never put that knowledge to use. I notice now it is April 6, and I want to start a Roth before the 15th. I have $7k to contribue for 2004/2005 right now, so....

Please help me choose a temporary custodian/investment. Somewhere I can just start with for the next 6months or so while I do research and try to understand what is out there. I'm thinking maybe a market index type fund at a brokerage? Maybe a Fidelity/Vanguard/T Rowe??? I don't really know what the best options are for me at the moment so please give me specific recommendations that you think would be good. I really want to get started now so I can get that 2004 contribution in. Help? Please?

[John G]

The deadline is pressing - but just for the $3k from last year.

You put up three reputable mutual fund names - you can also add 20th Century, Janus... there are many. All of the major NO load families have viable offerings. Either select on in your area (many like Fidelity have branch offices) or get moving fast on the internet. Almost everyone opens accounts online.

Other choices: Etrade, Scottrade, Schwab.... and many other brokerages. Here you can give them two checks - designate different calendar years. Park it all in a money market fund and then think about your mutual fund choices.

Fund choices: any general purpose no load low-expense stock mutual fund will do for your first choice. You can go with a market index fund immediately or do some reading and make the choice in a month. No one at this site should be picking a stock fund for you.... that's your job. But, if you want to post about a specific fund or email me, I will take a look at it if you give me a week to reply. (I can only do this for a few funds, can only offer comments if I can find info, and I won't tell you what to do but give readers some idea as to the diagnostic steps.)

BUT - get started. The clock is ticking on 2004 and you need to stop procrastinating ASAP.

[Guest iplay72]

Thanks for the advice. I stumbled across this site by accident and posted without expecting to get any real help. I think I will start out by opening an account at Vanguard and put my money in VFINX (S&P 500 Index fund) and VIMSX (MSCI Midcap 450 Index fund) for now. If anybody has any advice about these 2 funds or anything else I would greatly appreciate it.

BTW in case it matters, I'm 26 so I've got plenty of time to take a few risks

[John G]

Both are reasonable choices: good diversification (not perfect - but lots of companies in the portfolio), no load, and extremely low annual expenses.

Go ahead and get started. BUT, don't forget to commit a modest amount of time to learning more about investing and personal finance. One or two hours of quiet time a month reading some magazines or a finance book (libraries have many) will give you a big payback.

You might want to start with the article in Kiplinger Financial - May 2005, page 52 which gives a two page overview of how to choose a fund. There is a second article starting on page 36 discussing the merits of 25 funds they have selected for various purposes.

Interesting quote from the same magazine:

"My top adviser is Fred W. Frailey. He picks my funds and diversifies my investments. You should trust yourself with this task, too -- its not hard."

Fred W. Frailey, Editor, Kiplinger Personal Finance from the page 12 editorial about ethics in mutual funds