Roth is doing great

[Guest misstifyd]

Hello,

About a year ago I was looking around on this site and came up with what I want to invest in for my Roth. I believe it was with the help of John G so thank you.

I opened a roth with fidelity FCNTX I believe it is called Contrafund, I put $3000 in it in February and it is at $3604 as of today. I think that is great progress. I have also a roth with franklin templeton which is divided up between 4 funds and the initial investment was $2000 and after 3 years that is worth $2756 which is great. I pay no fees for any of these.

My question is this, I will have $4000 after I get my tax check back this year again and it is perfect for me to invest in roth's because I get the total investment taken off my income for child support that I pay and this way I get to invest it and give it to kids when older. Works great. Anyway....

My question is this, should I put the 4k into the contrafund or do you have any other ideas? The money I put in will stay there for 20 more years so this is long haul. I am 38 and single.

Thank you in advance for your ideas!

[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.