Opening a Roth IRA

[Guest Barbie]

I am new to the world of investing, other than my 401K. I am interested in opening a Roth IRA, but am not sure where to start. Any ideas?

[John G]

You must income qualify. The max contribution for 1999 is $2000.

Since you are just getting started, keep things simple. If you believe in long term investing and are tolerant to normal investing risks, then you probably want to pick a mutual fund. For get individual stocks, your pool of funds for many years will be too small. Bank CDs are not a very strong investment option but are about risk free as you can get.

You can deal directly with a mutual fund (Janus, Vanguard, T Rowe, Strong, etc) or use a brokerage (Schwab, DLJ, Fidelity, etc.)as your custodian and pick your mutual funds through their list. Your choice.

You can find lists of funds and brokerages in Money, Worth, Kiplinger, even Consumer Reports. If you do not subscribe to a general personal finance mag, I would highly recommend Kiplinger.

Fees: many places will charge a small annual fee until your assets grow beyond 5,000 or 10,000. Shop around... reject anyone beyond $25 per year. Ask them to wave the fees! It is a competitive world.

Mutual funds come in 8,000 different flavors. Pick something broad based that has very low annual expenses. Pick a NO LOAD fund so you do not have any front end or back end charges. You may want to consider an Index Fund.... which may own all of the S&P 500 stocks or even 5000 stocks. A classic is the Vanguard 500 index fund which has ultra low expenses.

Final thought: in the next couple of years you need to educate yourself about investing. Your custodian probably has some basic info on IRAs and investing. Ask them.

Don't worry about short term performance. Think of any disappointments as real world tuition costs. Learning about investing is a lifelong persuit. Mutual funds can reduce but not eliminate your personal time commitment and resposibility for keeping an eye on your assets.

Follow up emails are OK. It is hard to cover all the issues. Good luck.

John G

Blackstone.summit@worldnet.att.net