How do I invest my Roth?

[Guest Gracey]

Hello. I am planning to open a Roth soon, however, I need specific advice as to how to invest the money in it. There seems to be so many choices, and I have become overwhelmed. I am 36 years old and have no other retirement accounts as of yet. I would like to retire somewhere around 2031. I qualify for a Roth, and am able to contribute the maximum of $4,000. I would appreciate any advice, as most of the information I have read deals with the benefits and rules of the Roth, and not how to actually invest the money in it. Please be as specific as you can if you can offer some advice. The world of investing is very new to me. And also, do I actually make the investments at the same institution in which I open the account, such as my bank? Is this all done the same day I open the account? Thank-you to all those who may respond. I am grateful for any insight that would help me narrow down my choices. Gracey

[Guest riabaj]

Gracey

You can open a Roth IRA with your bank and/or a brokerage. You can choose to invest it in anything from a CD to bonds, stocks, mutual funds etc. If you are new to this, I would put my money in a money market account until I figure out what to do with it. That way, your money is not tied down and yet earning some interest.

Hope this helps

Ria

[John G]

I am travelling and have limited time to answer your question, so I suggest you do a search on this message board under keywords like: beginner, mutual, index, start... etc.

You are making two initial choices: a custodian and then an initial investment.

Custodian: bank, mutual fund, or brokerage are the most common choices. If you are comfortable with internet use, you might want to chose either a discount brokerage or mutual fund family based upon looking at a few websites. Annual account fees, investment options, tools for beginners... some of the factors to consider.

Investment choice: no you don't want safe insured CDs unless you are easily scared by media stories of doom and gloom! You also don't want to consider individual stocks, options, commodities or anything else that requires a high level of knowledge and experience. That leaves mutal funds... and you should ignor loaded funds (front/back or any commission type fund, typically with a salesperson) but go straight to NO LOAD funds (there are thousands). Any broadly based mutual fund that has a reasonable track record is acceptable. You might want to choose an index fund that offers very low expense. Why a mut? Because they give you instant diversification - - they hold portfolios of dozens to hundreds to thousands of stocks.

I highly recommend that you subscribe to Kiplinger's Personal Finance (about $16 per year), a monthly magazine that fits your age and will give you a wide range of personal finance advice including Roth/IRAs.

Don't forget that company 401K, 403B or any employer sponsored plan that offers a match.

Congratulations on getting started. Post again if you have investment questions.