For a long term investment that wouldn't need to be touched for 10+ years would you recommend a CD or just investing in some index funds. The total amount to invest is $3000-5000.

10/9/2007 7:42:53 AM

roth ira if you don't have one.

otherwise some sort of CD should work.

10/9/2007 8:00:21 AM

Yeah I was thinking of starting a Roth as well, theres a cap for $4k deposit per year is there not? Who would you go with for a Roth, Vanguard?

10/9/2007 8:03:04 AM

i did a roth through vanguard while in high school and it isnt bad.

With all investments getting advice over the internet is probably bad unless it's simply "dont buy things you cant afford".

[Edited on October 9, 2007 at 8:09 AM. Reason : .]

10/9/2007 8:08:59 AM

You can buy mutual funds through ING with only a $1k minimum.

10/9/2007 8:26:43 AM

can some explain the roth in laymans terms for me. i have been looking at online and at the secu website, but i can't make much sense of it.

10/9/2007 8:34:54 AM

i have a roth at vanguard intested in their 2045 target retirement fund and ive got a return of 17% so far....so im pretty pleased.

^ you invest money in a roth that has already been taxed, and you dont have to pay taxes on its growth, nor withdrawal.

[Edited on October 9, 2007 at 8:37 AM. Reason : s]

10/9/2007 8:35:59 AM

^^ With a Roth IRA, you can put up to $4000 a year of after-tax money into an investment account, where you can invest in stocks, bonds, mutual funds, etc. that grow tax-free and are not taxed upon retirement.

[Edited on October 9, 2007 at 8:37 AM. Reason : asdf]

10/9/2007 8:37:07 AM

whats the risks associated with this kind of investment, if any?

10/9/2007 8:38:30 AM

well, it depends on what you invest in. if you invest in risky stocks then you risk losing money. you can be safer and go with bonds. its all up to you as far as where you allocate your money.

10/9/2007 8:39:48 AM

ah i see

so if i put 4k a year in the money market, that would have to be taxed i assume?

10/9/2007 8:41:35 AM

no. that $4000 has already been taxed (income tax). the beauty of the roth is that you no longer get taxed on that money and its growth.

[Edited on October 9, 2007 at 8:43 AM. Reason : d]

10/9/2007 8:43:11 AM

ok but the limitation is that you only can put 4k a year, which is reasonable. i just want to invest in something that has pretty much no risk, even if roi is relatively low, since the principle amount is still your money saved and you are getting a little something to go along with it, and after about 20-30 years it would pay off pretty good.

10/9/2007 8:46:00 AM

Nothing _truly_ has zero risk, except for a high yield savings account. But you can minimize your risk by having a highly diversified portfolio. That, and over the long term, the stock market has never lost money, so an S&P 500 index fund is certainly a safe investment for a retirement account, averaging about 10% a year since it's inception.

Here's some good info about asset allocation within a retirement account (401k, Roth)
http://hingefire.blogspot.com/2007/02/portfolio-diversification-401k.html

And this is one of my favorite articles:
http://www.sanfran.com/home/view_story/1507/

and if you don't want to do a ton of research and simply let it go, there are funds that have low expense ratios and modify your asset allocation based on your target retirement date. Sober mentioned the Vanguard 2045 retirement fund. Those kinds of funds are great if you don't want to spend countless hours poring over financial data to figure out where to put your money.

Sometimes I think i'd probably be better off doing my retirement investing that way...

[Edited on October 9, 2007 at 8:51 AM. Reason : adf]

10/9/2007 8:46:40 AM

yep, thx for the info! i like stuff like this to be nice and easy.

10/9/2007 8:48:47 AM

yeah, the retirement fund will start off with riskier investements (but ones with potentially higher returns) when youre younger. the best time to takes risks is when your young and have plenty of time to recover from losses if they happen. as the fund gets older, it slowly shifts to less risky investments, like bonds.

i want my retirement savings to be easy, without much oversight, so this is a good option for me.

[Edited on October 9, 2007 at 8:54 AM. Reason : e]

10/9/2007 8:53:52 AM

that seems be some sound advice there. i will pass it off as my own

10/9/2007 9:03:06 AM

http://bankrate.com/brm/calc/cdc/CertDeposit.asp

Would this be accurate? A CD with a 5% interest rate for 60 months would gain ~$850 interest (Assuming your initial deposit was $3k)

10/9/2007 9:19:39 AM

over 5 years, yep. but that doesn't take into account income taxes.

plug that into this:
http://www.fincalc.com/inv_10.asp?id=6

Over 5 years, you could also invest in an S&P 500 ETF, and given the historical average return of about ~10%, and pay 15% capital gains taxes rather than federal income taxes, which are whatever your tax bracket dictates.

10/9/2007 9:34:57 AM

I agree that a nice Vanguard retirement fund is great for lazy people such as myself. I actually just bought 4K of VFIFX last week for my roth.

Quote :

"even if roi is relatively low, since the principle amount is still your money saved and you are getting a little something to go along with it, and after about 20-30 years it would pay off pretty good."

After you factor in inflation your little CDs won't have made you that much money. For that time span you can't afford not to invest in stock based mutual funds.

10/9/2007 11:02:47 AM

Pick some diversified ETFs with that money.

Make it a Roth if you're positive you're not going to need it.

[Edited on October 9, 2007 at 5:45 PM. Reason : EWA and ADRE are making me a bundle]

10/9/2007 5:44:46 PM

one caveat to a roth ira that i don't think anyone mentioned is that it has to be earned income. $4k is the maximum you can contribute if you earned income over $4k after-tax that year. If you have earned less than $4k after-tax then you can only contribute up to the after-tax amount you have earned.

10/9/2007 6:03:46 PM

what is the penalty for withdrawing from the roth before retirement?

10/10/2007 9:55:42 AM

There is NO PENALTY for withdrawing PRINCIPLE funds from your Roth at any time, no limitations...

However, there are rules for withdrawing the "interest/investment revenue" from those accounts, and there are also rules for withdrawing funds that were converted into a roth IRA.

You can deposit 4k in a new roth IRA today, and make 5 bucks on in in the market, sell the stock tomorrow, and then pull out your 4k with no penalty on friday.


I chose Scottrade for my Roth IRA. $7 tax free trades is my favorite way to invest. Sure beats playing with taxes at the end of the year, and I can pull out my principle at any time for anything.

10/10/2007 10:03:12 AM

for some reason the stock thread is broken for me, so i'll post this here

picked up WX @ 34.59 yesterday -- i think its got legs

same with STV -- got it just below 50

be careful however, the 5 yr communist party meeting next week may cause volatility

note: this is not a "Best Investment Option" this is my best posting option since i can't get into the other thread

no more ghost edits plz!

10/10/2007 12:08:16 PM

^^^10% early withdrawal penalty

10/12/2007 12:02:13 AM

^ plus income tax on earnings if taken out before 5 years

10/12/2007 11:51:26 AM

prostitution ring

10/12/2007 12:11:31 PM

Quote :

"you can minimize your risk by having a highly diversified portfolio. That, and over the long term, the stock market has never lost money, so an S&P 500 index fund is certainly a safe investment for a retirement account, averaging about 10% a year since it's inception. "

10/12/2007 10:00:11 PM

GET YOURSELF A COUPLE OF GRAND OR MORE IN A BRIC (Brazil, Russia, India, China) MUTUAL FUND.

Or any Asian markets mutual fund.

Mine has appreciated a lot since I put money in it last November:

Past 11 months: 70%
Past 9 months: 61%
Past 6 months: 42%
Past 3 months: 25%
Past 2 months: 39%
Past 1 month: 22%

Remember the crash that happened in July? That explains the last three figures.

10/12/2007 10:50:05 PM

i've got the majority of my stuff in mutual funds and a roth ira. my broker/adviser seems particularly fond of what american funds offers, and what i have there has done really well so far.

10/12/2007 11:34:58 PM

because of the area you live in....LAND

10/13/2007 3:01:19 AM

Quote :

"GET YOURSELF A COUPLE OF GRAND OR MORE IN A BRIC (Brazil, Russia, India, China) MUTUAL FUND."

While I agree that foreign markets are going to outperform the US market over the next several years, I think BRIC has seen its peak, especially China.


Vietnam, Indonesia, South Africa, Turkey, and Argentina are the next group of hot emerging markets. If you want to invest in foreign markets, I'd look for ETFs in these countries, which are not yet overbought.

[Edited on October 13, 2007 at 6:41 AM. Reason : AKA: VISTA]

10/13/2007 6:40:54 AM

I have a couple janus mutual funds that have seen around 27% return since january-- Janus Orion and Twenty, but they are higher risk. I also have a Janus fund Roth IRA which is medium risk, but its still gotten about 15% since jan.

10/13/2007 10:00:21 AM

^^ True, but a 61% return since January is no joke!

I have seen newer funds being created, such as South East Asian, Emerging Markets, etc, which are doing, at this point, marginally better than BRICs, and are forecasted to do a lot better in the coming years.

China and India are still growing at 8-9% every year, and will continue to do so for the next 3-5 years. Brazil and Russia are at 5-7%.

10/13/2007 2:09:34 PM

www.fidelity.com

probably one of the best research sites out there

10/13/2007 10:26:46 PM

^^In fact, i was looking at fidelity diversified international fund.. 24.77 over 5 year period.. mainly Japan and EU holdings.. looks pretty good.

[Edited on October 14, 2007 at 3:32 PM. Reason : .]

10/14/2007 3:32:21 PM

If anyone here is interested in stock investments, etc. I would recommend going to the stock investment society meetings on mondays from 7:30-8:30pm @ Fox 104.

10/15/2007 6:32:27 PM

in regards to the tax and withdrawal situation, here's an example:

Quote :

"Jim, age 30, made a Roth IRA contribution of $2,000 in 1998. In 2005, Jim's Roth IRA has a balance of $3,500. Jim decides to close his Roth IRA in a non-qualified distribution that year. Since the distribution is non-qualified, Jim will owe taxes on his Roth earnings of $1,500, and will pay tax on this amount at his marginal tax rate. In addition, since the distribution took place before Jim reached age 59 1/2, and since Jim did not meet any of the exceptions, Jim will also be assessed a 10% early withdrawal penalty on the earnings. If we assume that Jim is in the 28% marginal tax bracket, he will pay $420 in tax on the earnings, and will pay a penalty in the amount of $150 on the early distribution. This is a very steep price to pay."

http://www.fool.com/money/allaboutiras/allaboutiras07.htm

10/15/2007 11:44:56 PM

I decided to start a Roth IRA with Vanguard I placed $3000 in a 2050 target retirement fund, but what should I invest the other $1000 in? The rest of the funds they have available are a minimum $3k, or is there something I am missing.

10/18/2007 11:08:50 AM

^I already said it earlier in the thread, but allow me to repeat myself. ING direct has mutual funds with a $1k minimum.

10/18/2007 11:34:12 AM

^^

Nice call. I couldn't find anything good to do with my remaining 1K so I just put all 4K in the Vanguard 2050 fund.

10/18/2007 11:39:10 AM

i love ETFs

10/18/2007 1:12:12 PM