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My first Roth IRA
Old 08-06-2007, 12:50 AM   #1
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My first Roth IRA

I'm 33 years old and I'm going to start my first Roth IRA soon. I figure I have at least 30 year to go until I retire.

I just wanted suggestions on what would be good to invest in?

Thanks

Jim
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Old 08-06-2007, 10:55 AM   #2
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Jim, it's hard to beat Vanguard as a place to invest. You might stick it in a money market account for now and read up on "asset allocation", so you can make decisions on how you want to invest.

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Old 08-06-2007, 11:33 AM   #3
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summer2007:

Perhaps one of the "balanced Funds" such as the Vanguard STAR fund would be suitable for a first investment.

Also check out the Vanguard lifecycle funds (called Target Retirement funds at Vanguard).
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Old 08-06-2007, 05:30 PM   #4
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If you happen to be a USAA member, I give them two thumbs up.

I started a Roth IRA at about 25 or 26 through the brother-in-law of a friend. It was at "SunAmerica" (I didn't know what was what from Adam). For eight or nine years, it stayed there. Every time I wanted to make a change, the person i'd dealt with last was gone, and I had to go through all sorts of contortions to get anything done. It was actually hard to contribute to the IRA because of this. In 2005, I had about $5K I was at a job with a really good salary, and I decided to get serious. Somehow, I found out that USAA has an investment branch, and I was off. I bought into their S&P 500 index fund and used direct-deposit to automate my contributions. My balance really started to move forward USAA has been very helpful whenever I have questions.

If you aren't a USAA member, try to get recommendations here, from friends, coworkers, etc. for a place that will help make things easier for you. This SunAmerica I was with, I think that A) they churned through agents, and B) nobody wanted to be stuck dealing with a piddly $5K IRA. You want someone who is going to help you make investing as easy as possible.

And remember... a downturn in the market, for someone around our ages, is a buying opportunity! Keep making those contributions! If the market isn't doing better in ten years, we're all in a steaming cauldron anyway.
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Old 08-06-2007, 08:42 PM   #5
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I second (or third) the Vanguard recommendations. Both my and DW's Roths are with Vanguard (as well some 403B and non-retirement stuff). Lots of decent fund options, they are very easy to deal with and I also like and use their on-line tools quite a bit. If this new Roth will represent a core holding for you at this point in your accumulation, then the balanced or lifecycle funds already suggested may be good choices. If you already have other holdings in your larger portfolio, or as you accumulate stuff over time, then asset allocation slice-and-dicing and tax efficency of where you hold various things become considerations. Your retirement accounts are good places to hold those things that would otherwise have ongoing realized income outside of the retirement umbrella (i.e. interest, dividends, cap gains from portfolio turnover, etc.). So, for example, you can put tax-efficient equity index funds in taxable accounts and income producing funds (or funds with high turnover) in the Roth. Similarly, as your retirement accounts grow they become good places to hold multiple funds in order to allow exchanges for portfolio rebalancing without incurring capital gains taxes. That may not be an option until you have enough accumulated in the Roth to spread across several funds, but as you proceed that's something you will want to think about. We have some long-term holdings that we started (and continue to hold) in taxable accounts that would have been much better to have placed originally in the Roths, had I thought more about future tax efficiency at the time. Now to sell them and re-purchase in Roth, we would realize significant capitial gains. What you put in the Roth now can be changed later with no tax consequences, but what you put in your taxable accounts may not be so painless to move later. Sorry if you already are well aware of this, but if it can help you or someone else avoid an early-on tax efficiency mistake, then it's worth it.
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Old 08-06-2007, 09:36 PM   #6
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If you aren't a USAA member, try to get recommendations here
FWIW, anyone can invest in USAA IMCO. The only restriction that I am aware of with USAA is the P&C (auto/HO) insurance aspect of the company where you need to have a connection to the US military.
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Old 08-06-2007, 09:48 PM   #7
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I just wanted suggestions on what would be good to invest in?

Thanks

Jim
Hey Jim,

It is probably better if you determine what is best for you to invest in. A way that many of the folks here have become somewhat conversant on the topic of investments is to read books that are written by some financial writers.

Check out the Diehards recommended reading list here:
Investment Books

You may wish to start with :The Bogleheads' Guide to Investing and The Coffeehouse Investor and A Random Walk Down Wall Street in that order.

Vanguard has this nice deal on indexing: Vanguard Library
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Old 08-06-2007, 10:35 PM   #8
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Jim, put away as much as you can into the ROTH IRA.
We're not allowed to contribute anymore due to our income but it's one of the best way to save money and lessen the tax bite.
Vanguard has been good to us and has received more of our assets over the years with the choice and expenses (or lack of).
Global Equity is good if you want world in a basket.
They also have index funds (if you can meet the mins.) to meet most of your needs.


Good luck.
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Old 08-07-2007, 09:52 AM   #9
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Originally Posted by summer2007 View Post
I'm 33 years old and I'm going to start my first Roth IRA soon. I figure I have at least 30 year to go until I retire.

I just wanted suggestions on what would be good to invest in?

Thanks

Jim
Do you have any other retirement accounts? If so, listing the funds with percentages would help in coming up with an asset allocation plan. I'm assuming you are single and have no kids.

You all need to figure out you risk tolerance in order to setup an asset allocation.
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