Roth IRAs

[PandaBear]

Michael (The Critic) is still a student and his tax rate will be lower now than when he retire, so that whole point about tax advantage is not there.

If you save more right to get locked away, so that you have to borrow more money and be taxed later. I'd don't think it is a net saving. Unless he is not planning to buy a house in the future, the extra cash that can be used as down payment to eliminate a second mortgage and its related cost/mortgage insurance would be a much better return than a Roth IRA mutual fund.

That's just my opinion. However if this is the only way a person can have the discipline to save money, then by all mean do it.

 

[Gary Allan]

He'll never need dough. 2nd gen 3rd world tightness (frog's behind tight - and that's water tight) will allow him all the apparent consumer benefits without the typical consumer pitfalls. Normal trappings will be avoided.


"Well it was a very nice story ...and you told it so well." - lady on bus stop bench sitting next to Forest.

 

[Cutehumor]

I did a vanguard 500 index fund at 22 yrs old in 1999 to be diligent about compound saving. I made contributions off and on. now it's 2010. But after 9/11, real estate bubble bust, and oil bust. I don't think I made any money at all. Unless someone wants to run a stock scenario with vanguard 500 who started investing in 7/99 to now. In fact, there was an article somewhere reflecting on stocks in 2000-2009, that said it was the "lost decade" in terms of investing.

 

[JHZR2]

It may not be the absolute best time to invest, but in the long run it may still be an ok time. It is better getting something in vice nothing - at some time I'm sure they will make roths available only to the lowest wage earners, if anybody. Good to get in now.

I think what you have is great as each 'cap' size will have different growth rates and points where they do good or just average. This gets you exposure to all in a dimple way.

I'd go to the library and pull smartmoney, money and kiplingers magazines from this month. Each has a listing in there of their top 20-70 mutual funds. Find the vanguard funds listed as top picks and check them out.

You dont need bond exposure, and with interest rates so low, bond prices will drop as the rates go up anyway. I would go for international, and since you're young, I'd go for an emerging market international fund.

Not all vanguard funds are ultra-low cost, but they're all fairly cheap compared to other fund companies. You're doing the right thing and can't go wrong.

Also, you should be able to pull initial principle penalty and tax free for major events and purchases, even when young(check the law), so you're not that constrained...

 

[Warstud]

Originally Posted By: Cutehumor
I did a vanguard 500 index fund at 22 yrs old in 1999 to be diligent about compound saving. I made contributions off and on. now it's 2010. But after 9/11, real estate bubble bust, and oil bust. I don't think I made any money at all.


That's because when you purchased the fund in 1999 the market was higher than it is now.

 

[eljefino]

Originally Posted By: JHZR2


Also, you should be able to pull initial principle penalty and tax free for major events and purchases, even when young(check the law), so you're not that constrained...


I'm half betting on this being some new form of stimulus in the future.

 

[BeanCounter]

If you have the lowest income you will likely ever have now, don't defer taxes and invest aggressively. Even my 401k at work is Roth, as I'd much rather pay the taxes now, although there are a number of ways to look at things, as I see this the best in the long run.

 

[Mr_Joe]

You are going in the right direction. Vanguard is among the very best of the mutual fund companies. A Roth IRA is great. The fund is a nice choice too, considering your ballpark age & all. Now just add to it every year, & don't touch it. The next thing we'll hear your family has been schooled by Bob Brinker.