YAIT

[Oscar1613]

a few summers ago i opened a roth IRA at my credit union. it's just a savings account so the interest rate is decent, but not great. after thinking about it, i've decided that i should probably put it into something more aggressive like a mutual fund, but i'm new to that stuff so i dont really know what to look for. i was thinking of either the vanguard or t rowe price retirement target 2045 funds.

is this a good idea? should i sign up directly under them, or should i go through my credit union's broker? any advice/comments/suggestions are appreciated

 

[purbeast0]

i thought a roth IRA was an investment plant that you can max out at like 4K or something a year, and a savings account was just that ... a savings bank account to put any amount of money you want in it.

im kind of confused.

 

[BlancoNino]

I thought YAIT = Yet Another Incest Thread.

 

[Oscar1613]

Originally posted by: purbeast0
i thought a roth IRA was an investment plant that you can max out at like 4K or something a year, and a savings account was just that ... a savings bank account to put any amount of money you want in it.

im kind of confused.

you can have different kinds of roth accounts. by savings, i mean its a bank account that is FDIC insured, gets a interest rate comparable to a savings account, and can deposit money into just like a regular savings/checking account at the bank (as long as it meets the roth requirements). i also had it as a CD for a little while, which got me a little higher interest rate, but i didnt like that cause i couldnt add money into it, so its back to the regular account for now, until i can decide what kind of investment account i want

 

[AgentEL]

Originally posted by: Oscar1613

Originally posted by: purbeast0
i thought a roth IRA was an investment plant that you can max out at like 4K or something a year, and a savings account was just that ... a savings bank account to put any amount of money you want in it.

im kind of confused.

you can have different kinds of roth accounts. by savings, i mean its a bank account that is FDIC insured, gets a interest rate comparable to a savings account, and can deposit money into just like a regular savings/checking account at the bank (as long as it meets the roth requirements). i also had it as a CD for a little while, which got me a little higher interest rate, but i didnt like that cause i couldnt add money into it, so its back to the regular account for now, until i can decide what kind of investment account i want

CDs and a savings account sound a little too conservative especially if you don't plan on retiring for another 40 years. I put my retirement savings into high-growth mutual funds and will slowly shift to something more conservative as the time gets closer to retirement.

 

[j00fek]

look at saving certificates at the CU, im about to get a couple 5yr ones @5.45% apy

 

[Fern]

Originally posted by: Oscar1613
a few summers ago i opened a roth IRA at my credit union. it's just a savings account so the interest rate is decent, but not great. after thinking about it, i've decided that i should probably put it into something more aggressive like a mutual fund, but i'm new to that stuff so i dont really know what to look for. i was thinking of either the vanguard or t rowe price retirement target 2045 funds.

is this a good idea? should i sign up directly under them, or should i go through my credit union's broker? any advice/comments/suggestions are appreciated

The investment strategy for a Roth IRA should be different from that of the "regular" IRA. Specifically, because the withdrawls from a Roth IRA are nontaxable (and contributions are nondeductible), you want to keep your high yeilding assests in a Roth. Particularly high growth stocks.

I assume you're fairly young (older peeps should not usually invest in high yield/high risk stocks).

Why put high yield stocks in a Roth and not a regular IRA?

Example: If you put $5,000 into a potential high yielding stock (ex. IPO) and get lucky and realize a return of 10 times = $500,000 you will pay NO tax when either converting into another investment in your Roth portfolio or even withdrawling it.

If you had it in a regular IRA, you would pay tax (at regular rates instead of capital gains) on the $500,000 upon withdrawl. This is a common investment strategy error, converting what would otherwise be low taxed/cap gain rate income into higher tax ordinary income.

So, I suggest you consider a high yield/high risk stock investment for your Roth. Sorry, I can't propose a specific stock, just the appropriate strategy.

Good Luck with it.

 

[Oscar1613]

Originally posted by: AgentEL

Originally posted by: Oscar1613

Originally posted by: purbeast0
i thought a roth IRA was an investment plant that you can max out at like 4K or something a year, and a savings account was just that ... a savings bank account to put any amount of money you want in it.

im kind of confused.

you can have different kinds of roth accounts. by savings, i mean its a bank account that is FDIC insured, gets a interest rate comparable to a savings account, and can deposit money into just like a regular savings/checking account at the bank (as long as it meets the roth requirements). i also had it as a CD for a little while, which got me a little higher interest rate, but i didnt like that cause i couldnt add money into it, so its back to the regular account for now, until i can decide what kind of investment account i want

CDs and a savings account sound a little too conservative especially if you don't plan on retiring for another 40 years. I put my retirement savings into high-growth mutual funds and will slowly shift to something more conservative as the time gets closer to retirement.

yeah thats what i thought. from what i understand, these target retirement funds automatically adjust from high-growth to conservative as time progresses, so i just dump money into it and they take care of everything for me, which is very appealing to me

 

[BoldAsLove]

T Rowe Price and Vanguard are both very good. Have you looked at the expense ratios? I would just go with the one with the lowest expense as they are both very solid.

 

[Oscar1613]

vanguard is 0.2% and t rowe price is 0.81%

 

[BullsOnParade]

This thread is exactly what I've been looking for. Who should I go talk to to learn about all these savings and investment options as well as budgting and what types of loans/debts to take on and those to avoid. Should I go speak with a CFP ?