Your Questions About Invest In Stocks Or Ira


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Your Questions About Invest In Stocks Or Ira

  1. 1. Your Questions About Invest In Stocks Or IraCarol asks…Should I invest in Mutual funds or Stocks in a Roth IRA ?I am contributing to 401k and maxing it out as part of my employers retirement plan. The moneyin the 401k is getting invested in Mutual funds. I also plan to open a Roth IRA and would like toput $5000 (max amount). I have 30 more years to retire. At this point, is it advisable for me toinvest the amount in the Roth IRA in mutual funds or in stocks ?Steve Winston answers:You will get a bunch of different answers to this...and thats because no one but you can reallyanswer the question properly.I also know this probably wont be a popular answer in "the community" because I am aprofessional...and this site is popular with the we hate professionals crowd. But, I wanted totake the time to give you some honest and unbiased info...regardless of voting results.The fact that you are asking the question shows that you are probably notcomfortable/experienced in picking stocks...and that brings up the question... Are you looking tobuy stocks and hold them for the next 10-30 years+...or try to trade them like all the "hype" outthere tells people they should do now?Mutual fund investing is what I call "investing with training wheels" pay high fees and get 1 / 10
  2. 2. diluted returns...but you have an element of reduced risk...possibly...too. Also, $5,000 is what isconsidered "smaller amounts of money" in the professional investing many"professionals" wont bother working with you or educating you either...because theyre lookingto "get paid"!!!Your choices at this point are:*Find an advisor that will work with you...based upon a growing long term relationshippotential...and/or...*Start educating yourself with various books and websites, etc. (Start learning about it)*Pick a mutual fund or five and "diversify" your money...if you have 30+ years and will continuecontributing each should probably go with small cap aggressive stuff (okay,Small/Medium), especially when the market is still about 2/3 what it was and you have a longterm outlook....but others will say "always diversify" (the watered down risk, remember) and tellyou to buy small/medium/large funds in growth or value catagories and short/long term bondfunds...etc.*Pick one or two stocks and buy what you can with the money...but with enough shares it willactually make you money when it goes up (this is the "riskier" approach)Either way...keep funding the company plan & as much as possible...keep feeding theRoth...then as the market recovers you can build up the "balanced" approach...but trying tomake some amazing returns while the market is still full of such opportunities...isrational...especially for some young enough to have 30 years to work with....maybe, if doneright...It wont take so long to reach retirement afterall.Note: There are a number of websites that you can visit and start learning on our own too...feelfree to email me for them if youd like...otherwise...I hope this helped...dont be a sheep...thinkfor yourself.Helen asks… 2 / 10
  3. 3. Invest in an IRA, Stocks or 401K?Im faced with a challenge. Ive talked to retirees, a financial adviser (which was a completewaste of my time), the vice president of my bank, and the Human Resources/Benefits Managerwith my employer. My co-worker received his Quarterly Savings Statement for his 401K plan.Hes lost $14,000.00 this year, $9,000.00 was lost this last Quarter alone! Even with theEconomy sinking I can still afford to put away almost $400.00 a month for retirement, Im justnot sure where I should put the money. I want it to grow quickly and without a lot of risk but Iknow thats unheard of. My employer just increased their contribution to the 401K plan; theynow contribute 50 cents for every dollar I invest, up to 6% of my Gross pay. Would it be wise tospread the money out into different accounts? Has the Stock Market really bottomed out andhas no way to go but out or up? Im not looking for the correct answer, just honest answers fromyour experience or your expertise.Steve Winston answers:Like others said, before anything else you want to max out your employer contribution in your401k. Youre basically foregoing potential salary if you dont! Once this is maxed out, if youreyoung and looking to invest for 30 years or more, put the extra into a Roth IRA. Youre taxedinitially on it but it grows tax-free so you dont pay tax on the capital gains.Note that you can probably diversify within the 401k plan, depending on what the companyoffers. Often its not just a single stock or fund but a diversified portfolio in itself; in mine, e.g., Ichoose a percentage allocation of my monthly investment between four or five different mutualfunds.The stock market is very likely going to rebound within the next year, but it probably wont beimmediate. There are no guarantees, as Im sure youre well aware; historically though it goesup and long-term investments are generally considered safe. Wanting it to go up "quickly" isunderstandable but you have to shake this notion--all that matters is the date you plan on takingit out. If thats sufficiently far in the future, any present ups and downs are of little consequence. 3 / 10
  4. 4. Lisa asks…Should I Rollover to Traditional or Roth IRA, invest short term thencash out?I have 401k from my former employer. Im gonna need the money soon so I will be cashing itout sometime in the next couple months. Its only the couple thousand. I was gonna cash outand pay the penalties but I think I have other options. I was thinking of rolling over to an IRA,invest in some stocks short term and hopefully increase my funds then cash it out. Whatshould I do?Steve Winston answers:Cashing out at any time may cost you up to 35% or more depending on your tax bracket andstocks are not meant for short term investment - you could wind up losing more of your money -doa direct rollover to an IRS and try and wait as long as possible before withdrawing anythingand there is no need to withdraw it all at once - as soon as you do that - you trigger the penaltyand taxes on teh full withdrawal 4 / 10
  5. 5. Jenny asks…Some here suggest that I should sell my stock and invest in Iras?what are you opinions on this?should I pull all of my stock or ride out the storm?Steve Winston answers:Whoever is telling you this, is mixing a tax/retirement vehicle with a type of investment. Stocks,bonds, mutual funds are types of investments, whereas IRA - traditional or Roth are a method ofsetting money aside for retirement. Based on certain tax rules, a traditional IRA may get you atax deduction, the Roth will not save you taxes when created, but no monies will be taxesprovided you use the money for retirement and comply with applicable tax laws.To your question... Historically, the market recovers within 6 months to two years. After thismess, I am inclined to say it will take two years, my opinion. If you dont need the money andyou are invested in sound companies, let it ride. To sell now will be what I like to call a moneymaking opportunity - for me. Love it when people panic and sell low - I then can buy low. Justwish I had more money... It is like a huge garage/yard sale out there.Good luck - hope this helps. 5 / 10
  6. 6. James asks…Can you ignore bad credit and invest in stocks?Im 27 years old; married twice, with a credit score of 78. - . - (Unimaginable I know)During my first marriage (5 years ago) I acquired a little over $300,000.00 in debt ($120k for ahouse, $7k for a car $10k or so in credit cards, and the rest in medical debt.) Im at a pointwhere Im able to put aside about $3k a month for IRAs, and investments as Ive landed anEXCELLENT job.I only acquired this promotion 4 months ago, so Im trying to be proactive and protect the moneythats starting to come in. And keep in mind, prior to landing this promotion I lived off a salary ofonly $25k to $35k/yr so I didnt really have money that collectors could garnish or money for alawyer even to clear this up sooner.I tried filing Chapter 7 to wash the slate clean but Im now told I make too much money, and Ihave NO assets anymore so my expendable income after expenses is large.Ive been told I can only file a Chapter 13 - which based on preliminary calculations it will costme about $4k a month just to pay off my debts for 5 years!! How can one plan for any retirementor build any assets taking ALL expendable income for Chapter 13??At this point Im willing to take my chances and wait the remaining 3 years the collectors haveleft to sue me. But in the meantime I want to invest in IRAs, stocks, and possible property.Can one do this with bad credit? 6 / 10
  7. 7. Steve Winston answers:Brokerage firms normally do not run credit checks on their customers since the service they useprovides a more comprehensive report than those supplied by credit reporting companies, alsothe extension of credit and the payment of funds for broker/dealers is covered in Regulation Tby the Federal Reserve which has more comprehensive requirements over money paymentsand movementsIn the United States all major brokerage firms employ the services of a company that runschecks on any negative financial and trading/investment activities of their customers and on anynegative history resulting from dealings with other broker/dealers or any regulatory problemsthat have been reported including a conviction for a felony.Also verification is made as to the mailing address provided, the social security number givenwhen opening an account, or any foreign involvement with banks or countries that are notacceptable by the US Government as defined by The Office of Foreign Asset Control (OFAC)So to respond to your question directly, bad credit is not a problem for opening a brokerageaccount,But filing for bankruptcy isSandy asks…I have approximately $2,500 to invest in my IRA. What stocks ormutual funds, etc.should I be looking at? Thx? 7 / 10
  8. 8. Steve Winston answers:So far you have been getting some good advice from the other posts.$2,500 in the investment world is a small amount of money.AlthoughVanguard has some of the best funds, their entry price is $3,000. Youneed to find an investment company that lets you start with small amounts.I recommend American Centurys Equity Income fund (TWEIX)Also try to get the ROTH IRA. You pay tax now, but none on your retirementwithdrawals.Just the opposite of a plain IRA.Betty asks…How to buy stocks for my son and other investment stuff!!?I know nothing about the stock market, cds, mutal funds, iras, etc. (I know, I am working onlearning). But I was watching something cant remember who or where and they said thatinstead of sending X amount of dollars to your grandchild for a present buy them a stock. Ithought what a great idea. So I was thinking of purchasing stocks in my sons name for him. 8 / 10
  9. 9. How do I go about that. I just found out that you pretty much cant purchase stock from thecompany that you have to use a broker. Which one is the best, low fees and uneducatedinvestor friendly? Also, what other types of accounts can I open for him for the future? I knowabout the college savings, but what if he gets a scholorship (ok hes only 7) but isnt it correctthat money HAS to be used for college education? We live in North Carolina. Lastly, if anyonehas basic laymans terms for me to start learning about investing (stocks, bonds,iras mutualfunds, which is best) or a really good book that would be great!!!Steve Winston answers:I strongly urge you to consider a DRIP Plan for your son.They are seldom recommended by brokers due to the low rate of commissions received.However, thesereinvestment plans can be very powerful long-term investments. Studies have shown thatDRIPs are one ofthe best strategies on Wall Street.They are inexpensive and easy to start. New investors to the stock market should definitelyconsider a DRIP Plan.Companies like Toyota, Royal Canadian Bank, Sony, Bank of America, General Electric andmany other Blue ChipStocks can be purchased through your DRIP Plan, with as little as 1 share in most cases.These long-term plans are great for beginners as well as veterans. Check them out.Best of LuckPowered by Yahoo! Answers 9 / 10
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