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Posted: 9/26/2001 4:52:50 PM EDT
I'm 25 and I'm thinking about opening an individual retirement account (Roth). My question is: is it a wise decision to open up a retirement account right now with this whole mess going on, or should I wait a while? I plan on starting by putting away the yearly max into a Roth (if I do that every year for 40 years I should have a good pile when I'm 65). I am in a retirement plan at work, but it sucks. Next year or so they plan on switching over to a system that enables us to invest part of our retirment withholding on our own, so I plan on taking advantage of that and building a more diverse portfolio. I don't know that much about investing right now, if you couldn't tell. Any thoughts?
Link Posted: 9/26/2001 4:56:52 PM EDT
Link Posted: 9/26/2001 5:08:58 PM EDT
You can still open your IRA. Just park it in a money market fund until you think the market has hit bottom.
Link Posted: 9/26/2001 5:17:48 PM EDT
The idea is to Buy Low and Sell High. And right now the market is low [b]compared to what it's been[/b]. For me and considering an investment to retire with, pump what you can into a 401k/IRA whenever available. I'm more of the "grow it slow" with a growth-type or index-type mutual fund. - Robbie DISCLAIMER: (why not?) Stock market investments are risky! They do not provide fixed returns and past performance doesn't guarantee future results. All securities investment entails the risk of great and sudden financial loss. Returns vary and you may have a gain or loss when you sell your securities! No assurance is given that the techniques described here will be successful. This post contains neither recommendations nor solicitations to buy or sell securities! Post is published solely for information and educational purposes and does not form the basis of any contract or commitment whatsoever. Nothing in this post should be construed as investment advice, either on behalf of particular stocks or in regard to overall investment strategies. Feinstein, Schumer and Clinton are big putzes. No representation or warranty, expressed or implied, is made as to the fairness, or correctness of the information contained in this post.
Link Posted: 9/26/2001 5:30:15 PM EDT
Well since you are looking long term, an IRA, I would say, yes. Maybe wait to see how low the market will go before diving in. If you go with a diversified portfolio and stay with solid Blue chip stocks, when you retire, many of these under valued stocks will pay you back in spades. It takes a while to set up an account and start the ball rolling. You don't have to invest right away, but once it's done you will be ready to go at a time of your choosing.
Link Posted: 9/26/2001 5:34:53 PM EDT
Good advice above. Market sure is low compared to what it was. One other thing to check... Think long and hard about getting out of any retirement plan that matches your contributions. The employer puts in what amounts to free $. I realize that this may not be what you meant, but if it is, give it a hard 2nd look. Stay safe
Link Posted: 9/26/2001 6:10:11 PM EDT
Originally Posted By Robbie: The idea is to Buy Low and Sell High. And right now the market is low [b]compared to what it's been[/b]. For me and considering an investment to retire with, pump what you can into a 401k/IRA whenever available. I'm more of the "grow it slow" with a growth-type or index-type mutual fund. - Robbie DISCLAIMER: (why not?) Stock market investments are risky! They do not provide fixed returns and past performance doesn't guarantee future results. All securities investment entails the risk of great and sudden financial loss. Returns vary and you may have a gain or loss when you sell your securities! No assurance is given that the techniques described here will be successful. This post contains neither recommendations nor solicitations to buy or sell securities! Post is published solely for information and educational purposes and does not form the basis of any contract or commitment whatsoever. Nothing in this post should be construed as investment advice, either on behalf of particular stocks or in regard to overall investment strategies. Feinstein, Schumer and Clinton are big putzes. No representation or warranty, expressed or implied, is made as to the fairness, or correctness of the information contained in this post.
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My $.02 get in now. Regardless of current levels investment for the long term is a good deal. My 401(k) is taking a beating right now, however, I keep pumping money into it. I'll be glad I did in another 20 years.
Link Posted: 9/26/2001 6:14:53 PM EDT
Put as much in as you can afford. Never too early to start saving. If you are really nervous park it in a money market till you're ready, but I would (and am) spend money on index funds and not look at them for thirty years. The index's are really low right now and even though they might go down even further, that just means you are buying cheaper. In the long run you will come out ahead. At least that's what I think and WTF do I know? [:)]
Link Posted: 9/26/2001 6:21:10 PM EDT
Link Posted: 9/26/2001 6:24:36 PM EDT
What's bushmaster's ticker symbol?
Link Posted: 9/26/2001 6:30:46 PM EDT
I tell my 18 year old students to put $20 away a week now, and if they can get ~10% interest by the time they retire they will be $1.20 shy of $1,000,000 (this is at 65). If you wait till you're 30 the price per week is $70. Budget for ammo then buy it in bulk and pass the savings towards retirement (if you do this right you may even have enough ammo for retirement [:)]
Link Posted: 9/26/2001 6:39:37 PM EDT
I would start now. You might not use the money for 45 years, and with that kind of timeframe you can weather just about any storm. If you're a little nervous, start with a conservative balanced mutual fund (something like 60/40 stock/bonds) and try to put in the maximum every year. Dodge & Cox offers some of the best long-term funds in that category. Is the maximum still $2000 a year? If so, that's about $166 a month. If you can get that $166 in every month consistently, in the long run you'll do okay. Also, a lot of funds require an initial investment of $2500-$3000, but they sometimes accept $1000 for IRA accounts to get long-term investors in the door. With interest rates what they are and your investment horizon, I would not wait for the market to hit bottom. There is no need to do so because you're in for the long haul. Also, if you have a 401k, the golden rule is to maximize contributions to the 401k first and put the leftovers in the IRA. This is because IRA's have no employer match. This doesn't mean you have to put in the maximum 401k deduction, only that you should contribute at least up to the maximum that your employer will match. Disclaimer: I ain't no certified financial planner. :)
Link Posted: 9/26/2001 6:47:26 PM EDT
If you have a Primerica in your area give them a call. They will give you a free finacial analasys and hook you up with a great mutual fund. Smalls LCpl of Marines
Link Posted: 9/26/2001 6:49:46 PM EDT
[Last Edit: 9/26/2001 6:58:11 PM EDT by raven]
I cannot think of a single stock I would want to own now. There are only 2 reasons to own a stock: 1. The company is making tons of money and is paying out big dividends, and increasing earnings. 2. Everyone else wants the stock and pushiing the price through the roof out of greed. Can anyone tell me of a stock that is doing both these things? Because I can't think of one. MY advice is to be very defensive now. Don't buy stocks, mutual funds, or even bonds. Just sock it into a money market account until you can find a good opportunity. The only opportunties in the stock market right now is selling short, something you shouldn't be meddling with unless you know what you're doing/don't mind risking the money you put in the market. Go ahead and open your IRA and contribute. Just put the money in a money market account and keep your eyes peeled for opportunities. You can always divert the money market funds to stocks once the business climate improves. It's practically cash. Whatever you do, do not listen to brokers or brokerage house analysts who tell you about stocks to buy, because you're 25 and can take the risk. They are blowing smoke up your crack for the commissions.
Link Posted: 9/26/2001 6:52:33 PM EDT
Don't park your money in a money market mutual fund. what are you waiting for? stock prices to recover, then you'll invest? now is a perfect buying oportunity. even if stock prices continue to fall keep buying. it's called dollar cost averaging.
Link Posted: 9/26/2001 6:54:13 PM EDT
Originally Posted By markm: Don't park your money in a money market mutual fund. what are you waiting for? stock prices to recover, then you'll invest? now is a perfect buying oportunity. even if stock prices continue to fall keep buying. it's called dollar cost averaging.
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If you followed that advice over the last year, you would have been eaten alive. No one knows when the business climate is going to get better. No one.
Link Posted: 9/26/2001 7:00:24 PM EDT
Don't try to time the market. Put a smaller amount in every week or bi-weekly. You can diversify some, put half in bonds the rest in stocks, but you are young and can handle risks. I wish that when I was your age around 1988 I had bought a lot of stock. GunLvr
Link Posted: 9/26/2001 7:04:43 PM EDT
Originally Posted By raven: If you followed that advice over the last year, you would have been eaten alive. No one knows when the business climate is going to get better. No one.
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Don't think of it that if you have been buying over the last year you have been losing money, you have been buying at increasing bargains (if you buy solid companies). That is what dollar cost averaging is all about. When stocks go down it is a good thing because you don't need to sell right away so depressed markets allow you to buy cheap. Buy low, sell high, ya know. You'd only be eaten alive if you had to sell this year, but if you hold for the long term this is a great time to get in, even if it does go down farther. shotar- according to the refi guy, our home has gone up over a hundred grand in the last three years (just did a home imp. loan). Thing is, if we want to buy a new home they have all gone way up so it is a wash. And wife won't let us move to AZ. The trick is to buy in an are that will become popular. My wifes friends bought a house in Woodside, CA (hills over silicon valley) in the early 70's for under a hundred grand. Now that home is worth about two million. Of course the deaths of the dotcoms might bring that down a bit. Still a pretty good investment.
Link Posted: 9/26/2001 7:07:12 PM EDT
I would hold off. The market will probably slide some more. The hard part is predicting when the slide will stop.
Link Posted: 9/26/2001 7:13:32 PM EDT
If the experts cannot time the market, how can the average Joe? No man, don't sit around waiting for the bottom because you will invariably miss it just as you will miss the top. You can put it in an MM account and hold it until you feel comfortable investing, but with interest rates so low and the fact dividends are taxed as income, it's unliky it will keep up with inflation. You know, the recession of the early 70's is considered one of the best buying opportunites in 50 years. Those who bought and held realized substantial gains throughout the 80's and 90's. Think about it.
Link Posted: 9/26/2001 7:16:06 PM EDT
Originally Posted By mattja: You can put it in an MM account and hold it until you feel comfortable investing, but with interest rates so low and the fact dividends are taxed as income, it's unliky it will keep up with inflation.
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He's opening an IRA. Interest rates suck, but at least he won't LOSE money.
Link Posted: 9/26/2001 7:17:03 PM EDT
at these price you bet!Buy defense stocks now!Ratheon,ITT and especially Boeing.The government will fully bailout Boeing if they go into debt and that will be a good long term investment.Also MSA stock is a good idea due to the heavy demand for gas masks.This will never go away,we will always be under threat from NBC attack from now on and MSA provide respirators for the military.
Link Posted: 9/26/2001 7:20:14 PM EDT
[Last Edit: 9/26/2001 7:25:57 PM EDT by raven]
Originally Posted By Ratters: Don't think of it that if you have been buying over the last year you have been losing money, you have been buying at increasing bargains (if you buy solid companies). That is what dollar cost averaging is all about. When stocks go down it is a good thing because you don't need to sell right away so depressed markets allow you to buy cheap. Buy low, sell high, ya know. You'd only be eaten alive if you had to sell this year, but if you hold for the long term this is a great time to get in, even if it does go down farther.
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[>:/] Yeah...how MUCH further? How long till it comes back? If ever? Meanwhile, 2% interest looks good besides a 10% loss, even if you rationalize the loss by "dollar-cost averaging". Believe me, you guys. I can accept the risks of the stock market, but only when they're in my favor. Right now, if you adopt the buy-and-hold strategy drummed into all of your skulls over the last 7-8 years, be prepared to take some (more?) losses. Remember, a stock that loses 50% of its value from where you bought it has to appreciate by 100% to get back. And prices fall a lot faster than they rise. Now is not a good time to buy stocks.
Link Posted: 9/26/2001 7:21:47 PM EDT
Originally Posted By raven:
Originally Posted By mattja: You can put it in an MM account and hold it until you feel comfortable investing, but with interest rates so low and the fact dividends are taxed as income, it's unliky it will keep up with inflation.
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He's opening an IRA. Interest rates suck, but at least he won't LOSE money.
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He won't lose money unless he sells, which by his own admission could be in 45 years. You don't trade IRAs like you do stocks in a non-retirement brokerage account.
Link Posted: 9/26/2001 7:24:57 PM EDT
Originally Posted By mattja:
Originally Posted By raven:
Originally Posted By mattja: You can put it in an MM account and hold it until you feel comfortable investing, but with interest rates so low and the fact dividends are taxed as income, it's unliky it will keep up with inflation.
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He's opening an IRA. Interest rates suck, but at least he won't LOSE money.
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He won't lose money unless he sells, which by his own admission could be in 45 years. You don't trade IRAs like you do stocks in a non-retirement brokerage account.
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My point is that the interest he garners in an IRA account won't be taxed, so that shouldn't be put into consideration against a MMA.
Link Posted: 9/26/2001 7:31:07 PM EDT
Originally Posted By raven: [>:/] Yeah...how MUCH further? How long till it comes back? If ever? Meanwhile, 2% interest looks good besides a 10% loss, even if you rationalize the loss by "dollar-cost averaging". Believe me, you guys. I can accept the risks of the stock market, but only when they're in my favor. Right now, if you adopt the buy-and-hold strategy drummed into all of your skulls over the last 7-8 years, be prepared to take some losses. Remember, a stock that loses 50% of its value from where you bought it has to appreciate by 100% to get back. And prices fall a lot faster than they rise. Now is not a good time to buy stocks.
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This is a guy who is going to be investing for forty years. The value of quality stocks and funds will have gone up and down several times during that period. That is why you keep buying so that it all averages out in the end. There is no knowing where the bottom is, you just keep plugging away. Now if he was investing for the next year or two I would understand your concern, but right now there are some good bargains out there and the indexs are way low. Now is a good time to buy. If stocks continue to drop, that will make it a better time to buy. In forty years he will be glad he did.
Link Posted: 9/26/2001 7:31:43 PM EDT
Originally Posted By raven:
Originally Posted By mattja:
Originally Posted By raven:
Originally Posted By mattja: You can put it in an MM account and hold it until you feel comfortable investing, but with interest rates so low and the fact dividends are taxed as income, it's unliky it will keep up with inflation.
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He's opening an IRA. Interest rates suck, but at least he won't LOSE money.
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He won't lose money unless he sells, which by his own admission could be in 45 years. You don't trade IRAs like you do stocks in a non-retirement brokerage account.
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My point is that the interest he garners in an IRA account won't be taxed, so that shouldn't be put into consideration against a MMA.
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Yup, my mistake. Taxes are not an issue, other than the fact he cannot deduct his Roth contribution (but if he has an employer sponsored retirement account, he probably couldn't deduct his deduction to a standard IRA either). My vote is still a good balanced fund, but for the truely concerned, at the very least I would opt for an ultra short-term bond fund such as Strong Advantage. I don't see anything to gain in an MM account, especially when stocks are as low as they are now and the length of time he has until he must start taking distributions.
Link Posted: 9/26/2001 7:32:41 PM EDT
[Last Edit: 9/26/2001 7:32:45 PM EDT by musicman]
Put everything in technology stocks! Then margin another 100% off your stocks and invest that too! Then take out cash advances on your credit cards and invest that also! Heck, take out a second mortgage on your house and invest that too! Hey, I have just as much chance of being right as all those guys on CNBC.
Link Posted: 9/26/2001 7:36:04 PM EDT
Originally Posted By musicman: Put everything in technology stocks! Then margin another 100% off your stocks and invest that too! Then take out cash advances on your credit cards and invest that also! Heck, take out a second mortgage on your house and invest that too! Hey, I have just as much chance of being right as all those guys on CNBC.
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No, I tried that and it didn't work [:(]
Link Posted: 9/26/2001 9:46:38 PM EDT
A hot tip I heard was to invest all you have in pets.com and flooz.com.
Link Posted: 9/26/2001 10:38:25 PM EDT
I really feel sorry for the guys who bought VA Linux thinking it would amount to anything. But I also know two guys who bought $15,000 worth of CMGI before the run-up. One sold it a year before the peak and made $275k, the other guy watched it grow to $500k but didn't want to sell because of the tax burden, so he held, and held, and he's still holding, and now it's worth something like $1500.
Link Posted: 9/26/2001 10:51:50 PM EDT
[Last Edit: 9/26/2001 10:52:46 PM EDT by dingleberry]
Thanks for the info guys, I can see right now I need to look into this a lot futher... BTW, this is my retirement plan. Tell me if y'all think its a screw or not. I'm a government employee. I pay .88% of my mothly before tax salary into a retirement plan. I'm automatically enrolled in it by being an employee. At age 65 (40 years from now) my monthly benefts would be 80% of the average of my highest 60 consecutive months pay. In other words, if I avaraged $5,000 a month the last five years of employment, I'd get $4,000 a month until I die. I take a huge hit if I retire before then. If I retire at age 55 (the earliest I could) the monthly benefit would only be $1400. If I leave before age 55, all I would get would be my contributions plus interest (currently 5.5%), which I'd have to pay taxes on. There's a lot more to it than that, but thats it in a nutshell. I don't think it a good deal unless I stay with this employeer for 40 years (possibe I guess, I like my job) and live a good long time after retirement. At the same time, I'm not putting much into it. We do have a differed comp program. I know a lot of other people use this to put money into thier own investments. I plan on opening the Roth now and getting into this program maybe next year. What do you all think of this. Weird, huh?
Link Posted: 9/27/2001 5:42:12 AM EDT
good one imbriglio... I invest in the STOCK MARKET (note-not mutual funds) for fun, and trying to earn extra cash. I am no expert, but I bought priceline.com stock at a buck something and sold for 8 bucks a share. Risky but worth it. I also bought some ADCT stock at 10 bucks a share which are down to 3 now...that means i should buy a pile more! I just play the stock market for fun-not much money involved. I invest in IRA/401k/mutual for retirement. I am just worried that the rest of us will be paying for the fucks that dont invest at all in their futur retirement. Wal mart will be overflowing door openers.
Link Posted: 9/27/2001 6:16:40 AM EDT
Originally Posted By raven: There are only 2 reasons to own a stock: 1. The company is making tons of money and is paying out big dividends, and increasing earnings. 2. Everyone else wants the stock and pushiing the price through the roof out of greed.
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Or #3, because stocks are likely to provide the best return on investment over the period in which you're investing. In case #2, that's a good scenario in which [b]not[/b] to buy, unless you think you're clever enough to sell before the speculative bubble pops.
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