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Official Roth IRA contribution Thread...
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<blockquote data-quote="Rmsanger" data-source="post: 3613387" data-attributes="member: 544424"><p>In case you haven't done so this year it is time to start thinking about putting something towards retirement...</p><p></p><p>Paying down debt, maxing out the 401k match, and maxing out your Roth IRA contributions are some of the most effective uses of extra cash. I try to "pay myself" each year during the holiday season once my gift shopping is complete.</p><p></p><p>Basics: Maximum contribution in 2007 is 4k and 5k in 2008. These are after-tax dollars to be invested in a tax free retirement account, which you can begin withdrawing at 59.5 without taxes or penalties. Some scenarios such as purchasing a home will allow you to withdraw a portion early though.</p><p></p><p>Attached are some helpful links about this investment method and my favorite fund groups:</p><p></p><p><a href="http://en.wikipedia.org/wiki/Roth_IRA" target="_blank">http://en.wikipedia.org/wiki/Roth_IRA</a></p><p></p><p><a href="http://www.getrichslowly.org/blog/2006/05/23/how-compound-interest-favors-the-young/" target="_blank">http://www.getrichslowly.org/blog/2006/05/23/how-compound-interest-favors-the-young/</a></p><p></p><p><a href="http://www.fool.com/school/basics/basics01.htm" target="_blank">http://www.fool.com/school/basics/basics01.htm</a></p><p></p><p><a href="http://www.fool.com/money/allaboutiras/allaboutiras.htm" target="_blank">http://www.fool.com/money/allaboutiras/allaboutiras.htm</a></p><p></p><p><a href="http://www.kiplinger.com/columns/starting/archive/2006/st0309.htm" target="_blank">http://www.kiplinger.com/columns/starting/archive/2006/st0309.htm</a></p><p></p><p>American Funds ~ I am in the New Perspective and EuroPacific Growth Funds</p><p></p><p><a href="http://www.americanfunds.com/funds/returns/alphabetically.htm" target="_blank">http://www.americanfunds.com/funds/returns/alphabetically.htm</a></p><p></p><p>Vanguard Funds ~ I am in Precious Metals and Mining Fund and Mid-Cap Growth Fund</p><p></p><p><a href="https://personal.vanguard.com/VGApp/hnw/content/Funds/FundsVanguardFundsTarget2050Summary.jsp" target="_blank">https://personal.vanguard.com/VGApp/hnw/content/Funds/FundsVanguardFundsTarget2050Summary.jsp</a></p><p></p><p><a href="https://personal.vanguard.com/VGApp/hnw/funds/vanguard/byname" target="_blank">https://personal.vanguard.com/VGApp/hnw/funds/vanguard/byname</a></p><p></p><p>Some quick pointers (Will go in more depth about fees, strategies, and long-term investing philosophies later when I have time):</p><p></p><p>1) Index Funds are inherently diversified amongst many asset classes and individual assets, hence there is a better risk/return ratio compared with randomly selecting individual assets for the average investor.</p><p></p><p>2) Risk tolerance - typically younger investors</p><p></p><p>3) Index vs. Actively Managed funds - Managed funds typically have higher fees and have statistically proven over time to produce lower risk adjusted returns than Index funds or Etfs. Try to limit the fees you pay annually as they rob you of growth.</p><p></p><p>4) Political risk vs. FX risk - Some funds are available for you to contribute $ and the assets are held within Foreign currencies. Other funds invest indirectly in foreign firms and political / economic risk of a particular region or country. Risk exposure to foreign currencies seems to be popular now with a weakening $ thus you want to have a percentage of your funds here.</p><p></p><p>5) Large Cap vs. Med Cap vs. Small Cap: Cap = Market Capitalization or Price Per share X # of Shares outstanding. Large Cap - Citi, GE, Exxon, BP are typically better as defensive plays and offer stronger returns through dividend yield in a stagnant or receding economy. Med Cap funds have been statistically proven to outperform Large Cap on a risk adjusted basis over time.</p><p></p><p>I'll spend some more time putting together my research over the next few weeks to make this thread more robust.</p><p></p><p>I expect that Flip and a few of the other resident finance experts can add value to this discussion as well! Happy Holidays...</p></blockquote><p></p>
[QUOTE="Rmsanger, post: 3613387, member: 544424"] In case you haven't done so this year it is time to start thinking about putting something towards retirement... Paying down debt, maxing out the 401k match, and maxing out your Roth IRA contributions are some of the most effective uses of extra cash. I try to "pay myself" each year during the holiday season once my gift shopping is complete. Basics: Maximum contribution in 2007 is 4k and 5k in 2008. These are after-tax dollars to be invested in a tax free retirement account, which you can begin withdrawing at 59.5 without taxes or penalties. Some scenarios such as purchasing a home will allow you to withdraw a portion early though. Attached are some helpful links about this investment method and my favorite fund groups: [URL="http://en.wikipedia.org/wiki/Roth_IRA"]http://en.wikipedia.org/wiki/Roth_IRA[/URL] [URL="http://www.getrichslowly.org/blog/2006/05/23/how-compound-interest-favors-the-young/"]http://www.getrichslowly.org/blog/2006/05/23/how-compound-interest-favors-the-young/[/URL] [URL="http://www.fool.com/school/basics/basics01.htm"]http://www.fool.com/school/basics/basics01.htm[/URL] [URL="http://www.fool.com/money/allaboutiras/allaboutiras.htm"]http://www.fool.com/money/allaboutiras/allaboutiras.htm[/URL] [URL="http://www.kiplinger.com/columns/starting/archive/2006/st0309.htm"]http://www.kiplinger.com/columns/starting/archive/2006/st0309.htm[/URL] American Funds ~ I am in the New Perspective and EuroPacific Growth Funds [URL="http://www.americanfunds.com/funds/returns/alphabetically.htm"]http://www.americanfunds.com/funds/returns/alphabetically.htm[/URL] Vanguard Funds ~ I am in Precious Metals and Mining Fund and Mid-Cap Growth Fund [URL="https://personal.vanguard.com/VGApp/hnw/content/Funds/FundsVanguardFundsTarget2050Summary.jsp"]https://personal.vanguard.com/VGApp/hnw/content/Funds/FundsVanguardFundsTarget2050Summary.jsp[/URL] [URL="https://personal.vanguard.com/VGApp/hnw/funds/vanguard/byname"]https://personal.vanguard.com/VGApp/hnw/funds/vanguard/byname[/URL] Some quick pointers (Will go in more depth about fees, strategies, and long-term investing philosophies later when I have time): 1) Index Funds are inherently diversified amongst many asset classes and individual assets, hence there is a better risk/return ratio compared with randomly selecting individual assets for the average investor. 2) Risk tolerance - typically younger investors 3) Index vs. Actively Managed funds - Managed funds typically have higher fees and have statistically proven over time to produce lower risk adjusted returns than Index funds or Etfs. Try to limit the fees you pay annually as they rob you of growth. 4) Political risk vs. FX risk - Some funds are available for you to contribute $ and the assets are held within Foreign currencies. Other funds invest indirectly in foreign firms and political / economic risk of a particular region or country. Risk exposure to foreign currencies seems to be popular now with a weakening $ thus you want to have a percentage of your funds here. 5) Large Cap vs. Med Cap vs. Small Cap: Cap = Market Capitalization or Price Per share X # of Shares outstanding. Large Cap - Citi, GE, Exxon, BP are typically better as defensive plays and offer stronger returns through dividend yield in a stagnant or receding economy. Med Cap funds have been statistically proven to outperform Large Cap on a risk adjusted basis over time. I'll spend some more time putting together my research over the next few weeks to make this thread more robust. I expect that Flip and a few of the other resident finance experts can add value to this discussion as well! Happy Holidays... [/QUOTE]
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