Dec 3

I’m 34 and want to start a Roth IRA for myself and plan to to contribute the max amount in one contribution each year. I know I want to go with either Fidelity, Vanguard, or T. Rowe. I know very little about investing and would like to feel secure with the investment. I know there are too many funds to choose from and I don’t understand them. Thanks for your suggestions.

3 comments so far...

  • Shana B Said on December 3rd, 2009 at 3:26 am:

    I know Fidelity (and probably the others too) has funds that are named by the year that you plan to retire (so you’d pick fund for the year 2040) that will automatically redistribute your money to be more aggressive when you’re younger and more conservative and safer as you age. They mix it up b/w stocks, bonds, and cash for you.

  • enoriverbend Said on December 3rd, 2009 at 3:57 am:

    You have already picked excellent fund companies. Of the three you mentioned, Fidelity and Vanguard have an enormous variety of mutual funds to choose from (T.Rowe Price has excellent funds, but far fewer in variety.) Also, Vanguard has been and continues to be the fund company with the lowest fees overall, although Fidelity is certainly trying to compete hard there as well.

    Since IRA money is for your retirement, and thus for the long-term, you should not be too conservative with it (no CDs, for example). This argues for a high % of stocks or even 100% stock fund (depending on any other investments you may have, that you didn’t mention).

    Shana’s suggestion of one of the target retirement funds is fine. These do tend to be quite conservative but the percentage allocated to stocks drops over time (as you near retirement, which is advisable). The Fidelity and the Vanguard target retirement funds differ in their percentage of stocks for a given retirement date, but are very similar.

    But if you have no other stock investments, you could easily go for an S&P 500 index fund, which invests your money in 500 of the biggest US companies. (And thus is well-diversified among US companies.) Alternatively, look for a ‘total market index fund’. Both Fidelity and Vanguard have both of these types of funds.

    Whichever you pick, do not judge it by any short-term fluctuations. The market fluctuates, and the ups and downs are important to short-term traders, but considerably less important for your long-term needs.

  • J Said on December 3rd, 2009 at 4:35 am:

    I’m a Vanguard fan myself. If you are just starting out I would recommend their Star fund – which invests in a number of their other funds – it is well diversified with Large, small and foreign stocks and several bond funds. I put my daughters in that fund when they started their Roth.

    Then try reading up – I suggest The Bogleheads Guide to Investing by Taylor Larimore (and others) – it is written for regular people. Also, check out their web site: – just read the answers to what others ask and you will see that they are very kind to people starting out who might have “dumb” questions.

    As you get more money and experience you will want to move out of the Star fund into several index funds.

    You can do it. It really isn’t rocket science. There are a lot in the media that what to make it confusing but a few simple index funds can give you a diverse, low cost portfolio and you don’t have to do a lot of trading – every year or so rebalance to your original plan.

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