Bank IRA's and investing?

Question

To get an early start, what should a 18 year old invest in for the future. Should they open up an ira with say ingdirect.com? Or should they do the sharebuilder at ingdirect.com and invest in stocks and the market? How does this start, looking for some good advice on what to do to have some money in the future.

Answer 1

Getting started early is and AMAZING thing to do. As long as you dont' pull any money out of your IRA for 7 to 10 years, you will be set.

You can put your money in an IRA and it will grow tax free. The only downside is you can only put 5,000 a year in. When with drawing, you can pull out what you put it. But if you pull out any of the interest you earned, you will get taxed hard. There are someways to pull interest out, and that is if you are a first time home buyer, and a couple of other scenerios.

Make sure you just don't put cash into your IRA, you want to put them into mutual funds since they are already diversified. Some advisers will tell you that since you are young, you should try to be aggressive, but that is not true. Look at performance. Look at the 10 year history (the higher the better) and you want a low expense ratio. Now is a great time to buy in since the market is down, you will get more bang for your buck. I was just explaining all this in another person's question a matter afact.

If person A put 5000 a year for 7 years into a mutual fund that earns on average 10% starting at age 18. At age 25, if they decided they wanted to invest in other things and stopped putting money in that fund, they have invested a total of 35K.

If Person B started at age 25, and put 5000 a year in for 30 years, into the same mutual fund that averages 10%, they would have invested a total of 150K.

Well since person A started early he reaps the rewards. At age 60 he would have 1.5 million after investing only 35k.

Person B at age 60 will have 1.5 million as well, be he invested 150k.

So if you start now, and keep putting money in, and you get a quality advisor, you should have millions by the time you are in your 50's if not sooner.

Anything over 5K a year, put in strong mutual funds. Take a look at American Funds, they are a common set that I recommend to new or smaller investors.

Opening an IRA with ING is fine for now, but over the next couple of years, you will want to find a quality adviser. Shop around for one too. In my experience Meryl Lynch and T-Rowe Price are Okay. Fidelity is pretty good. But all the others, I end up knowing more about what's going on than they do.

I try not to manage my own finances, you start playing favorites with funds and you don't really look out for your best interest like you should.

But a short answer, YES, Invest in and IRA as soon as you can. 5000 a year may be alot for your age, but try to put in at least 100 bucks a month and at a bare min. 50 dollars a month. YOU WILL REAP THE REWARDS LATER!!!!

I'm going to wrap this up now, please feel to contact me if you need more info or have anymore questions.

Answer 2

Why not open up an IRA at a brokerage firm like Fidelity or Schwab.  They have a good back office and can process your request easily.  Then you can trade stocks, bonds and a ton of mutual funds in your IRA.  tba

Answer 3

First of all, Michael G is lying.  Let me tell you why.  First of all, his name says "Retired at age 41 in Acapulco - Tax free" which is impossible if you do what he recommends.  For a young kid, he's right about the Roth, go with it.  Ignore your 401k and forget about the match, assuming they have one.  Even if they do, it won't be 100%.  Michael is obviously recommending what's hot now.  Corn?  Oil? Tobacco?  Commodities in a commodities market?  Ever heard of buy low, sell high?  He's recommending the opposite.  Ever heard of "by the time the public has heard of it, you're too late??"  Well...that's what's going on with liar boy.  Lastly, a home is not an investment, its a home.  Buy a home because 1) you want that home, and 2) you can afford it.  

With all that said, invest in a solid growth mutual fund.  For someone your age, I'd recommend US equities for a portion, and international equities for a portion.  Maybe as much as 50-50.

Answer 4

ROTH IRA and always max out 401k up to employers match.

Pay yourself FIRST every pay  day.

Diversify your investments - never put all your eggs in one basket.

Corn futures are a good one. Oil is always a safe bet. Tobacco is usaully safe.

Battery Tech Companies. Alternative fuel Companies.

Invest in a home as soon as you can.

Dont forget the tax man. He will take 1/4 th of your paycheck and anything else he can - Get a tax advisor !!!