I am 20 years old, have $2000, can save $1000 a year, and want a long term investment. Is a roth IRA it?

Question

I'm in college. Applying for dnetal school in a year. Looking to start saving now to use when im in mid to late 60's.

Answer 1

Dental**

And probarly.

Answer 2

I wish I started a Roth IRA a twenty.  Start learning about the stock market.  There's nothing like making money by just moving money around on the Internet.  You may want to look into some stocks/funds with unqualified dividends for your Roth IRA.  Stocks/funds with unqualified dividends are usually taxed at 25% instead of 15%, but in a Roth IRA you don't have to pay squat.  Given enough time your stock will pay for itself leaving you nothing but gravy.  Funds in 401k's are typically dependent on the overall market since they are pretty diversified.  

Buying the right stock at the right time will make you money (like buying energy stocks before the rise in oil and natural gas prices).  Buying a stock that is takeover targets can make you a quick (in my experience) 5% to 70%.  Investing in an industry after the passage of a bill that gives a certain industry subsidies can also boost a stock price.

If you're not interested in the stock market and just want to buy mutual funds (where an expert invests in stocks for you) then you might want to look into a Roth 401k.  The limit is $15,500/year as opposed to $5000/year for a Roth IRA.  Plus if you buy mutual funds offered by the same brokerage house then they won't charge you transaction fees normally, where you would get charge $7 to $28 per trade normally.  Make sure any fund you buy is a no load

mutual fund.  Most funds however will charge you a fixed percentage every year (1% or less is good) even if your fund loses value.

Once you learn how the market works making money is pretty easy (but not guaranteed).  I would wait until you have $5000 so you can diversify your portfolio a little more.  You could look into low priced stocks, but that is pretty risky.  I would try an online stock buying game first, just so you get the hang of it first.  It's especially important now since we are in a bear market.  You have plenty of time to practice before we hit rock bottom and have no where to go but up.

Answer 3

That is definitely one of the better options......I would suggest doing your research....go to www.vanguard.com - they have a ton of info on beginner investing....Roth's are good if you are SURE that you won't need the $$ for a long time - it is specifically devoted to retirement....it's a great tool - because it is already taxed money - and the presumption is that you will use it for retirement & the entire balance will be tax free (all that compounded interest over 40 years - wow!  )

Two other good sites for new investors are www.smartmoney.com and motleyfool.com - Good luck with everything - Ken

Answer 4

Long term Idea:

Roth Ira

S&P 500 Index

S&P Mid Cap 400 Index

Dollar Cost Average every month

Keep Smiling.

Answer 5

Make sure your debt is paid off first.

I'd buy shares in DRIP plans...or be agressive in an international fund.