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chicago_bull · 10-31-2007, 03:25 PM

i'm 25 yrs old, and trying to figure out where to invsetment my money on the long run. I have not opened any 401k or IRA and roth IRA. Im just bothered by differences... i know they are all retirement account, and have differences on the taxes, etc. what about mutual funds? would it be the same as the retirement account that i mentioned? is there any minimum acoount to open? please helllp!!<br />

Dani_Garcia · 10-31-2007, 03:25 PM

The Best IRA is the Roth IRA...and you can have mutual funds IN the Roth IRA...

alexanra · 10-31-2007, 03:25 PM

401K and IRA and Roth IRA are all about taxes. The investment is the same, no matter what.

They've proven pretty conclusively that professionals can't pick stocks very well. A "market basket" of average stocks will outperform every stock picker out there.

For the long run, small cap companies tend to outperform large cap companies. Some of them do horribly, and a few of them do *really* well, so a market basket of small cap companies is the way to go.

For the long run, "value" companies tend to outperform income or growth companies. "Value" companies are companies that have been beaten up in the stock market because they're doing poorly, and maybe even are in bankruptcy. Many of them do horribly, but a few of them do *really* well, so a market basket of value companies is the way to go.

Consequently, for a period of time 10 years or longer, a small cap value "index fund" is probably the best bet. Index funds are a market basket, with no clever manager trying to get in and get out of stocks at exactly the right moment, and with really low management fees. The Vanguard funds are the biggest, but there are other small cap value stock index funds out there.

Without knowing what your tax situation is, I can't recommend whether you want 401K, IRA or Roth IRA. You need a tax expert. Don't go to a CPA - they are usually generalists. Instead, find someone who is an "enrolled agent'. That means he's a whiz about taxes. He can advise you on how to structure your investment.

BOB+ · 10-31-2007, 03:25 PM

don't now which is better only that the sooner you start the better,so do something go see a professional investment adviser ,

ermak · 10-31-2007, 03:25 PM

Actually, they now have something called a Roth 401(k). That is the best retirement account available, assuming your employer matches some of your contributions. If your employer does not, then the Roth 401(k) and the Roth IRA are essentially equal (although 401(k)'s typically have fewer transaction fees and so may still be the best type of retirment account even if your employer doesn't match your contribution.)

gooner · 10-31-2007, 03:25 PM

An IRA can contain mutual funds. The money you contribute to an IRA is treated as pre-tax money - that means that when you file your taxes next year for income from this year, you will be deducting the amount you contributed to you IRA before you figure your taxes owed.

A ROTH IRA can also contain mutual funds. the money you contribute to a ROTH IRA is treated as post-tax money - that means you will not deduct the money you contribute before you figure your taxes.

You might qualify for a retirement contribution credit for contributions to either an IRA or ROTH IRA on your tax return, but this will be determined by your annual income.

When you withdraw money from your IRA (starting at age 65) you will pay taxes on all funds that you withdraw. You MUST begin taking money out of your IRA when you are 65, under current regulations.

When you withdraw money from your ROTH IRA, you do not pay any taxes on any of the money you take out - even the profits from your investments. You do not have to start taking out money from your ROTH IRA at 65, you can wait for several years.

If you do not have a 401(k) offered by your company, you cannot open one on your own.

There is no minimum to open an IRA or ROTH IRA. you can have both an IRA and a ROTH IRA and contribute to one, both or neither every year.

10-31-2007, 03:25 PM	#1
chicago_bull Piggy Bank Join Date: Jul 2006 Posts: 60 Rep Power: 6	which one is the best for the long run? i'm 25 yrs old, and trying to figure out where to invsetment my money on the long run. I have not opened any 401k or IRA and roth IRA. Im just bothered by differences... i know they are all retirement account, and have differences on the taxes, etc. what about mutual funds? would it be the same as the retirement account that i mentioned? is there any minimum acoount to open? please helllp!!<br />

10-31-2007, 03:25 PM	#2
Dani_Garcia Greenhorn Join Date: Jul 2006 Posts: 21 Rep Power: 6	which one is the best for the long run? The Best IRA is the Roth IRA...and you can have mutual funds IN the Roth IRA...

10-31-2007, 03:25 PM	#3
alexanra Greenhorn Join Date: Jul 2006 Posts: 9 Rep Power: 0	which one is the best for the long run? 401K and IRA and Roth IRA are all about taxes. The investment is the same, no matter what. They've proven pretty conclusively that professionals can't pick stocks very well. A "market basket" of average stocks will outperform every stock picker out there. For the long run, small cap companies tend to outperform large cap companies. Some of them do horribly, and a few of them do really well, so a market basket of small cap companies is the way to go. For the long run, "value" companies tend to outperform income or growth companies. "Value" companies are companies that have been beaten up in the stock market because they're doing poorly, and maybe even are in bankruptcy. Many of them do horribly, but a few of them do really well, so a market basket of value companies is the way to go. Consequently, for a period of time 10 years or longer, a small cap value "index fund" is probably the best bet. Index funds are a market basket, with no clever manager trying to get in and get out of stocks at exactly the right moment, and with really low management fees. The Vanguard funds are the biggest, but there are other small cap value stock index funds out there. Without knowing what your tax situation is, I can't recommend whether you want 401K, IRA or Roth IRA. You need a tax expert. Don't go to a CPA - they are usually generalists. Instead, find someone who is an "enrolled agent'. That means he's a whiz about taxes. He can advise you on how to structure your investment.

10-31-2007, 03:25 PM	#4
BOB+ Piggy Bank Join Date: Jul 2006 Posts: 96 Rep Power: 6	which one is the best for the long run? don't now which is better only that the sooner you start the better,so do something go see a professional investment adviser ,

10-31-2007, 03:25 PM	#5
ermak Greenhorn Join Date: Jul 2006 Posts: 20 Rep Power: 6	which one is the best for the long run? Actually, they now have something called a Roth 401(k). That is the best retirement account available, assuming your employer matches some of your contributions. If your employer does not, then the Roth 401(k) and the Roth IRA are essentially equal (although 401(k)'s typically have fewer transaction fees and so may still be the best type of retirment account even if your employer doesn't match your contribution.)

10-31-2007, 03:25 PM	#6
gooner Piggy Bank Join Date: Jul 2006 Posts: 75 Rep Power: 6	which one is the best for the long run? An IRA can contain mutual funds. The money you contribute to an IRA is treated as pre-tax money - that means that when you file your taxes next year for income from this year, you will be deducting the amount you contributed to you IRA before you figure your taxes owed. A ROTH IRA can also contain mutual funds. the money you contribute to a ROTH IRA is treated as post-tax money - that means you will not deduct the money you contribute before you figure your taxes. You might qualify for a retirement contribution credit for contributions to either an IRA or ROTH IRA on your tax return, but this will be determined by your annual income. When you withdraw money from your IRA (starting at age 65) you will pay taxes on all funds that you withdraw. You MUST begin taking money out of your IRA when you are 65, under current regulations. When you withdraw money from your ROTH IRA, you do not pay any taxes on any of the money you take out - even the profits from your investments. You do not have to start taking out money from your ROTH IRA at 65, you can wait for several years. If you do not have a 401(k) offered by your company, you cannot open one on your own. There is no minimum to open an IRA or ROTH IRA. you can have both an IRA and a ROTH IRA and contribute to one, both or neither every year.

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