thinking of opening a roth ira, need advice

So I have about 10k I would like to invest in possibly a roth ira. I was looking at the vangaurd 2060 or 2050 mutual fund. I did some research and from my limited knowledge it seems like a good investment without alot off fees. Now for my background info. Im 22 , still live at home, trucks payed for and only have a small amount of debt. 10k isn't my whole savings but a good portion of it. I plan on moving out within 2-5 yrs. Im new to investing and a little confused on some of the ira rules.

Can I withdraw contibutions at anytime without a penalty or does the account have to be 5 yrs old?

Is the vangaurd 2060 a smart investment? (it is up 22% this year)

Does anybody have any other suggestions?

Also I might have to take some money out to put a down payment on a house, when that time comes.

Thanks jeff.

P.S. Also open to other ideas I can legally and safely make a long term retirement investment and add to it every year even if it isnt a roth ira.

 

From the horses mouth...

http://www.irs.gov/Retirement-Plans/Roth-IRAs

The 2050 & 2060 are managed targeted retirement accounts that are geared to balance risk to maximize the return for each specific year. If you plan to leave the money invested for the duration, I think those are decent. I have (for a few years) some cash going into a 2040 through my 401k and so far, have been satisfied but I'm sure not a pro...

ON EDIT: It's great that you are planning and investing at 22!!!

 

Would it be a bad idea to put all my money just in a vangaurd 2060.

Also I understand the short term risk of possibly taking some of my money back out to buy a house in just a couple years but Im not in a hurry either.

 

I believe max contribution allowed per year is 5500

 

Remember that the max contribution for a Roth IRA is $5,500 per year.

The further you are from retirement, the more aggressive you should be, in my opinion.

 

I can put 5500 in this year then wait til jan. 2014 to put the rest in.

Anybody think I should only put 7 or 8 K in the ira and invest in something shorter term. or would taxes and fees eat up most of the profit. Suggestions are welcome.

 

You can trade stocks within the IRA if you want to play with more short term, aggressive investments. The IRA will act as a tax shelter as well.

You could also consider buying physical silver. Read up on inflation, study the charts, and make that decision for yourself; but I will say that I feel physical silver is a good deal right now. It will certainly be well above its current price ($20/ounce) when our generation is looking to retire.

And if we ever hit a period of hyper inflation, you can sell that physical silver at hugely inflated prices and pay off a fixed rate home loan at pre-hyper inflation dollars with your post-hyper inflation dollars made by selling the silver.

 

Can I buy actual silver to do that or is it smarter to buy into those ads.you see on tv.
Also to sell it what places give the best prices to.buy and sell. Are coins a bad idea.

Also how would they collect taxes on the profit made if I did have silver and decided to sell it.

 

I wouldn't buy anything off the TV. I use kitco.com to keep an on spot prices. Just watch out, retailers will sometimes charge a ridiculous amount over spot. Don't fall for it.

I buy american silver eagles from gainesvillecoins.com. You pay a little more for ASE's but they sell for more and can be sold at any coin shop. I stay away from foreign coins.

If you have a local coin shop, they will buy and sell. You can also sell to online retailers like gainesville it is just a little more of a hassle.

No clue on the taxation portion... I do not plan on cashing my silver in 20+ years. You can also look at SLV, it is traded like stock and mirrors the price of silver. You can trade that within your roth IRA.

 

Im sorry for so many questions, this whole ira thing is still a pretty new idea for me. But can i set the account up with vangaurd and the buy the SLV stock through them or am I way off here.

 

Not sure about Vanguard, my experience is with USAA. Within the Roth IRA you can buy and trade stocks, mutual funds, CD's, etc. SLV is a stock that mirrors the price of physical silver. You don't own any silver when you own that stock, you're just trading against the price of silver.

You can buy stock through any broker. Doing it through a Roth IRA acts as a tax shelter for your profits.

 

Kinda makes more sense now. Vangaurd is the broker the 2060 would just be the "stock" I could buy among other things.

 

Check into a real metals backed IRA make your on corporation as the custodian for the metal to be legit it is stored in your local bank a little pain with the paperwork but won't evaporate with a stroke of a pen or failure of any industries etc. do your homework on first. Check this site http://www.goldenira.com/ it has some good info and make your choices from there

Cypher

 

Yea I kinda like the idea of actually owning the silver, does seem safer.

 

PM's are a horrible long term investment, just look at their track record...it should make you not even think twice about it.

You mentioned you still have some debt? First step should be to pay that off before you start investing. Whatever amount of debt you have, you should be subtracting that from what you plan to invest, since that money technically belongs to someone else.

 

Good on you for looking into the Roth! I've been contributing to mine since I was 19, started maxing it out when I was 22.

The Roth, in my opinion, is one of the most powerful investment vehicles that young people can get into. I do some personal finance consulting on the side and the Roth is one of the first things I suggest. The reason being that all of the investment return is tax free (right now... we'll see what happens as the country becomes more socialist). Simple math shows that every dollar you put in when you're young is exponentially greater by the time you're older.

Precious metals (gold/silver) may not be a bad idea right now if you think we're coming up against another recession. Both are near their yearly lows so it *could* be a good time to buy. I keep about 5% of my portfolio in precious metals. Some of my friends are closer to 50% so it all depends on what you believe in and how risk adverse you are.

 

E

I only have a loan to help build my credit and want to at least take a yr to pay it off.

Also why are Pm's bad buys, is it because the price just jumps up and down to much?
Wouldn't having them over cash protect me during inflation?

Just wondering why you say they are bad Im new to this.

 

Been looking around about this stuff. Anybody have any input on putting s&p 500 etf's in my ira too.

 

Shop around (ask family/friends) for a GOOd financial advisor/planner. some do it for free, some do it for a commission, some charge.

With that amount of $$$ you want the best advice you can get, now and for the future and a professional will help you plan your future so you can make money on your investments and retire early.

 

Vanguard index mutual funds are some of the best in the industry. Why? Because they are low cost and diversified. Vanguard is an at cost investment firm, where most others are for profit. This means less fees for you to pay.

All of the vanguard target retirement date funds are excellent retirement vehicles. They have expense rations below .20 !!!!

Most mutual funds through employer sponsored plans have expense ratios of 1.20 and up. You can use the link below to see how lower expense ratios effect your return over a given time. Expense ratio is basically what percentage of money the investment group takes out of your return to cover expenses. When company's want to increase profits, they increase the amount they take out of your account.

https://personal.vanguard.com/us/insights/investingtruths/investing-truth-about-cost


Also, don't think you are going to get 22% every year, this year the stock market did good. Next year might be bad. I like to follow jack bogles advice in knowing that the only way to truly beat the market is to stay invested in a low cost/ diversified fund for an extended period of time.