Many people are writting in this forum that they do not like index
funds. I am 23 years old, and new to investing. I'm trying to learn a
bit more before I open an IRA account. What are the disadvantages to
an index fund??


jIM wrote:
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Piggy wrote:
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No opinion on Morgan Stanley... I would look at TRP, Fidelity and
Vanguard.

Vanguard will have low cost index funds.
TRP will have low cost managed funds (and index funds as well- not sure
of costs relative to Vanguard, I don't like index funds).
Fidelity will have index and managed funds. I am not sure about costs
(I could look up cost information, but will let you research this if
it's important to you).

Piggy, you want to check the cost of buying mutual funds at
Morgan Stanley vs. buying them at Fidelity or Vanguard or
somewhere else. ISTM it's the transaction fees and services,
and mutual fund expenses, that are typically the dealbreaker
in decisions between brokerages. These costs can take a big
bite out of an investor's profits over the years.

Fidelity may offer more "in-house" (= Fidelity managed)
mutual funds, but Vanguard has a much larger selection of
low cost indexed mutual funds. I would give a lot of
consideration to Vanguard, if only to know what competitive
cost standard the competition should meet.

I do suggest experimenting with the free online asset
allocation tools linked at
http://home.earthlink.net/~elle_navorski/id8.html . They
offer a person ideas on investment options and introduce one
to the notion of minimizing risk through diversifying one's
assets.

Thank you for the referrals . . . do you (or anyone else that's
listening) happen to have an opinion on Morgan Stanley? Any good or bad
experiences? Since I have never invested before, the fine points (as
far as investment options) are going to go right over my head . . .
I'll be basing my decision more on the advice and knowledge of others
more experienced . . .

thanks )


jIM wrote:
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Piggy wrote:
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T Rowe Price is where my Roth IRA is. My wife also has a rollover
account with them. I would rate them highest- I have had 401k's with
TRP in the past and I chose to open my Roth there and have not been
disappointed whenever I need customer service. I would rate their fund
selection as acceptable and #2 on this list.

Vanguard is my 401k custodian. There website is useful. I would rate
their fund selection as #3 on this list. If using index funds only,
Vanguard moves to top of list (I prefer to stay away from index funds,
so take my comments with a grain of salt).

Fidelity is quite popular. I have never invested with them. Their
fund selection is clearly #1 (no one is even close as #2), but does it
matter if a company has 1 small cap fund or 4 small cap funds? I'm
only going to invest in one of them anyway. Web site now appears
easier to use than it did 7 years ago when I opened my Roth IRA at TRP.

what about knowing where to start up your roth? i have 8K left over
from a custodial acct at morgan stanley and i suppose i could start a
roth there, but i dont know if there may be better firms to transfer
to?

jIM wrote:
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RigasMinho wrote:
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I use the rule of 72 posted below for many quick calculations. If you
can find a way to squeeze more into the Roth, it will pay major
dividends later, in more ways than one.

A few ideas:

contribute around $50-$150 each month to account (instead of a lump
sum). $150 is $1800 per year. Try increasing the $150/month as much
as possible. I contribute $500 per month, $4000 per year (the max), so
for 4 months each year I get a "$500 bonus" in my take home pay.
Sept-Oct-Nov and Dec, which helps with x-mas travel and x-mas gifts.

The advantage of the $500 is I can also easily increase savings to
$5000 per year in 2008 when yearly maximums are increased. 10 months
get paid to IRA
instead of 8.

"RigasMinho" <minho.cho[at]gmail.com> wrote
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www.fincalc.com (click on "ConsumerCalcs" on the left;
then look for the link to "What will my current savings grow
to?"). Googling for something like {calculators savings}
will turn up more tools.

I hope you'll consider putting more into your Roth IRA in
these your younger years. You cannot make up past
contributions. It would even be better, generally speaking,
to put $4k in this year, and then not put anything in for
the next few years, because of the compounding effect.

I trust we covered the pros and cons of 401(k)s, and you'll
keep your eye peeled for when you have the opportunity to
contribute to a 401(k) that has matching.

"RigasMinho" <minho.cho[at]gmail.com> writes:

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Depends how you invest it - and how that investment does.
Historically, in the very long term (ie. 20 year increments)
stocks have gone up by about 7% per year - after ajusting
for inflation.

(1.0 + 0.07)^20 = 3.87.

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Why not? Does the 401k offer a match? For most folks who
have access to one, the 401k is a great deal.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

RigasMinho wrote:

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Elle posted http://www.fincalc.com/ some time back. It will lead you to
different calculators. An excel sheet is a good thing to use.

For the first part of your question, let me offer you the rule of 72.
If you expect a return of 10%, money will double in 7.2 years. At 8%. 9
years. (divide the rate into 72 to get the years to double)

So, historically, 10% seemed the prudent rate to use. This would give
you $6727 (not quite 3 doublings).
Now I'd say 8% is a safer estimate. $4661.
JOE

Okay,
In 2 months i'm going to put 1k into an Roth IRA.

I'm 24 - the guy who put in the post of "punk college kid"

So now the question is this:

How do I calculate how much that 1k will be in 20 years from now?
I'll plan on adding about 1k to 1.5 K the Roth IRA each year
Any ideas?
Any web pages I could go to?

Basically I want to start doing the retirement stuff now but i dont
want to do 401k