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Subject:  Re: first time in fooldom Date:  8/6/1997  5:01 PM
Author:  TMFPixy Number:  164 of 88501

Greetings, CvilleFool, and welcome to Fooldom.

<< I know I need to get that money out, and I also know that I need to start putting money away for retirement. However, as I am merely a 'temp', I receive no benefits. I mean zilch. I know that 401K contributions are tax deductible, and that IRA contributions are only tax deferred if you participate in your company's retirement plan. But what if you don't? Are the IRA contributions now tax deductible?

My current plan, until I feel confident enough to invest in stocks myself, is to put the $2K from the small cap in to an IRA fund like Vanguard. Is this Foolish? Any recommendations on what to do with the rest of the money in the meantime?

Also, are there any web sites that you can download quotes to a spreadsheet that are reasonably priced (or free)?>>

I think you're confused about the tax deferred nature of an IRA. Your IRA contributions are tax deferred only if you do NOT participate in a company's retirement plan, not if you do. Therefore, as a temp not eligible for benefits of any kind, you may contribute up to $2K per year to an IRA on a tax deferred basis. That means you can exclude those contributions from your taxable income in the year of deposit, and they along with all earnings will remain tax deferred until you begin taking those funds at retirement. In your case and given your age, IMHO it would be a Foolishly smart thing to do. The earlier you save for retirement, the better the results because of the magic of compounding (the eighth wonder of the world).

As to your current plan until you're comfortable with other types of investing, a no-brainer approach like the Vanguard 500 as the IRA is excellent. And it may (probably will) beat the small cap fund to boot over the years. No guarantees though. Yet Vanguard's record speaks for itself. Year in and year out it beats the majority of equity funds regardless of type. Just this Fool's opinion FWIW.

As to web sites, you can get quotes in many spots to include from the main screen of The Motley Fool. But downloadable in a spreadsheet format? I'm not familiar with any sites that offer this capability. Perhaps someone else is.

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