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Subject:  Re: IRAs What does my money get invested in??? Date:  4/24/2000  11:13 PM
Author:  Mark0Young Number:  21496 of 88498

An IRA or a Roth IRA (you didn't state which kind) is an account type, not an investment.

If you open an IRA account with a bank, typically your options would be CDs, money market account, or a regular savings account.

If you open an IRA account with a fund family, you can typically invest in one or several mutual funds offered by that fund family. I often see Vanguard ( and TIAA-CREF ( mentioned as good no-load fund families.

If you open an IRA account with a "fund supermarket" (a brokerage that sells a number of mutual funds), you can have your IRA money invested in a number of funds that don't even have to be at the same fund family, and generally you can contact that brokerage house and move money from one fund to another.

If you open a "self-directed IRA" at a brokerage house, you may be able to buy and sell shares of stocks as well as buy and sell shares of mutual funds. "Self-directed IRAs" seem relatively rare but is an option if one wants to trade stocks within one's retirement portfolio.

In all cases, there is usually more paperwork involved and sometimes additional fees because of special reporting and custodial requirements to maintain favorable tax status of that accunt.

As far as which is best, it really depends too much on your savings or investment objectives, risk tolerance, investment horizon, etc., but if you are in for the long haul you would probably want to get stock exposure, either by having the IRA invested in mutual funds that invest in stocks, or having the IRA invest directly in stocks. A no-load S&P500 index fund is one way to get diversified stock exposure for relatively low fees and low cost of entry, but one really should have an investment plan and follow it, rather than rely on some stranger (and my friends sometimes say I am really strange) make investment suggestions.
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