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URL:  http://boards.fool.com/roth-ira-individual-stocks-14707289.aspx

Subject:  Roth IRA + Individual Stocks Date:  4/5/2001  12:26 PM
Author:  ztreuhaft Number:  28922 of 75593

This is my first post ever, so please forgive me if this question has been asked before.

I have a Roth IRA with a small amount of money, a taxable account with a larger amount of money, and a long investment horizon (I'm 24, so it's about 40 years). I want to move into investing in individual stocks (i.e., Rule Makers), but can't figure out the best way to allocate the various assets while maximizing the tax benefits of the Roth.

Since I can only contribute $2K per year to the Roth, I'm nervous about buying individual stocks in that account. My thinking is that if I only hold a few stocks in the Roth, and they don't perform so well, I've wasted the tax advantage. Should I keep the Roth money in funds (e.g., VFINX) for the diversification? Should I keep it in individual stocks, and swallow the risk?

I guess the bottom line is this: What assets do I put in the Roth to best make use of the tax benefits of this account?

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