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Author: harryk44 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: Internet Fund for an IRA? Date: 11/15/1999 1:09 AM
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Hello,

I am going to start putting money into an IRA this year. I am considering investing in an Internet fund rather than an Index fund, as I think it will perform better. Is this type of relatively high risk investing OK for an IRA investment? or am I smarter to stick to either an Index fund or use the Foolish Four Dow methodology?

I am 31, I plan on keeping the money in the IRA until I retire, (unlesss I take a withdrawal towards a house payment in a few years).

Feedback appreciated.

Harry
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15384 of 75335
Subject: Re: Internet Fund for an IRA? Date: 11/15/1999 11:53 AM
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Internet stocks have done so well recently, it is tempting to invest in them. Personally I like the technology sector funds better (FSPTX, PRSCX, ATECX, plus many others) because they have potential to prosper long term. Some are doing NASDAQ index funds spiders like QQQ. There is also a technology spyder, XKL. (XLK and QQQ have Foolish boards.)

The net stocks took off on October 26, when housing starts were reported down for September and people concluded that interest rates were not likely to increase further. They cashed in their money markets en mass and seem to have put their cash in a few net stocks.

Since Oct 26, most of these funds have been earning 1% per day, 5% per week--a whopping return compared to the 12% per year expected from an S&P Index fund. They are hot.

Should you go after net stocks? If you are willing to take the risk, it can be OK. The risk is high. Price earnings ratios are astonomical (Alan Greenspans "exuberance") and a crash is possible. But the payoff can be big. You will certainly want to do this when you are young. And Fools would probably advise against it.

The Foolish advice is start with a basic index fund and limit your participation in hot sectors to about 20% of your investment. You could of course invest in Rule Maker stocks that also happen to be internet stocks.

Best of luck to you.

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Author: mathetes Big red star, 1000 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15404 of 75335
Subject: Re: Internet Fund for an IRA? Date: 11/15/1999 10:02 PM
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I am going to start putting money into an IRA this year. I am considering investing in an Internet fund rather than an Index fund, as I think it will perform better. Is this type of relatively high risk investing OK for an IRA investment? or am I smarter to stick to either an Index fund or use the Foolish Four Dow methodology?

I am 31, ...


There's nothing that says you can't take some risks with an IRA. Just do it with your eyes open. Is the fund one that really makes sense? You could certainly put a portion, maybe even a generous portion, into that.

You should probably do a bit more studying of the Fool's various methodologies before putting too much into any mutual fund other than an index fund. You might conclude, as many others have, that you can do at least as well by picking out your own internet stocks, for example.

mathetes

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