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Author: cwilkens Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75378  
Subject: IRA investing Date: 3/19/2001 12:55 PM
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What is the most appropriate strategy to invest with for a ROTH IRA? Should the IRA be diversified
like any other portfolio, should I just chuck all $2000 in one index fund every year, or should I use the
Rule Maker strategy, buying 10 stocks and leaving it alone? With relatively little money in that account
($4000 currently) and $2000 limits on contributions/year, I am not sure I could diversify much.
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Author: Ringfinger Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28504 of 75378
Subject: Re: IRA investing Date: 3/19/2001 1:01 PM
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Well, I would say that one should always try to diversify. With that in mind, if you left in all in an index fund, you would be better off than most. You really need to have a decent balance if you want to invest in individual stocks. Of course, ther is B&H to lower your commissions.

Just some thoughts.

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Author: PMcMullenCT Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28505 of 75378
Subject: Re: IRA investing Date: 3/19/2001 1:09 PM
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What is the most appropriate strategy to invest with for a ROTH IRA? Should the IRA be diversified
like any other portfolio, should I just chuck all $2000 in one index fund every year, or should I use the
Rule Maker strategy, buying 10 stocks and leaving it alone? With relatively little money in that account
($4000 currently) and $2000 limits on contributions/year, I am not sure I could diversify much.


The money in your Roth IRA should be just one part of your diversified portfolio. Buy and hold stocks would probably be a better idea for the taxable portion of your portfolio, as you could control capital gains and losses. If there's a place in your portfolio for any actively managed funds, you should probably have them in a tax sheltered IRA or 401K plan.

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Author: tfranklin Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28506 of 75378
Subject: Re: IRA investing Date: 3/19/2001 1:11 PM
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What is the most appropriate strategy to invest with for a ROTH IRA?

The appropriate strategy is what you feel comfortable doing.

Should the IRA be diversified like any other portfolio, should I just chuck all $2000 in one index fund every year, or should I use the Rule Maker strategy, buying 10 stocks and leaving it alone?

Yes it should be diversified. Investing in an index fund can be considered diversifying. An S&P index fund holds 500 different stocks. IMHO, that is the best way to go until you get the account built up to about $10,000, or how ever much you feel comfortable with, and then start looking for a few long term buy and hold stocks. Whether you use Rule Maker or another strategy is up to you. You could add one stock per year after you reach $10,000.

It's up to you.
Good luck,
Tony

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28510 of 75378
Subject: Re: IRA investing Date: 3/19/2001 3:47 PM
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cwilkens,

Remember that in a Roth IRA,
1- If you lose the money, it's gone, and you won't get a tax deduction
2- you can only add $2000 a year (unless they change it)
3- If you gain money, it's never taxed (with a very very few exceptions)

Because of #1 I don't think it's a good idea to go with something super-concentrated or super-aggressive. Because of #3, don't be too conservative. So being somewhat diversified and somewhat aggressive is the best policy in my mind.

However, diversification can be expensive with a small account balance. There are some funds that are set up for precisely this situation -- "balanced" funds which have some allocation to stocks, some to bonds, and some to cash. Vanguard has the LifeStrategy series of funds.

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