Hello all. I am trying to decide how to invest the $5000 I can use each year in my Roth IRA. I had just been putting it into a mutual fund evenly distributed throughout the year.

But now I was thinking in investing in stocks suggested by TMF. Is there a rule for investing too little? Should I purchase $1000 worth of 5 different stocks throughout the year? $500 of 10 stocks? Or maybe $5000 of one stock?

Any suggestions would be grand. Thank you!

Jerome

I suggest you put it in a mutual fund. Preferably a low-fee index fund.

Jerome,

If you haven't read the 13 Steps under How To Invest above, I would highly recommend you do so before investing. Here is a direct link:

http://www.fool.com/how-to-invest/thirteen-steps/index.aspx?...

Next ask yourself if this $5K contribution to your Roth is the only money you will invest this year? Taxable brokerage? 401K with self-directed or brokerage?

If you have cash going to other investments, I might say yes to some small stakes, $1,000 or so, in individual stocks. No Rush If it was to take the whole year to buy those 5 companies, great. For a limited amount like this, I would suggest selecting companies very carefully. Penny stocks, No. Way too risky.

If this will be the only cash you have invested, go with an ETF for the time being. Build some savings first, then revisit the question on individual stocks.

In the mean time, study and learn. Knowledge will serve you well.

Gene

I currently put $5000 into the Roth IRA into a targeted Vanguard retirement fund (index), and the other $6500 I'm allotted (total of $11500) into my 401k at work.

I'll re-read the MF 13 investment steps again since it was a while ago and I'm just trying to get back into the game.

I have additional money that I could invest, but thought it might be best to do it within my Roth IRA. Perhaps a taxable brokerage account should be my goal.

Thanks for the tips.

Jerome

Jerome,

I have additional money that I could invest, but thought it might be best to do it within my Roth IRA. Perhaps a taxable brokerage account should be my goal.

Tax-deferred accounts are almost always(there are exceptions) the best place to put money into for retirement investing. The growth, tax-free, over the years can make a big difference.

If you have maxed out all the legal contibutions to tax-free accounts, by all means, invest any remaining available cash into a taxable account. The nice thing about this is no limit on contributions. Of course, you need to understand the tax implications of sales.

If you end up in a position to retire before you are 59 1/2, money in a taxable account can be used for expenses. Withdrawls from IRAs and 401Ks before 59 1/2 may be subject to a 10% early withdrawl penalty. There are, of course, exceptions to that.

Another thing to keep in mind as you go forward investing, view all accounts as one pot. If you decide you want a certain percentage in stocks, bonds, etc, use the total of all accounts to calculate your percentages, not just your Roth or 401K.

Gene