No. of Recommendations: 0
I'm a fairly young (28) professional who just opened a Roth IRA account with scottrade last year. I only have $10k invested in it and most of my other excess income is going towards debt reduction.

Contrary to everything I've ever heard about investing, I haven't focused on diversification in my Roth IRA, but rather I have selected a handful of stocks that I considered to be improperly valued, regardless of their business sector. The reasons why I haven't taken the standard diversification approach are:

1. I have enough time before retirement that I can afford to take some losses in my retirement portfolio and adjust my investment strategy as I move towards retirement.

2. Proceeds from Roth IRAs are non-taxable so if I were to hit a few homeruns, I could take the profits without paying taxes on them, but if I did it outside of a Roth structure, I would be hit with a tax.

3. I only have $10k (~5k invested), so my undiversified exposure isn't huge at this point. I will become more diversified as I invest more.

4. It seems to me that over the past 24 or so months market forces have been the main driving force in stock prices. In other words, there is a higher than normal correlation between which way any two stocks move because of market wide forces such as europe's debt crisis, panick, etc.

Given my situation, do you think it is reasonable to have an undiversified portfolio? Or should I set aside my greed for tax free gains and take my "free lunch"?
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.