Greetings. I usually lurk on the Credit Card board but now it is time to head over here and ask for assistance and guidance. I'm a medical resident (age 43, single, no kids) with a whop of debt but also have a $84K Roth IRA that I wish to prod into life and I'm seeking thoughts on ways to go with it.Right now I have about $25K in S&P 500 funds, about $49K (sadly) in the money market and about $10K divided among 4-5 mutual funds. I will be adding $2K per year to the Roth for as long as I am eligible (about another 4-5 years).I am not averse to risk but don't wish to drop $49K all at once into some new vehicle. I wish to begin to diversify it now and, though I have READ the 13 Steps, still hope to hear of some sample PLANS that anybody out there might favor and might be willing to share with me.Looking forward to any and all comments and ideas. Thanks for your anticipated input!xraymd
Right now I have about $25K in S&P 500 funds, about $49K (sadly) in the money market and about $10K divided among 4-5 mutual funds. I will be adding $2K per year to the Roth for as long as I am eligible (about another 4-5 years).I am not averse to risk but don't wish to drop $49K all at once into some new vehicle.Well, you don't indicate how much risk you want to take, what are your goals and time horizon, etc. But here are my thoughts, FWIW.1. You have > $80K you can diversify with. That's enough to buy $10K worth of 8 well researched stocks. Or if you still want some in mutual funds (Foolish advice is to stick with the S&P 500 index fund), choose how much stays there and how much goes into individual stocks.2. While reading, educating yourself on investing, and researching stocks, I'd recommend you get your money working for you by putting it in the S&P 500 index fund. If you don't want to do so all at once, do it over time; e.g., $10K per month. That'll get you invested over the course of 6 months. Move the money market funds first, then sell the other MFs and buy S&P.3. While you're doing that, you can begin to research companies you like. When you find some, instead of moving the $10K that was earmarked for S&P 500 for that month, buy the individual stock instead.4. Keep reading The Motley Fool. There's some great advice here.Hope this helps.Bob H, aka Blues
Hello xraymd,You asked for portfolio suggestions for you IRA and I starting thinking "what would I buy if I had $50K to invest?" Since you are investing for the long-long-term (i assume you don't plan to remove the money early) I am thinking of long-term growth stocks. So here's what came to mind....as you'll see, these are mostly tech stocks but I think they have long-term growth potential1. Microsoft -- check out some of the Motley Fool analysis on MSFT. What other company has such an incredible amount of CASH? Buy shares now and watch your profits mount over the next 10 years2. Scient -- although this is a brand-new public traded company, they have what it takes to make it in the eCommerce market. They recently came to my college to recruit and let me tell you, they are only hiring the BRIGHTEST people. I can't say the same for huge companies like Hewlett Packard, Deloitte, or IBM. Put your money here and watch the stock go up, split, go up split, for at least the next 5 years.3. Cisco -- the next wave in high-tech manufacturing after the quest to acheive the highest microprocessor is how to achieve the most bandwidth. Higher bandwidth = faster internet connection. You could have the fastest modem on the planet but if any connections downstream from your ISP are low-bandwidth, your pages will download s-l-o-w-l-y! Cisco is the master in this and will continue to be the master.4. Berkshire Hathaway -- (the B shares, which are cheaper ticker:BRKB) Warren Buffet and his company outperform the market EVERY STINKING YEAR! The man is a genius. Investing with him is like investing in an index-mutual fund. Just put the money in and ignore it. Take a look in 10 years and let your jaw drop at the profits. I have faith in the guy, I read his biography. well, that's what I'd buy if I had alot of money. good luck and I hope to be in your position someday. Have you thought about opening a regular investing account aside from your IRA? Then you could take advantage of your profits before you retire. =)-Alina
xraymd,It can pay to "bet the ranch" with your Roth. Remember that all the earnings are yours (or your heirs) tax-free. You don't indicate whether or not you have other investments, but if you do be the most aggressive with the Roth IRA.Before you "plop" your money anywhere, decide if you first want to become an "active" investor, i.e., selecting individual stocks. Don't make this decision lightly. Moving from index funds to active investing will require a significant investment of time and effort. From the tone of your message, it sounds like you are looking for passive investment ideas. Fortunately, there are a couple of good ways to try to beat the market with little effort. There is the RP4 method advocated on this site, which many people have had success with.Another idea is to buy sector funds or investment trusts. Instead of investing in a broad based index, these investments select a subsegment of the stocks by industry. This strategy can either win or lose compared to the market. It doesn't take a whole lot of effort though to pick good sectors to invest in. Invest in the sectors that are expected to grow earnings the fastest: technology and health care. This article offers a good selection of the entire realm of sector investments (none of these funds are managed - they might be called sector "index" funds ): http://cbs.marketwatch.com/archive/19990921/news/current/superstar.htxTwo of my favorites are VIGRX and QQQ. There's no magic with these investments. QQQ, which is made up of the Nasdaq 100 companies is projected to growth earnings 30%/year over the next 5 years.rustedSoul
xraymd:As an easy way to easy into the market over time, I would recommend the Keystone Dozens approach to supplement your index fund. It involves investing an equal amount every month in the top ranked stock of the Keystone screen which selects large cap growth stocks.This would be a kind of 'dollar cost averaging' method and has had great results in the past.For more information, browse on over to the Foolish Workshop in the Investors Roundtable folder.
Not being the "traditional" medical student or resident, you didn't say whether you incurred school debts for your education. If you have them (or any other debt), that's the first place I'd "invest" in, paying off debt.Second, invest in the Roth IRA. Once that first job comes along, so long to qualifying (good news bad news thing).Third, been there done that with the residency lifestyle (I believe that's an oxymoron). Keep it simple for now. I'd place my money in RP4 or BSP and Keystone. Gives value and growth plus they only have to be updated once a year. Time your most valuable assest as a resident. Need it to play, not work on your investments.JLC
xraymd You've gotten a lot of good advice here but I would like to add some. I assume your remaining debt is relativly low interest student loans. Since you have been on the credit card board, I hope youv'e got the message to pay off all credit card debt before you do much investing. First thing to do in my opinion is:Get the money out of the Money Market funds and into one or more of the indexes.Get the money out of the mutual funds and into one or more of the indexes. Then prepare yourself for much better returns. You've read the 13 steps, now its time to do more reading. I recommend, "You Have More Than You Think" as a starter. It may be repetitive for you but it is a good starting point. Then read "The Motley Fool Investment Guide". This will give you a much better understanding of the various Foolish investment stratagies. Follow it with "Rule Breakers, Rule Makers" then you will be ready to move on past indexes.Chuck
Many, many thanks to all who took the time to offer me their opinions on how to get started. It's given me a push to rebalance my timid portfolio into one that is more robust without careening headlong into investments I don't fully understand yet. I have just transferred $10K into the S&P 500 while I continue my reading on Rule Makers, Rule Breakers and I must thank everyone again for helping guide me.I'll be happy to check in with progress reports, or to offer my newly minted Foolish opinions when the opportunity arises. For those who wondered: yes, my remaining debt came from medical school and most of it is in Dept of Education student loans -- the remainder is on credit cards (GASP!) but at rates below 8% and I am NOT adding to the debt burden. I am paying down the cards monthly (though it will take awhile) and am investing no more than $2K per year so I can maximize debt payoff while still catching the Roth wave while I can (the $84K I have in Roth came from a conversion of an old 401(k)). Again, I do appreciate your willingness to share your knowledge and experience so generously and I will certainly try to do the same in return.xraymd
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