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Author: rupee1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76397  
Subject: short term investmenting in IRAs Date: 8/25/2000 11:25 AM
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The question I pose is:
Is using your IRAs as a pool of money for risky investments a bad idea ?

The introductory article suggests (and just talks about) the Dow 4, which is relatively conservative.
But I harbour dellusions about knowing the industry that I work in. I keep track of several companies: and hope to make informed predictions about when a company will grow or slow down. The said industry happens to be very volatile as well.

In my own simple minded way I see IRAs as: ...buy and sell as many times as u want, just paying brokerage fees. Great for short term investments, that you want to sell and reinvest more than once a year. Perfect for buying the volatile stocks that I keep track of and sell them off when I see that a company may not do too well.

Can someone please comment on this. Is there a flaw in the logic I have proposed above. Just in case someone may find this information useful in making a comment. I am 23 yr old and make around 70k.

Thanks in advance,
-- Rupee1
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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: 24344 of 76397
Subject: Re: short term investmenting in IRAs Date: 8/25/2000 12:27 PM
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There is no question that a good stock picker can do better than the mechanical investing techniques usually recommended in Fooldom. However, most stock pickers also pick a few losers and face difficult decisions knowing when to sell. That is why mechanical investing works well for many who are less sophisticated or who do not have lots of time to monitor the performance of companies they are investing in.

Different strokes for different folks. If you feel you can successfully pick stocks that give good returns, Roth IRA can be a great place to do it.

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Author: rhecker One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 24346 of 76397
Subject: Re: short term investmenting in IRAs Date: 8/25/2000 12:34 PM
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Is using your IRAs as a pool of money for risky investments a bad idea ?
But I harbour dellusions about knowing the industry that I work in. I keep track of several companies: and hope to make informed predictions about when a company will grow or slow down. The said industry happens to be very volatile as well.

In my own simple minded way I see IRAs as: ...buy and sell as many times as u want, just paying brokerage fees. Great for short term investments, that you want to sell and reinvest more than once a year. Perfect for buying the volatile stocks that I keep track of and sell them off when I see that a company may not do too well.

Can someone please comment on this. Is there a flaw in the logic I have proposed above. Just in case someone may find this information useful in making a comment. I am 23 yr old and make around 70k.


1. "Informed Predictions" are still predictions. It sounds like you want to try to time the market. In my opinion, the "psychic friends" network is very helpful in this area.

2. The money for making trades in your IRA comes from the contributions to that IRA. If you're just starting, then $2,000 might not get you too far with a lot of trading activity. A few bad trades could quickly erode the $2k. Of course, if you do well or have a few years of contributions under your belt, then the trading costs may become less significant.

3. Purely for tax purposes, it definitely seems easier to do a lot of trading within an IRA. You don't have to keep track of what kinds of capital gains taxes you may owe because there aren't any.

I wonder what "industry" you could be talking about? You work in it. You're 23. You make around 70k. Could it be something to do with technology? Maybe even network or telecommunications technology?


Hope this helps.


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Author: jkrou Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 24350 of 76397
Subject: Re: short term investmenting in IRAs Date: 8/25/2000 4:27 PM
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Rupee,

the main problem that I see in your strategy is that you are buying and selling a lot. Commissions come from within the IRA so you are diminishing the value of the vehicle by trading. Granted that this becomes mute if you make a huge gain on sale, but that in reality is not that often. One only has to look at the percentage of day traders who are losing money versus the ones who are making money to see that it is not really suited for your long term retirement funds.

Are you comfortable betting your retirement against the trading strategy?

Jenn

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