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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: of 76074  
Subject: Re: Which investment accounts are right for me? Date: 1/22/2004 2:09 PM
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Welcome, squarepegs. Glad you could join us.

You seem to be doing fine with what you have. I would encourage you to keep it up. VFINX is an excellent choice as your core investment. Adding some individual stocks to the mix as you become aware of good opportunities is also a good idea. And Scottrade is a good choice for that.

So long as you invest in growth stocks that pay small dividends or whose dividends fall under the Federal low dividend rate, taxable investments can be excellent. This is usually called LTBH (long term buy and hold) in the Foolish lingo. You select investments that grow and pay few taxable distributions. Then you pay taxes only when you sell and then at capital gains rates. This can be almost as good as tax advantaged programs and it gives you much flexibility to meet various financial goals without the restrictions and penalties of the tax advantaged programs.

Tax advantaged programs are a good deal for the most part. So investing a Roth to the max allowed each year is usually a good idea. Other tax advantaged programs are also good. Maxing all of them and then having a LTBH account is usually a good idea if you can afford it--especially if you want to retire early.

Tax deferred annuities are the one plan out there that Fools would hesitate to recommend. Many are sold by insurance companies and charge high fees. Investment performance can be mediocre and the costs to change can be high. However, companies like Vanguard now offer annuities with no surrender charges. These can be OK if you really need one, but Fools suggest you try LTBH before setting up an annuity.

Best of luck to you.
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