Hello -I've been a fool for more than a year now and have taken several courses. I've learned a great deal, but still have a way to go. I'm at a crossroads now, and would love to hear from others who might be facing (or have faced) similar situations.Currently, I have an IRA and two 401K, all of which are invested in S&P 500 index funds. I want to start a Roth IRA before April 15 and contribute to it each year (I figure I have about 20 years until I retire). Once I've done this, I plan to invest in several stocks, most likely through DRIPs, but I want to gain a little more confidence before taking that step.For now, I'm deliberating as to the best way to invest the Roth IRA funds. I could invest them in another S&P 500 index fund, but was wondering if I should diversify a bit more. I could try another index, or perhaps a fool-friendly managed fund, but I'm not sure. Any thoughts from others who have been where I am? How did you make your decision?A footnote: Despite my newly acquired knowledge, I realize I'm hesitant because of the way the market has been. It's one thing to invest money in a 401K plan through my employer; it's another to realize the available choices I have on my own. And, boy, have I made past mistakes (like keeping my 401Ks in balanced funds during the peak years of the 1990s---and switching them just before the markets plummeted!). I've learned valuable lessons through this process, but it still smarts. It's empowering to be gaining info that helps me make more informed decisions, but I'm at this awkward stage where it sure would help to hear from others before I take this next step with the Roth IRA.Thanks in advance,Gail
Gail, your comments are exactly what is happening to the stock market right now. Investors are uncertain about the future, so they are being cautious. That may continue for a while until company earnings start showing major gains. But the gains from the week after 9-11 have been pretty spectacular.Fools believe you should be a long term investor. Therefore, the short term swings in the market don't matter. Just keep buying at regular intervals and in the long term you will be very pleased with the results.Expanding your position in S&P 500 Index funds by investing your Ross too in those funds is certainly OK. The S&P is relatively diverse--especially for the long term investor. You could go with a small cap, mid cap or international fund for divsification if you like.Your drip plan sounds like a good one too. I would favor blue chips for that. You can do that in a Roth by having your Roth at a discount broker. Its not quite as inexpensive as most company sponsored drip plans, but it lets you participate in a Roth while reinvesting those dividends.Best of luck to you.
I've been obsessing with similar questions. A signif. % of my (large) rollover IRA portfolio is in VFINX (Vanguard S&P 500 Index Fund), and I've watched its NAV go down in recent months (though it appears slowly on the way up again, as the broad market does the same).I'm not one to try to time the market (and don't recommend that), but have been considering exchanging some of the VFINX for VGSIX (Vanguard REIT Index Fund). It has had a fairly reliable income return for many years, but I haven't a clue as to how I should expect its NAV to do (because I'm too dense to grasp the complexities of the RE market). This probably shouldn't matter over the long term, as long as the income continues at historical rates. So far, it looks like VGSIX would be a good thing for me, and possibly for you. [DISCLAIMER: I've been FIRE for almost a year, and haven't had to draw on my retirement assets yet, having 2 half-sized pensions and early SS checks to live on. So this would continue to be a long term investment.]Do any of the Board's veterans have thoughts on this idea (for you and for me?Cheers and good luck!jtr
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