I'm only 21 and I'm going to open an ROTH IRA. I was recommended to
invest into The Hartford Capital Appreciation Fund. I don't know much
about mutual funds or stocks. Any advice for a young guy looking for
long term gains? Any recommendations? Where can I look? What should I
do?
wrote:
> I'm only 21 and I'm going to open an ROTH IRA. I was recommended to
> invest into The Hartford Capital Appreciation Fund. I don't know much
> about mutual funds or stocks. Any advice for a young guy looking for
> long term gains? Any recommendations? Where can I look? What should I
> do?
Which class of this fund? And who "recommended" this to you? Some
sales person who is going to take 5.5% off the top of your money?
It's a class A (ITHAX). The person who recommended it to me is some
random guy who works at my bank. I went to go see a family friend of
mine who works at the bank regarding opening an IRA. He told me to
speak to their Investment Services guy who "recommended" me to The
Hartford Capital Appreciation Fund (ITHAX). The guy has been calling me
like no other about opening the account now.
wrote:
> It's a class A (ITHAX). The person who recommended it to me is some
> random guy who works at my bank. I went to go see a family friend of
> mine who works at the bank regarding opening an IRA. He told me to
> speak to their Investment Services guy who "recommended" me to The
> Hartford Capital Appreciation Fund (ITHAX). The guy has been calling me
> like no other about opening the account now.
Ask him what's his commission?
I remember a long time ago a pizza place I used to go had a sign that
says "The bank don't make pizza, and we don't cash checks." The same
idea says I would never get investment ideas from my bank.
First, repeat your question at misc.invest.financial-plan . It is moderated,
and its participants tend to see investing for retirement somewhat
differently than many here. Misc.invest.mutual-funds has more gamblers. A
diverse set of viewpoints is often more helpful.
Open an IRA account and put your first Roth IRA contribution into a money
market fund making at least 4%. Ask if you're not sure where to find one.
Then I would spend a few hours each weekend for the next six months reading
about investing in stocks and bonds, so you know what you're getting into.
For a newbie like yourself, sometime after six months of weekend reading, I
then recommend considering an index mutual fund. The site below has links to
a number of other sites that discuss index funds.
In your readings on mutual fund, take special note of the counsel that
chasing returns often does not pay, and that low fee funds often do better
than high fee funds. Certainly at this point avoid funds with loads.
Now watch the vitriol spewed on the above. See you at
misc.invest.financial-plan , where far more sanity reigns.
<> wrote
> I'm only 21 and I'm going to open an ROTH IRA. I was recommended to
> invest into The Hartford Capital Appreciation Fund. I don't know much
> about mutual funds or stocks. Any advice for a young guy looking for
> long term gains? Any recommendations? Where can I look? What should I
> do?
Where can I find a money market fund?
It's 5.5%. Does this sales charge apply each time I make a
contribution?
Two good choices to my mind are:
- Vanguard Total Market index fund - low charges, no load, and a good
long term record
- Vanguard Target Retirement 2045 Fund (VTIVX) - this is a fund that
invests mostly in stocks, but some bonds, and targets retirement at
2045, when you will be 65
If you cannot access Vanguard funds, then you want low cost index funds
which index against the US stock market. I wouldn't get too fancy at
this point in your life-- you want something with a proven long term
record. As you make savings, there is plenty of time in the future to
experiment with other kinds of funds and asset allocations.
A related point is whether you really want to be opening an IRA at this
point. An alternative would be to have a money market fund, and save
your money for the downpayment on your first house. I wouldn't rush
out and buy one now (property prices are at record highs pretty well
everywhere in the US) but you probably want to be buying your first
home sometime between age 25 and 30 and you could save up a tidy nest
egg between now and then for the downpayment.
Most banks and mutual fund companies offer them. By and large, the key
is to get a low management expense ratio (MER). These are not Federal
Deposit insured (FDIC) as far as a I know, so if a fund is paying a
higher yield than other MM funds, it is probably taking higher risks.
Other than banks, quality fund companies include Vanguard, Fidelity.
They both offer a very wide range of funds and AFAIK, quite user
friendly online tools for managing your portfolio of funds.
Morningstar.com is a good place to start researching mutual funds.
Their star system isn't that helpful but it is a start.
<> wrote in message
news:
> It's 5.5%. Does this sales charge apply each time I make a
> contribution?
Yes.
<> wrote in message
news:
> It's 5.5%. Does this sales charge apply each time I make a
> contribution?
I'd stay away...do some research at the library over the weekend (ask for a
publication called "Morningstar") and look for "no-load" funds.
There is a very good chance the U.S. stock market will take a 5-10% hit this
year, after 3 up years...if your $1000 investment only gets you $945 in
funds after the commission...and the fund drops 10%, or $95, to $850, then
you'd need an up year of 17.65% the next year just to get you back where you
started.
Avoid load funds. Period.
D
"Elle" <> wrote in message
news:cLtKf.2341$
> First, repeat your question at misc.invest.financial-plan . It is
> moderated, and its participants tend to see investing for retirement
> somewhat differently than many here. Misc.invest.mutual-funds has more
> gamblers. A diverse set of viewpoints is often more helpful.
I agree...people here have higher risk/reward tolerances...you may, too,
eventually...just be aware that many people here invest in funds that can
shoot up or down quickly.
> Open an IRA account and put your first Roth IRA contribution into a money
> market fund making at least 4%. Ask if you're not sure where to find one.
I didn't like this advice at first....
> Then I would spend a few hours each weekend for the next six months
> reading about investing in stocks and bonds, so you know what you're
> getting into.
Great idea...start with Kiplinger's Personal Finance or Money
Magazine...also go online at at do some searches.
> For a newbie like yourself, sometime after six months of weekend reading,
> I then recommend considering an index mutual fund. The site below has
> links to a number of other sites that discuss index funds.
>
I'd say more like 2-3 months...and speed it up if you are looking to get
this in as an '05 contribution.
Index is okay...but he's young and can afford a bit more risk.
> In your readings on mutual fund, take special note of the counsel that
> chasing returns often does not pay, and that low fee funds often do better
> than high fee funds. Certainly at this point avoid funds with loads.
True, true, and true...but look at returns over 3, 5, and 10 year-periods to
see that a fund is consistently good...and that the managers haven't changed
a lot in that time.
> Now watch the vitriol spewed on the above. See you at
> misc.invest.financial-plan , where far more sanity reigns.
LOL
D
>
> <> wrote
>> I'm only 21 and I'm going to open an ROTH IRA. I was recommended to
>> invest into The Hartford Capital Appreciation Fund. I don't know much
>> about mutual funds or stocks. Any advice for a young guy looking for
>> long term gains? Any recommendations? Where can I look? What should I
>> do?
>
>
"Dave Hannes" <> wrote
> "Elle" <> wrote
>> For a newbie like yourself, sometime after six months of
>> weekend reading, I then recommend considering an index
>> mutual fund. The site below has links to a number of
>> other sites that discuss index funds.
>>
>
> I'd say more like 2-3 months...and speed it up if you are
> looking to get this in as an '05 contribution.
Sure, two-three months is do-able for someone working a
40-hour work week and willing to put in the time after work
hours. (Over 20 years ago, when I first started buying
stocks and mutual funds, I think it took a lot more time,
because there wasn't any internet with all these resources
quoting studies about the virtues of index funds,
allocating, etc. And to whom could one address questions and
get an answer quickly? A trusted relative or maybe a for-fee
financial planner, period. Sucked. Now one can post at
multiple forums and get dozens of opinions on an investing
topic within hours.)
> Index is okay...but he's young and can afford a bit more
> risk.
Sure; I should have said "index fundS." Absolutely for his
age he should consider having some funds in international
stocks, emerging markets, etc. But there are index funds (or
at least low expense funds) for these sectors.
>> In your readings on mutual fund, take special note of the
>> counsel that chasing returns often does not pay, and that
>> low fee funds often do better than high fee funds.
>> Certainly at this point avoid funds with loads.
>
> True, true, and true...but look at returns over 3, 5, and
> 10 year-periods to see that a fund is consistently
> good...and that the managers haven't changed a lot in that
> time.
Since I think index funds are most appropriate for the
investor who hasn't much time to spend on his investments,
returns over 3-, 5-, and 10-year time periods seem to me to
be irrelevant. Index funds return... whatever over 3-year
etc. periods. The point is (1) to be diversified such that
when, say, EM is going down, domestic is going up; and (2)
maximize returns via low expense ratios and, like you said,
no loads.