I'm only 21 and I'm going to open an ROTH IRA. I was recommended to
invest into The Hartford Capital Appreciation Fund ITHAX by a sales
person at my bank. So I know he intends to make 5.5% off me. 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?
Roger,
Congratulations on getting a start at age 21 on a ROTH IRA. As you
probably know your earnings on this investment will not be subject to
federal tax now or later when you withdrawl them in retirement.
There are many good no-load (no sales commission) funds out there.
However, beware of the fact that this year's winners will probably not
be next year's winners. You can spend a lot of time and opportunity
chasing last years winners and not be a winner yourself.
If you just want to do as well as the market indexes than an index fund
is for you. It is hard to find a company that does indexing better than
Vanguard. Their expense ratios are some of the lowest in the industry.
There is a stratagy that has consistently outperformed the market 8 out
of the 10 past years. It requires discipline and monthly attention from
you. The monthly attention is less then 1 hour per month. This is a
strategy that I know about and use. There are others.
As always when you invest in a mutual fund that invests your money in
stocks and/or bonds, there are risks. One of those risk is market risk.
Your investment may decrease in value. However, over the long term
historically stocks are the winners. You are 21. Your IRA is a long
term investment.
If you are not one to tolerate the risks then you should look to a
money market funds or a bank CD. The risk with these types of
investments is that they may not keep up with inflation.
Well, there is much to cover on the topic. But these are some things to
consider. There are many more.
Dave