cancel
Showing results for 
Search instead for 
Did you mean: 

Where To Invest My Roth E-Fund?

Auto Loans for ANY Credit Situation. Immediate Response.
Advertiser disclosure
Regular Contributor

Where To Invest My Roth E-Fund?

Hello again- recently I posted a thread about my emergency fund and PMI. At that time some suggested that I look into a Roth IRA for my emergency fund which I did and decided to get the ball rolling.

 

At this time my retirment plan consists of my pension from my job and my house which the loan to original amount paid is at 80 percent and aslo my Silver Bullion stash of 240 physical ounces. For reference my neibor has his house for sale and is asking 100k more then I paid for mine. His is a little nicer inside but its the same exact model, square feet, lot size, etc... so the loan to actual value is way more the 80 percent.

 

To this point I have hesitated opening any retirment plans because I dont believe the stock market is a safe place to park my money. I beleive that a bear market will come and I dont want to get in at the top obviously. Now I have been wrong for about ten years now so its become clear that my timing of the big boards is not very good although I do believe the bull market end is near. I do have experience swing trading small cap stocks and penny stocks using technical analysist. I have survived as a trader for several years straight in the past but at this time I only do it depending on my work schedule. Ive been trading on and off since 2008/2009. I can make an average of 1,000 per month consitantly if I can give 100 percent screen time which is why I drive the bus...

 

All that said can anyone suggest where to invest my new Roth IRA funds? Ive looked into some Vanguard target date mutual funds. Im almost 40 so im looking at 2045 target date (25 years). I am eligible to start collect my pension at age 57.5 but would get more if I work until the normal retitirement age of 65. I may retire early and play with the penny stocks. Im not sure because I do enjoy my regular job (and trading). Is there any advice for where I should put my Roth emergency fund (5500) which I plan to max out contribuations moving foward?

 

Honestly as long as it can beat my interest rate on my mortgage (3.75) I will be happy. I am not afraid to take risk if the risk/reward ratio warrents it. Ive blown up my share of trading accounts (tuition learning to trade) so I wont be jumping or anythingif I loose. haha. Any tips for a newbie retirement investor?

Message 1 of 5
4 REPLIES 4
Super Contributor

Re: Where To Invest My Roth E-Fund?

I don't believe there is any way you are going to be able to have a guaranteed return of 3.25%. Obvisouly nobody has a crystal ball so don't know if market will be going up or down. a 40-60 stock/bond balanced fund may be the best way to hedge your bets , but thats not even a guarantee. Vanguard has lifestrategy set of balanced funds that does 20-80 40-60 60-40 and 80-20 , but there is no way to hedge your bets with stock market bull market or bear market.

 

From the sound of it you seem to be on the more risk averse side so either one of vanguard life strategy fund or wellesley income fund could be a good fit for you. Wellesley is an active managed vanguard fund but expense ratio is pretty low , and has had good results. Past performance is  just that past performance but they have quite a long track record.



EX Fico 804 11/16/16 Fako 800 Credit.com 11/16/16
EQ SW bank enhanced 11/16/16 839 CK fako 822 11/16/16
TU Fico discover 10/19/16 814 Fako 819 Creditkarma 11/16/16
Message 2 of 5
Highlighted
Moderator Emeritus

Re: Where To Invest My Roth E-Fund?

There is no guarunteed 3.75% other than just paying down the mortgage for most if not all IRA's: if the banks could get better, you wouldn't get that rate for your mortgage TBH and rates haven't gone up that much to create enough of a spread currently.

 

If the market really does tank there's going to be outflows to something, would normally say the bond market but that's a current bet that rates aren't going to rise more... and I don't think anyone really has a good handle on why we aren't seeing more inflation even with absurdly good job data, and if that changes, well at least then we are back to something we understand I suppose.  Personally I'm just waiting for my last dividend out of my major bond holding to payout in March and then I'm getting out of that play, and read something recently that Italy of all places was getting major inflows to their bonds, and their economy has problems so clearly money is getting speculative in this current market searching for yield.

 

Anyway the market is strange and I saw my own portfolio utterly whipsaw over the last 4 months, down more than 30% and now back up more than 30%, but I'm a buy and hold equity investor so I wasn't that concerned, but if I get to 70 or whatever and it's 30% down from here then maybe I'll have bet wrong haha.

 

I am going to start hedging though, and maybe by the time we're in April that guarunteed 3.85% I'd get paying off my auto loan might start looking really good.  




        
Message 3 of 5
Valued Contributor

Re: Where To Invest My Roth E-Fund?


@Gardenhand wrote:

 

To this point I have hesitated opening any retirment plans because I dont believe the stock market is a safe place to park my money. I beleive that a bear market will come and I dont want to get in at the top obviously. Now I have been wrong for about ten years now so its become clear that my timing of the big boards is not very good although I do believe the bull market end is near. I do have experience swing trading small cap stocks and penny stocks using technical analysist. I have survived as a trader for several years straight in the past but at this time I only do it depending on my work schedule. Ive been trading on and off since 2008/2009. I can make an average of 1,000 per month consitantly if I can give 100 percent screen time which is why I drive the bus...

 

All that said can anyone suggest where to invest my new Roth IRA funds? Ive looked into some Vanguard target date mutual funds. Im almost 40 so im looking at 2045 target date (25 years). I am eligible to start collect my pension at age 57.5 but would get more if I work until the normal retitirement age of 65. I may retire early and play with the penny stocks. Im not sure because I do enjoy my regular job (and trading). Is there any advice for where I should put my Roth emergency fund (5500) which I plan to max out contribuations moving foward?


You are shooting yourself in the foot with your line of reasoning. You're looking at retirement 25 years out. Bear and bull markets should be meaningless in your plans. If you wait to time the market, you'll just end up losing - and you already admit a bit of this as you've sat and sat and waiting for the end to come before jumping in.

 

Mini-lecture aside, get in to the market now. If risk scares you, you can play it safer with a S&P ETF or large cap ETF, but whatever you decide, do it and just buy in. And as you grow, keep buying in. Buy the dips. Buy the highs. You should do this because the market today is a dip compared to the market 25 years from now.

 

I'm personally not a huge fan of mutual funds or target date funds. I know when to shift my own allocations as I age, so the target date is paying an extra fee to do something I can do myself. Mutual funds are similar - I'm paying someone who isn't going to have any more or less success than I would picking stocks. An ETF will beat a mutual fund over 10-20 years almost every time. A hedge fund manager is just a pretty way of saying a professional gambler who gets to bet with other people's money and gets paid even when they lose.

 

The aim is to win the game, not hit a home run, so stop swinging for the fences and get on base.

Message 4 of 5
Super Contributor

Re: Where To Invest My Roth E-Fund?

My recomendation would be to avoid soliciting advice about specific funds from strangers on the internet.  The reason is that you lack a sound foundation of understanding the theory and practice of investment and retirement planning -- a foundation necessary to properly evaluate the wisdom and appropriateness of a particular recommendation for your needs.

 

Instead start by reading good basic books on the subject.  IF YOU CAN by William Bernstein is a good first choice (and it is free).  His slighly longer THE INVESTOR'S MANIFESTO would be a good second choice.  There are other good books out there.  The folks at the Bogleheads Forum can offer some good reading suggestions.

 

After you  (in the words of the British 16th century Reformer Thomas Cranmer) "read, mark, learn, and inwardly digest " these books, you will be in a good position to make your own decisions and evaluate the advice you receive.

Message 5 of 5
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.