Setting up ROTH IRA

[dynamitecat01]

Hi Everyone, This forum has been so helpful to me. I've been stressing out about my school loans for a long time now but after getting advice from everyone on here and additional online research, I have put together a 5 year plan to pay off my loans(60K) and am very pumped about getting them out of the way!

I'm also prepared now to open and set up a ROTH IRA account, but just had some questions..

I am planning on opening an account with Vanguard and do a lump sum contribution initially of 5k for the 2010 tax year ( I was told I have til April 17th to do this). My questions are:

1) When is the best time for me to open the account? From what I understand the prices of stocks/bonds have low/high periods so it is best to buy when the period is low.

2) Which Vanguard fund would you recommend for a beginner investor, (26 years old) to invest in within my ROTH IRA? I was thinking of signing up for the Target 2050 Fund..

Also, as I learn more about mutual funds and investing in general would I be able to change what I invest in and what would be the repercussions, if any if, I decide to switch from one type of investment within my ROTH to another later down the road?

[photo]

Originally Posted by dynamitecat01

1) When is the best time for me to open the account? From what I understand the prices of stocks/bonds have low/high periods so it is best to buy when the period is low.

You have to follow the stock market and view trends. Even then, you can never know when the peaks and valleys are until they have already occurred.

[Mr Nice Guy]

You do not need to make any investments when you first open the account. You can have your initial lump sum sit in cash until you are ready.

[GREENBACK]

Originally Posted by dynamitecat01

1) When is the best time for me to open the account? From what I understand the prices of stocks/bonds have low/high periods so it is best to buy when the period is low.

The best time is whenever you're ready to. Don't try to predict the stock market. Technically speaking, yes, you want to buy low but you would need a reliable crystal ball to time that period.

[bjl584]

Originally Posted by dynamitecat01

Hi Everyone, This forum has been so helpful to me. I've been stressing out about my school loans for a long time now but after getting advice from everyone on here and additional online research, I have put together a 5 year plan to pay off my loans(60K) and am very pumped about getting them out of the way!

I'm also prepared now to open and set up a ROTH IRA account, but just had some questions..

I am planning on opening an account with Vanguard and do a lump sum contribution initially of 5k for the 2010 tax year ( I was told I have til April 17th to do this). My questions are:

1) When is the best time for me to open the account? From what I understand the prices of stocks/bonds have low/high periods so it is best to buy when the period is low.

2) Which Vanguard fund would you recommend for a beginner investor, (26 years old) to invest in within my ROTH IRA? I was thinking of signing up for the Target 2050 Fund..

Also, as I learn more about mutual funds and investing in general would I be able to change what I invest in and what would be the repercussions, if any if, I decide to switch from one type of investment within my ROTH to another later down the road?

Anytime is a good time to start a ROTH. Don't attempt to time the market. You are saving for the long term.

[disneysteve]

Originally Posted by dynamitecat01

1) When is the best time for me to open the account?

The best time is NOW. If you have the money, open the account. Nobody can predict the future. You are young. No matter what point you buy in today, 40 years from now you'll be glad you did.

2) Which Vanguard fund would you recommend for a beginner investor, (26 years old) to invest in within my ROTH IRA? I was thinking of signing up for the Target 2050 Fund..

I think for someone just starting out, that's a good solid choice. Since Vanguard has a $3,000 minimum investment on its funds, you really can't diversify on your own until you have a lot more money. With the Target fund, you get instant diversification and super low expenses.

Also, as I learn more about mutual funds and investing in general would I be able to change what I invest in and what would be the repercussions, if any if, I decide to switch from one type of investment within my ROTH to another later down the road?

There are no repercussions from switching funds within your Roth. Vanguard does have some funds that have short term redemption penalties but I doubt that would apply to what you're referring to. They do that to discourage traders from jumping in and out of funds trying to time the market.

[Slug]

Originally Posted by dynamitecat01

I am planning on opening an account with Vanguard and do a lump sum contribution initially of 5k for the 2010 tax year ( I was told I have til April 17th to do this). My questions are:

Unfortunately, it's too late for the 2010 tax year. However, you do have until April for 2011.

[snshijuptr]

Whoops realized Slug was just making a point about how we are now in 2012.