College Student Requesting Advice

[alleniverson]

Hello everyone. I posted here a while ago:

(If curious, you can search for the link "Planning to take action" in my profile.)

As of now, here's what I've done:
$1000 in an ING Direct savings account
$1200 in a Bank of America checking account
$1500 in Citigroup (which has plummeted by 2/3 )

The $1000 in the ING account is barely earning interest at a rate of below 2%. I decided to purchase Citigroup, but I'm not sure if I should regret this move. I am tempted to start a Roth IRA (T. Rowe Price Retirement 2055) but hesitant due to how the market's look right now. The initial $1000 for the Roth IRA would come from the Bank of America checking account.

I have a part time job where I earn anywhere from $300-$500 a month. I was wondering if I can get some advice here on what I should do. Thank you.

[kork13]

As some general advice, it would be best if you could take a small portion of your monthly income and automatically invest it. A target retirement fund such as the 2055 one you referenced would be a great choice for you. However, the amount that should be depends on your monthly expenses, and how much you have to play with.

Starting a Roth is a great idea. And right now, you'd be buying in with shares at a depressed price, which will equate to greater returns down the road. However, I wouldn't use your checking account to do it--it's important that you maintain some liquid funds available to you in the event of unexpected circumstances. I'd recommend starting your Roth using the $1500 you have in Citi shares (yes, all of it). There are some here who are making speculative investments in Citi and other banks right now. However, in your case, that's not a good idea. If that's the sum total of your investments (it appears to be), you're opening yourself up to a very rough ride with a very troubled stock. The great thing about that T.Rowe 2055 fund is that it's automatically diversified, which equates to relative security in your investments. Compared to being all-in with a single stock (especially Citi right now), that's like skydiving with nothing but an umbrella when you've got a perfectly good parachute sitting right next to you--it's needlessly (if not foolishly) dangerous.

In short, I'd recommend selling your Citi shares (at whatever loss you may encounter right now), and open up a Roth for yourself with the T.Rowe 2055 fund (or another similar mutual fund) that you've mentioned. It's smarter, and safer.

EDIT: Looking back at your original post last May, it looks like you have been planning to open a Roth for quite a while, but it seems you still haven't followed through... You need to just do it! No time like the present--nothing gets done by waiting.