Need more advice about ROTH IRA account opening?

[savingdealz]

Thanks noppenbd and jIM_Ohio,

I am sure I open this account for my retirement. Maybe I can take a risk with 50$ -100$ a month . I am very sure I dont know much about funds to choose. So can you tell me what is a target date fund? How can I choose it?

From my understanding, target means a specific time in the future. So, is a Retirement 2045 or 2050 fund the target plan because specific time is 2045 and 2050?

[jIM_Ohio]

target date is the probable year you would retire. OK to be off by 5 years, error on side of being late (choose later date).

[savingdealz]

Thank you very much for all your help. Today, I just open my ROTH IRA. I chose fund 2055 with more risk. I deposit 50$ for each month. YEAH..... WAY TO GO FINALLY...

[savingdealz]

I am thinking to put 5000$ in Retirement 2055 Fund ( I am 25 years old). Do you think my decision is so dangerous for this fund or not ? Why? or I need to choose another fund?
Thanks

[kork13]

That's a great way to go. Target-date retirement funds like that are perfect for savers who want simplicity, and can just add in money to it whenever without having to worry about throwing off an asset allocation. As long as your fund's costs/fees/expense ratios/whatever are reasonably low, and managed by a good company, it's a really good option. And at 25, a 2055 fund is a well-timed one to get into. It'll be just a little bit aggressive, but not seriously so.

I just transitioned to a similar fund for my roth just a couple days ago, and once the new year starts (i've already maxed this year), I'm just going to add money to it each month. Perfect. Easy.

[glock35ipsc]

That's a great way to go. Target-date retirement funds like that are perfect for savers who want simplicity, and can just add in money to it whenever without having to worry about throwing off an asset allocation. As long as your fund's costs/fees/expense ratios/whatever are reasonably low, and managed by a good company, it's a really good option. And at 25, a 2055 fund is a well-timed one to get into. It'll be just a little bit aggressive, but not seriously so.

I just transitioned to a similar fund for my roth just a couple days ago, and once the new year starts (i've already maxed this year), I'm just going to add money to it each month. Perfect. Easy.

^^^ Agree.

[savingdealz]

Thanks for your information. However, I am a newbie, so I think I need to know more how this fund work.
I have some questions about this funds, I just access to my account online, and I see this, but I dont understand much.

This is my Balance Details
Shares--------------Share Price-----------------$Change------------Available Balance---------------Value
6.039----------------$6.76----------------------- -0.22---------------$40.82---------------------------- $40.82

This is my Transaction History
Trade Date------------------ 10/01/2008
Transaction Type----------- 2008 CONTRIBUTION -ACH
Account Name--------------- Retirement 2055 Fund - Roth IRA
Dollar Amount -------------- $50
Share Amount --------------- 6.039
Price --------------------------- 8.28

I have 2 questions:
#1. Would you explain to me what do Shares, Share Price,$Change, Value, Share amount and Price mean ?
#2. I deposited 50$ on 1st October, however, now my available balance is only $40.82. What happened to my $9.18 ? Have I lost $9.18

Thank you very much for your help!

[maat55]

Would you tell me what is brokerage? What is the difference between the first link and the second link?

By the way, I see a lot fund in the first link. They are:


I have no idea what they are (absolutely no idea) ? How can I choose which one?

I break my asset builder into three funds with them. My favorite is Health Sciences.

[jIM_Ohio]

Thanks for your information. However, I am a newbie, so I think I need to know more how this fund work.
I have some questions about this funds, I just access to my account online, and I see this, but I dont understand much.

This is my Balance Details
Shares--------------Share Price-----------------$Change------------Available Balance---------------Value
6.039----------------$6.76----------------------- -0.22---------------$40.82---------------------------- $40.82

This is my Transaction History
Trade Date------------------ 10/01/2008
Transaction Type----------- 2008 CONTRIBUTION -ACH
Account Name--------------- Retirement 2055 Fund - Roth IRA
Dollar Amount -------------- $50
Share Amount --------------- 6.039
Price --------------------------- 8.28

I have 2 questions:
#1. Would you explain to me what do Shares, Share Price,$Change, Value, Share amount and Price mean ?
#2. I deposited 50$ on 1st October, however, now my available balance is only $40.82. What happened to my $9.18 ? Have I lost $9.18

Thank you very much for your help!

Yes you lost $9.18. If you read my earlier posts you skipped many steps which would have educated you on this before you invested. Learning about the risks after you invest is not a good idea.

Read my earlier posts in detail is my advice. There are many other things you need to learn about to save wisely and understand the risks being taken.

[savingdealz]

hic hic hic, I chose this Target 2055 because I will be 60 years old in 2055. Today, my balance goes down to 38.43$ hic hic hic. I dont know should I still keep this fund or I should change it to Spectrum growth and spectrum income. Would you give me some suggestion please!

[jIM_Ohio]

Read my earlier posts and do some reading.

There are 3 types of investments

1) stocks- ownership in a company
2) bonds- company borrows money and pays back loan with interest
3) commodities- tangilble supplies used to produce something. Real estate is an example, as is gold, silver and corn.

Mutual funds will pool money together from people like me and you and then invest in one or more of the investment types above.

There are many types of stocks (large companies, small companies, US companies, foreign companies), different types of bonds (government debt, corporate debt, foreign debt, real estate debt) and different types of commodities.

You need to decide how much of each of the types you want- this determines how much risk you are willing to take. For example would you want 100% of your retirement to be in the price of gold and corn? Probably not- too much risk, not enough historical return.

then I added this in another post

You should do some research before choosing- or read my previous posts for what I own- or check my blog which lists what I own as well.

Before doing this you need to research and understand the risks each fund will take. Some of my funds lost 20% this year (so far)- if you think this is bad, then do not follow my advice or look somewhere to learn more. There should be links on the TRP web site for how to choose an investment- but that link requires you spend some time to understand various risks with investing.

then another post which included similar comments from the above two with links and more information.

The T Rowe Price web site will help you research funds.

There is a fund research link (I think).

Here are the steps you need to take (in order)

1) decide to invest for your retirement
2) choose how much you can afford per month and per year.
3) Determine how much risk you want to take.
This is usually expressed in terms of %stocks and % bonds
100% stocks is aggressive
80% stocks 20% bonds is moderately aggressive
60% stocks and 40% bonds is moderate balanced
40% stocks and 80% bonds is moderately conservative with moderate income
anything less than 20% stocks is conservative and probably geared towards significant income needed.

Most financial sites (like T Rowe Price) will have links to help you determine this.
T. Rowe Price - Personal Guides

I think the above link is what you need from T Rowe Price.

You need to ask yourself-

1) do you know what you invested in?
if yes
2) do you understand what you invested in?
if yes
3) why are you asking performance questions relative to one day or one week?

if 1) was NO, you did not read the prospectus, which was a box you checked on the T Rowe web site which is required by T Rowe before investing with them.

if 1) was yes and 2) was NO, you did not read the prospectus or ask any questions to this effect before making the decision to invest. Before moving money to another fund you should understand what that fund invests in.

If you are not retiring tommorrow, then why worry about what mutual fund you own today did performance wise? Can you find another T Rowe mutual fund which went up the same day yours went down? Investing has risks. If you do not like the risks, you should use your money for another investment which is much safer.

Please note the quoted text in red. I was prompting you to do some homework and understand that you could lose money.

[savingdealz]

Thank you for your advice. You are so professional. I think I will read more about this. By the way, I think I should keep this fund. In addition, can you give me your blog, I could not find it. Thank you so much!

[jIM_Ohio]

Thank you for your advice. You are so professional. I think I will read more about this. By the way, I think I should keep this fund. In addition, can you give me your blog, I could not find it. Thank you so much!

I tried to tone down my post some. It probably came across harsh. If you can do a little more self education, you will understand you did not lose shares, only the value of the shares.

blog is
Retirement is not a question. The issue is how much longer do I need to work?jIM_Ohio is Investing to retire early

[savingdealz]

If you can do a little more self education, you will understand you did not lose shares, only the value of the shares.

Would you tell me why I did not lose shares, only the value of the shares please!
Shares and Value of the share, which one is important?

Studies have shown that the majority of the returns generated by an investment are dictated by the asset-allocation decision

I read this in finance.yahoo.com, but I dont understand what is asset-allocation decision? How do I know my asset-allocation decision of my stock?


Also, for 2008 contribution, when it is due for 2008?

[kork13]

Would you tell me why I did not lose shares, only the value of the shares please!
Shares and Value of the share, which one is important?

You hold a certain number of shares. No matter what, unless you buy or sell, you will have that same number of shares. However, based on the market, the value of those shares will go up and down. So you might have 30 shares. Today, each share is worth $10, so you hold a total value of $300. Tomorrow, each share might only be worth $9, so those same 30 shares are now only worth $270. However, those values are only important if you want to sell, because you don't actually make or lose any money until you sell the shares that you hold. Selling shares locks in the value that your shares are worth to you.

Number of shares and value of shares are both important. The more shares you hold, the more you can take advantage of low buying prices or high selling prices. The greater your shares are in value, the more they are worth. So both are of equal importance.

I read this in finance.yahoo.com, but I dont understand what is asset-allocation decision? How do I know my asset-allocation decision of my stock?

Asset allocation is defined in a few ways, but primarily it is how you choose what assets you want to invest in--whether you want to hold only stocks (100% stock), only bonds (100% bonds), or some combination of the two
(60% stock, 40% bonds). Cash assets are often included as well. Asset allocations also define the types of stocks and bonds that you hold. For stocks, you choose what portion of your money you want invested in large-cap, small-cap, international, etc. companies. Between these two, that is probably what they were talking about.

Also, for 2008 contribution, when it is due for 2008?

You can make your 2008 IRA contributions up until 15 April 2009, after which any contribution (for the next year) will count toward the 2009 limit. You may begin making a 2009 contribution starting 1 January 2009.