What are the best steps to take in retirement planning? Given today’s economy how safe are IRA’s?
My wife and I are both 31 years old, and we want to start saving for our retirement. We’re interested in starting a Roth IRA, but with today’s economy, we really don’t know if that’s the best choice, or with which company to go with. Basically we just need some advice.
IRA’s in and of themselves are not inherently safe or unsafe, it depends what investments you put in them. You can buy US Treasuries which are totally safe, but have terrible returns. In the long run, stocks and stock mutual funds provide the best return. If you’re concerned about current conditions, don’t buy stock or stock mutual funds. But if you wait for times to get better, you’ll be buying both at much higher prices. The best strategy is to buy slowly over time. That way you buy more shares at a lower price and fewer shares at higher prices. Dollar cost averaging. http://www.investopedia.com/terms/d/dollarcostaveraging.asp
Whatever you do, best of luck to you. Saving for retirement at 31 is a great idea.
Filed under: retirement planning
February 8th, 2010 at 1:29 am
The decision to start an IRA is separate from what to invest the IRA funds in. For example, you could establish an IRA and invest the funds in bank CDs. These have relatively low returns, but are guaranteed not to lose value. You could also choose to invest in a stock mutual fund, which would expose you to increased risk, but offers the possibility of higher returns. Basically, you can’t get away from the idea that if you want higher returns, you have to be willing to accept more risk.
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February 8th, 2010 at 1:51 am
IRA’s in and of themselves are not inherently safe or unsafe, it depends what investments you put in them. You can buy US Treasuries which are totally safe, but have terrible returns. In the long run, stocks and stock mutual funds provide the best return. If you’re concerned about current conditions, don’t buy stock or stock mutual funds. But if you wait for times to get better, you’ll be buying both at much higher prices. The best strategy is to buy slowly over time. That way you buy more shares at a lower price and fewer shares at higher prices. Dollar cost averaging. http://www.investopedia.com/terms/d/dollarcostaveraging.asp
Whatever you do, best of luck to you. Saving for retirement at 31 is a great idea.
References :
February 8th, 2010 at 1:59 am
Ask some respected business people in your area about brokers. They will advise you about options. It’s the best thing we’ve done for our future. Yes, IRA’s are good, but you will also want to start a SIP for your retirement. When you make more money, you will not be eligible for Roths. Diversity is key in investing; get some expert advice.
Good Luck.
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February 8th, 2010 at 2:24 am
An IRA is the big umbrella that gives favorable tax treatment to whatever you put inside: CDs, stocks, bonds, mutual funds, even real estate (the rules are tricky, but you can do it) .. anyway, as to investment performance – you are looking at 31 years until retirement. Over that amount of time you will go through market uptimes, and market downtimes – it’s all a cycle. Right now the market is off some recent highs, thus it looks like a buying opportunity. We’ve seen the DJIA at 14,000 – now it’s in the 12,000s.
The best advise you will find in this matter is actually from a specific financial advisor. This person will work with you to find out your investment experience, risk tolerance, time horizon, current assets and goals. S/he can then recommend a strategy to meet those goals over time. If you do not have a financial advisor, ask trusted friends or relatives to refer one to you. Also, many banks now have them on staff to work with customers, and they can usually get an initial meeting set up easily.
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February 8th, 2010 at 7:13 am
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