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I'm 24 and just started a Roth IRA this past year. Therefore, I have invested the full $4000 that I can. I'm constantly watching my investments and have found that 9 times out of 10 I've lost money. Everytime I check it's well below my initial investment! I currently have it through Fidelity.
Can anyone reassure me that this is a smart thing for me to be doing! Should I just stick it out and keep investing? Will this pay off for me in the long run? Should I invest it elsewhere?!
Stick with it, it will be fine. You're in much better shape than most people if you're already saving at your age. The worst thing you could do is switch money around every time your portfolio dips. Constantly checking is creating your stress - that money isn't going to be spent for 40 years, so don't sweat the short term.
I'm 24 and just started a Roth IRA this past year. Therefore, I have invested the full $4000 that I can. I'm constantly watching my investments and have found that 9 times out of 10 I've lost money. Everytime I check it's well below my initial investment! I currently have it through Fidelity.
Can anyone reassure me that this is a smart thing for me to be doing! Should I just stick it out and keep investing? Will this pay off for me in the long run? Should I invest it elsewhere?!
Thanks in advance for any and all advice!!
What are you invested in? Your doing the right thing by opening and funding your Roth IRA but you need to properly invest those funds.
The market has taken a beating the past 4 months due to the fall out of sub prime loans. But don't worry, it's ok, and normal for the stock market to correct 10% or more every so often. Fidelity is also a fine company, I use them myself and have no complaints.
So... What are you invested in and how much are you down?
I'm in a similar boat I'm 25, I put in $4000 last year, and $300 for this year so far, along with my 401k, and my traditional IRA from before then, they all have lost value since last Halloween. I used to look at the value of these investments all the time, I don't do that much anymore, I figure it will keep going up and down, considering that I can't withdraw the gains until 34 years from now I figure the ups and downs should work themselves out. The fact that I won't pay a cent in taxes on the gains is a very good benefit, paying capital gains every few years, and paying taxes on distributions or dividends eats up on the compounding gains. I just ride out these ups and downs.
As for the investments, I'm not sure if stocks are going to keep falling, but dollar cost averaging is not such a bad investment plan, and playing it for the very long term you have to be willing to accept temporary losses. If you needed the money in the near future then that would be another thing.
Well I'm down to $3861.59....and I'm not quite sure what exactly it's invested in. I definitely need to educate myself more in finance!
Your only down 3.5%!!! Thats nothing!! I'm down 11% from my all time high account balance but my average annual return over the past 4 years is still 34% so I shouldn't complain.
Get the basics down and learn how to navigate your account on Fidelity.com so you can tell what your money is invested in and how to move funds from one investment to another.
Go to Borders or Barnes & Noble and check out their investing section, there are many books that explain the basics. Maybe someone here can suggest a good book for beginners.
Seriously, your on the right track. Just educate yourself and you'll be fine.
Congrats on being smart enough at your age to start saving for your retirement. I promise you that you will be sitting around on a beach years before your friends will just because of this.
The stock market goes up and down, but more up than down. I know its scary to put your hard-earned money into something that goes down sometimes, but keep doing it. Fidelity is a good company with low fees. They have tons of funds to choose from. When you are young you should go with something that is Growth oriented. You have decades for this money to work for you so don't chicken out every time the market goes down.
Another thing you can do is spread out your contributions. Instead of putting $4,000 in all at once put $333 per month. This is called "Dollar-cost Averaging" and what it does is allow you to buy shares at all different prices during the year. Suppose your fund was $20 a share in June and you put the full $4000 in then (so you bought 200 shares) Now in December it is down to 17 a share and your 200 shares are now worth $3400 and you are freaking out. By dollar-cost averaging you are buying your shares when they are high AND low so that it averages out better for you in the long run.
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Yes, invest systematically, and you get more shares when the price is lower, thus have an overall cost advantage. If you have particular stuff you like, buy extra when it is under 200 day moving average AND ON ITS WAY UP... never buy into a falling market, they go down much faster than up. ...
Go to BobBrinker dot com, and check out the recommended reading list, and listen to his free weekly 6 hrs of finance info on radio. He is a 'low cost' manager, and you will do well over the long haul.
IMPORTANT... get a (good) strategy and stick with it, you will grow in your knowledge and do fine. It is real dangerous to change plans on a whim.
I like to be diversified, ~ 40% US and 40% Foreign and never more than 5% in a single stock or specialized sector. I am using ETF indexes to spread risks over lots of issues.
You guys are awesome. Thanks for the info and tips. Come April (I think April...maybe May) when I can start investing again and the limit goes up to $5000, I'll start doing the $416/month. I didn't even think about the "dollar-cost averaging" idea.
Thanks again everyone for all the helpful info and tips.
BTW...I also started my 401k at UPS last Sept. (which is down as well right now) doing the 15% of my paycheck with the company matching...that is also confusing in itself...so many things to choose from to invest in!! Hopefully everything will work out and I'll be a millionaire come retirement!!!
On the bright side, you could always wait for the market to tank, and then put your yearly contribution into the IRA. This is what I plan on doing...wait until some otherwise well performing funds become dirt cheap, and then buy, buy, buy. Rest assured, the market will go to hell-in-a-handbasket sometime this year, so be ready to dump your money in when this happens.
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