Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'd go with a Roth IRA. Time is your son's best friend right now, and he will have years and years to accumulate gains, which, in a Roth, will all come out TAX-FREE eventually (not so with a traditional IRA). That's HUGE, especially when you consider that, by the time he's retired, most of the account value is likely to BE gains.
And don't worry too much about the state of the market right now. He could dollar-cost-average into his Roth (make partial contributions periodically) if he wants to, which would allow him to buy at lower prices should the market continue to go down for a while. In the long run, he'll come out smelling like a rose...and very happy he started investing NOW.
Agree with both above... Roth IRA "Market is going down this year" ha! No one knows what the market will do by next year. I do know that if your son is lucky enough to get this good advise from you (OP), then he'll have a big nest egg in 20-30-40+... years.
Taxes are nothing for him now, a Roth is a no-brainer. Good luck! I wish my parents told me that when I was that young.
Dollar cost averaging will make him good money too, if the market goes down. He's got a long time for it to go back up. Frankly, it's when "the market sucks" is when you should be buying anyway. I bought a bank stock last week. Guess what, this week the pros are saying "things are changing for the financials/finally bottomed"... hmmm...
Given further scenario details investing is a sensible action. I still believe after 6 months the value of the IRA will be less than that which was put into it due to the economy, but if not it wouldn't be the first time (nor the last time) I've been wrong. If I am correct, it wouldn't be the first time multiple forum critics (and even financial industry professionals) were themselves wrong instead. Last year no less than 3 real estate brokers and an investment banker took over some threads stating to the effect that the economy was booming, it was a perfect time to buy real estate or refinance, etc. Well I know 2 of those folks are now in completely different lines of work after losing their jobs, and the others are awfully silent on the boards these days. The advice they gave just lacked judgement (to me) at the time but many people who posted here bought into their textbook advice. I am not a financial expert, just someone who does research for living and who loves to analyze trends. I know sometimes I am wrong. Let us see what happens. In either case it doesn't matter to me beyond the fact that I give my advice trying to help others who come to the forum asking for it.
Regarding opening up an IRA earlier in life to aid its growth - nothing is wrong with that at all (obviously). It's not the theory I object to at all. I object to advice to open up such an account right now, with money that isn't dispensable. If that isn't the case for the OP (and it sounds like it isn't), then that's great, no worries.
Last edited by belovenow; 03-22-2008 at 03:27 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
