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investing an IRA ??

post #1 of 6
Thread Starter 

So just before the divorce exdh received a settlement from an accident. He took put 5K in an account for me and 5k for himself. I have no idea about investments and IRA's etc. He recently told me his has made over 1K and mine is sitting at .79 because while he put it in an account it was not invested. I know nothing or how to invest and honestly I am not interested in spending time making these types of decisions. I thought I could just go online to invest it quickly but i guess that is not the case as there are hundreds to choose from. I would like to get some benefit from this money because it is literally my only retirement as of yet at 31. Advice? Should I try the b&m site and go in? I just don't have a ton of time to put toward this but don't want to wait on it either. 

post #2 of 6

If I were you, I would open up a Roth IRA.  You can go through a discount brokerage like Fidelity or Vanguard.  Roth IRAs are great because they grow tax free, but if you need the money in a pinch, you can pull out the contributed amount without penalty.

 

I'd put the amount in a low fee index fund (i.e. S&P 500), reinvest the dividends and let it grow. 

post #3 of 6
Yep I agree with the above. Keep it in a simple index fund and just let it be.
post #4 of 6

Check your bank to see if they have an investment account; or you can open an ING / Sharebuilder / Capital one account and open a ROTH IRA (having an income is required to open an IRA) and then find the fund that you want to invest in.

 

I like the investment funds that are related to your planned age of retirement; the fund is more aggressive for the first decade or so and then gets more conservative the closer to your age of retirement (its a managed fund, you dont have to do anything besides putting your money into the fund). Here is a write up of Vanguard Target Retirement Funds:

https://investor.vanguard.com/mutual-funds/target-retirement/#/

 

fyi: Mutual funds have a higher management fee (that is deducted, you dont really see this going on); Index funds have lower fees and stocks have no fees)

post #5 of 6
Quote:
Originally Posted by winterfan View Post
 

If I were you, I would open up a Roth IRA.  You can go through a discount brokerage like Fidelity or Vanguard.  Roth IRAs are great because they grow tax free, but if you need the money in a pinch, you can pull out the contributed amount without penalty.

 

I'd put the amount in a low fee index fund (i.e. S&P 500), reinvest the dividends and let it grow. 


This is exactly what I would suggest.  We are at Fidelity, but if I were starting from scratch, I'd probably go Vanguard (lower fees). That said, Fidelity is supposed to have a better "web experience" so if that is important to you, Fidelity may be worth it. I would not go with a full service broker.  The advantage of going with Fidelity or Vanguard is that you can buy their funds directly and not have an extra fee on top.  I've enjoyed using the "dated" funds (the date of your retirement) and they're definitely an easy place to start.

post #6 of 6

That's true what Sunrise said about earned income.  You need to have it for a regular IRA or Roth.  However, if you invest in an IRA, you may be eligible for the saver's credit (info on the IRS website).  Our family got a nice credit last year because DH and I invested in our Roth IRAs.

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