Lux Investing
Investing in 2008, Good Time to Start?
I am 26 years old and I am going to start putting money into a RothIRA. I have the money to max it out for the year but I am a little skeptical of putting it in RIGHT NOW. I am a huge Dave Ramsey fan and although he says "don't time the market", I feel I might be throwing money away. Besides my initial lunge, I don't want to time the market and am in it for the long haul. Also like Dave says, when I do invest, I will be investing in Good Growth Stock Mutual Funds. Currently, the money is in a online Bank Account making 2.75%. I know this is a small number but it sure beats negative numbers...like my 401k. I realize that noone can accurately tell when the market is going to turn around and I'm not trying to time it so I invest when it is the absolute lowest. I just don't want to put any money into a sinking ship. Thank you for our advise.
Public Comments
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- There are thousands of people just like you that are, or were looking to invest and those that did buy Mutual Funds. One purpose of mutual funds is to help investors like you, who are either just entering the investment world or who have no experience investing. Fund companies have an entire array of products many will fit your needs. You can go to the MSN.Money website it has an entire section on mutual funds. Read about the various funds and in doing so you will be getting investment ideas and at the same time educating yourself about investing. You could also contact the funds companies for more information. I have found that Vanguard & Fidelity can meet your needs. The service and information they provide is all free and you will find it helpful. And remember, keeping you money in a bank or bank product is not investing. Good luck
- Think of it this way, now your money will buy a lot more shares now with the market down then they will when the market goes up. If you're looking long-term like for retirement, don't worry too much about short-term losses or gains. In the long run, the stock market is the best way to grow your money long-term above inflation so don't worry so much about it. Just invest your money, sit back and be patient.
- I personally think this is a great time to get in the market. The whole market is trading at discount and in the last couple of weeks as shown signs of improvement. But you get around the timing of the market issue if you want. Go ahead and fund your IRA account. (Most of the interest brokers pay an interest rate similar to what you are getting now in your savings account) So, at least you will be getting this interest tax-free. Then, decide on a set timeframe like 3 months. Put $1k into the fund you want now. Then, in 3 months (regardless of what the market is doing) put in another $1k. Do this every 3 months. You can even use this to diversify by putting the $1k in different funds. This is called "dollar cost averaging" if you want to do more research on the idea. As for the mutual fund idea, I would look into index funds instead of mutual funds. The return will be about the same and you won't have to pay high management fees.
- Some people have already made some good suggestions, but let me add a couple. First, you are right to want to get in the market and start investing now when it is somewhat low. As one answerer said, dollar-cost averaging is a great way to do it. Divide up the $5000 contribution into chunks to be invested over the rest of the year. Some days you will be able to buy more shares, some days less. But generally you will end up ahead. (unless you think the market is set to only run up--then invest it all now) You might want to consider a "life-style" mutual fund--which automatically allocates the correct mix of stocks, bonds, etc for your projected retirement date. As the years go on, the allocation changes to reflect more safety as your retirement approaches. I am sure that Vanguard must have one, as do other fund families. You have the luxury of time to invest, and even if your investment goes down for the near term, you will reap great rewards if you invest with discipline over the years. Best wishes.
