Expert: Dr. Joseph de Beauchamp - 6/20/2005

Question
I am a 22-year-old journalist. I am graduating college after one more semester and have an inherited $130,000 that has sat still in mutual funds. I am planning on using that money towards a house soon, but I also have an extra $7,000 in my own personal bank account.

I have heard about a ROTH IRA. Do I know anything about it or anything else in the investing world? No. But I do want to invest. Should I be investing towards my retirement at this point. Retirement seems so far away and it seems like I would enjoy something more aggressive. Obviously, with that comes more risks.

I would like to put $3,000 in the stock market as a test to see where things go. Is now a good time, how should I go about it? Online or through my Wells Fargo?

I have many questions and know little. All I know is that money sitting and doing nothing is not smart.

Thanks for your help,

Jimmy Spencer  

Answer
Jimmy,

You might just stick with mutual funds. Even if they do not appear to move much, most funds are not run to loose you money. Picking stocks requires that you have 10 stocks to reduce the risk. With 100 shares as min., then you would have to invest far more than $3k. I think a good international mutual fund would be better for you. You can invest in any mutual fund through Wells Fargo.

Roth is okay, but you can invest in anything within those. Roth is operating under the assumption that you will pay less taxes when you go for you money. Less taxes later on, this is probably not what will happen 40 years from now, so I am not in favor of a Roth for you.

Dr. Joseph de Beauchamp