Expert: Paul Henneman - 7/23/2007

Question
I am 22 and I will be contributing to my ROTH IRA starting this year. Since I am still young, I want to be more aggressive. I am planning on investing through a broker such as Vanguard or Fidelity. As an aggressive beginner, should I choose large, small or mid-cap mutual funds?

Answer
Kalam,
   Thank you for your question! Congratulations on starting so early in your career in terms of investing! By beginning this at your age, your investments will have plenty of time to grow, and in a few decades you can build up truly an impressive amount of wealth.
  Typically, agressive investors would seek out smaller cap funds. You could do this through smal cap mutual funds as you suggest in your email. Smaller cap stocks to generally offer higher performance than larger cap stocks, but are more volatile. This means that in the short term, your investments could see dowturns during times of poor stock market performance that are more than average. But, during good times, your investments would perform better. Over many years and decades, the difference can be substantial, with more wealth accumlated by a large degree in small cap companies.

I hope that this helps! Please do not hesitate to follow up with me if I can be of any additional service,

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com