SEP IRA

Archive for August, 2008

Financial Services San bernardino CA: Life Insurance, Investments, Mutual Funds, 401k, IRA, Annuity

Question: Fidelity Freedom Fund 2050 vs. Domestic/International Funds?

I’m 25 and just opened a Roth IRA for $2,500 and want to know where a good place to invest my money is. I’ve research some of the funds and it shows that individual domestic and international mutual funds typically have much higher life rates of return than the Freedom Fund 2050 (FFFHX), but the advantage of the FFFHX is that I don’t have to do anything to worry about my retirement. It is aggressive growth right now because I can tolerate risk but gets more conservative as I get closer to retirement – it does this automatically by the fund managers.

Answer: C’mon…how busy can you be…that you can’t look in on an investment six months or a year down the road? The Freedom Funds are indeed very convenient… but as far as being ” aggressive”… that’s hard to agree with! 9.7% last year ..and that’s as risky as they are EVER going to be….
You are young, you can afford to take a little more risk than that…and get returns 2, 3 or even 4 times as much… do that for four, five or ten years and get conservative when you have some nice profit to ” protect”.
I’d suggest ( for a few years) something ” international”…with Fidelity that could be FLATX…or FEMKX… or even a little conservative with FIGRX.
Check this website and use the calculator to see the difference over time of an investment getting 10% returns and one doing even slightly better 13% or 17%….

http://www.finishrich.com/free_resources/lattecalculator.php

(…and remember that 9.7% was as ” aggressive” as FFFHX is EVER going to be…so your average after 35 years is going to be closer to 6% ? 5% ? )
Those international funds have made over 25% per year in the last few years…they may not continue that, but they will continue to outpace conservative U.S. companies for quite a few years….take advantage…double your money in four years… not ten… use your bigger profits to diversify…. once a year…get a Kiplinger’s mutual fund issue and take one weekend to make some moves…
If you’ve done some figuring on that calculator you can see what an ASTOUNDING difference a little thought can do for your future.
As far as your concern about fees/expense ratios…if some guy/gal or team can make make 45% for me ( FLATX) or even 28% ( FEMKX)… I’ll gladly pay the 1.1% fee.
If you are somehow leery of anything international…look at some of the ” energy” funds : FNARX, FSESX, FSENX…
…everyone whines about ” Exxon Mobil making soooo much money, yadda yadda..” stop whining, let ‘em do it for you… things are not going to change that fast…and as a matter of fact even U.S. Gov’t studies are seeing oil supplies in short, short, short supply by 2010.
So…you can be a lump on a log , or you can take just a leeeetle bit of an interest in your future… ( think you might have a wife and kids some day?…. impress ‘em …don’t live off them .)
Good luck….( sorry to get on the soapbox)

Charting a Course to Wealth – Part 4

Question: IRA amounts?

I am eligible to put money in a traditional ira, a roth and a SEP. If I invest in all three what is the maximum total amount I can put away?

Answer: Your 401K max is $15,500 and an IRA (Roth or otherwise) is $5,000.

Roth vs. traditional is different in regards to taxes. Roth’s are eligble for tax free benefits upon withdrawal ONLY after you’ve met certain requirements.

Financial Services Riverside CA: Life Insurance, Investments, Mutual Funds, 401k, IRA, Annuity