Roth IRA vs Stocks

[JanetRose]

I've been putting $150 a month into a Roth IRA and $50 a month into Kodak, $50 into Disney and $50 into Wal-Mart stock.

I'm thinking I should stop contributing into the stocks and put that additional $150 into the IRA - what do you think?

 

[DVCLiz]

I've been putting $150 a month into a Roth IRA and $50 a month into Kodak, $50 into Disney and $50 into Wal-Mart stock.

I'm thinking I should stop contributing into the stocks and put that additional $150 into the IRA - what do you think?

I think you should stop investing in specific stocks and put that $150 into a well-diversified mutual or index fund. That way you can have the benefit of the possible bigger gains in the stock market without your fortunes rising and falling on three very specific companies. The other $150 I'd keep putting into the Roth IRA. Just my .02!

 

[Chicago526]

Investing in individual stocks is a lot like gambling...nothing really wrong with it but you should only do it if you can afford it. Personaly, I'd only buy individual stocks after I maxed out my Roth and 401k, and still have money left over to invest.

Also, do you have a 6-12 month emergency fund? Car repair/replacement fund? Enough life insurance? Do you have any debt other than a mortgage that could be paid off early? All of those things should be taken care of before investing for retirement.

 

[corndog]

You ask as if the Roth is not invested in anything. If you feel you must have those stocks, buy them in the Roth. But, I do agree that you shouldn't be buying those stocks, as unless you have at least 25-30 different stocks it is impossible to earn a return commensurate with the risk you taking on because you have diversification risk which institutional investors do not.

 

[sbell111]

I'd drop the individual stocks in a second and put my money in a good mutual fund within the Roth (or 401k).

 

[rwdavis2]

I think you should stop investing in specific stocks and put that $150 into a well-diversified mutual or index fund. That way you can have the benefit of the possible bigger gains in the stock market without your fortunes rising and falling on three very specific companies. The other $150 I'd keep putting into the Roth IRA. Just my .02!

I agree with the prior reply. Kodak, IMHO, will not be around in 5-10 years. I don't think DIS is that great either. Pick a diversified or index no-load mutual fund. Try Vanguard to T Rowe Price. You also have to watch Walmart in that there is a very large part of the country's political class that would love to put them out of business. Not possible but it can hurt profits. What is the ROTH money invested in? Mutual funds, bonds, money market?

BD

 

[DawnCt1]

You can purchase the most diversified fund, The Vanguard Total Stock Market Fund. It is an index fund with very low cost. You can buy that within your Roth.

 

[DisneyKing82]

I've been putting $150 a month into a Roth IRA and $50 a month into Kodak, $50 into Disney and $50 into Wal-Mart stock.

I'm thinking I should stop contributing into the stocks and put that additional $150 into the IRA - what do you think?

Whether you should put that $150 into the ROTH IRA depends entirely on your goals. Is that $150 that you're putting in Kodak, Disney, and Walmart intended to be retirement money? If the answer is yes, then 100% absolutely you should put that money in the Roth IRA and then buy those stocks. TAX FREE GAINS in the ROTH. If the answer is no, then okay the money should not be put in the Roth IRA.

Can I ask why you're putting money in Kodak? Disney? And Walmart? Kodak is finished. Disney and Walmart will both be around in 50 years but what kind of gains do you think you're going to get on these? The answer is not a lot. If you feel strongly about large cap stocks, that's fine. Buy an exchange traded fund that tracks large cap equity performance. Its like a mutual fund without the money manager costs.

PM me if you want more guidance.