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I am looking towards depositing about $700~$1000 of it in something that will hopefully bring in some good interest returns, and at least something that does a lot better than my current "savings account".

My family resides in the same city that I'm in, and they encourage me to do start investing my idle money as well, and told me not to worry about an emergency fund.

I barely spend any money on a regular basis, so the leftover $500 or so after placing the rest in investments is sufficient for everyday needs (I'm also going to pick up a part-time job next semester at my university that will allow me to receive a little bit more pocket change).

Also, I am currently a full-time student with a lot of extracurricular activities, so I was hoping to find a plan that has minimal requirements on how much you need to actually spend time researching about the day-to-day, or week-to-week fluctuations of the market.

If a Roth IRA is good enough, and other options are only marginally better, we were thinking that the Roth IRA was the safest and conventional way to go about things...

Thanks.

Chris W. Rea
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Joseph G
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3 Answers3

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Your question seems like you don't understand what a Roth IRA is. A Roth IRA isn't an investment, per se. It is just a type of account that receives special tax treatment.

Just like a checking and savings account are different at a bank, a ROTH IRA account is just flagged as such by a brokerage. It isn't an investment type, and there aren't really different ROTH IRA accounts.

You can invest in just about anything inside that account so that is what you need to evaluate. One Roth IRA account is as good as any other.As to what to invest your money in inside a ROTH, that is a huge question and off-topic per the rules against specific investing advice.

JohnFx
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You are young, and therefore have a very long time horizon for investing. Absolutely nothing you do should involve paying any attention to your investments more than once a year (if that).

First off, you can only deposit money in an IRA (of whatever kind) if you have taxable income. If you don't, you can still invest, just without the tax benefits of a Roth.

My suggestion would be to open an account with a discount brokerage (Schwab, Fidelity, eTrade, etc). The advantage of a brokerage IRA is that you can invest in whatever you want within the account. Then, either buy an S&P 500 or total market index fund within the account, or buy an index-based ETF (like a mutual fund, but trades like a stock). The latter might be better, since many mutual funds have minimum limits, which ETFs do not. Set the account up to reinvest the dividends automatically--S&P 500 yields will far outstrip current savings account yields--and sit back and do nothing for the next 40 or 50 years. Well, except for continuing to make annual contributions to the account, which you should continue to invest in pretty much the same thing until you have enough money (and experience and knowledge) to diversify into bond funds/international funds/individual stocks, etc.

Disclaimer: I am not a financial planner. I just manage my own money, and this strategy has mostly kept me from stressing too badly over the last few years of market turmoil.

Rick Goldstein
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You're young. Build a side business in your spare time. Invest in yourself. Fail a few times when you have some time to recover financially.

Use the money that you would have let sit in some account and develop your skills, start up an LLC, and build up the capacity to get some real returns on your money.

Be a rainmaker, not a Roth taker.

mbhunter
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