Credit Debt Cures
Hi, I read a lot of Suze Orman books, Im not sure if I am doing the right thing? Please help!?
OK, so I am 24 years old, and I recently started a Extended Equity Market Index (Roth IRA). Is this the find that I can contribute $4000.00 annually and in 45 years Ill have a lot of money for retirement? Im asking because I noticed I have lost money, arent I supposed to be gaining compounded interest?
Public Comments
- you're losing money because the market is so crappy lately, given time, your stock will definitely grow. Don't worry about it right now, you can't touch it anyway. And Suze Orman is awesome, I wouldn't question her.
- Investments can always lose money. They are not guaranteed to make money. In the long run (5 + years), a good mutual fund should gain between 8% to 12%. Funds are generally down right now because of the subprime crisis and other things.
- Yes, this is the type to which you can contribute $4K per yr. You have chosen an Index fund. This is a stock market fund. Sometimes the market is up and sometimes down. Compound interest is not completely correct. You will re-invest your dividends. The dividends buy more shares. Consider diversifying into overseas and/or small or mid cap. More risk but more reward over the long term. ....and at 24, thats a very long term. How can a girl so pretty be so smart about money?
- You can contribute $4000 for 2007 (it goes up to $5000 in 2008). You don't get "interest" from a stock mutual fund, you get dividends and some capital gains which are reinvested in additional shares. A mutual fund's return will fluctuate in the short term, but an IRA is a long term investment. Don't worry about short term declines, just keep contributing regularly. When the fund share price is temporarily down, you are in effect buying shares "on sale."
