S2Koupe

wondering what all the guru's think.

ive got a small stockpile and thinking of opening my first ROTH IRA before april 15th so i can apply it to 2005.

but ING now at 4.0% and only seeming to go up along with the fed. so does it really make sense to bother putting all my money in the ROTH? (to the max of $4000 for 2005, and then another $4000 for 2006) its not like any gains are secured. however, of course the plus is that any earnings are tax free in the ROTH.

the key between the comparison is that with a ROTH IRA i can still pull my contributions out whenever i want, kinda like an ING account, right? so then, is a guaranteed 4% or more rate better than whatever other advantages a ROTH can give me?

im still leaning to put all i can in the ROTH. just wondering if anyone else has any other opinions. at the very least, i will open one at the minimum of $500 thru Scottrade so I can start it a year early.


(btw, im already contributing 8% with a 4% match to my 401k, but thats deposited and forgotten, except when i need to adjust distributions)

(btw2, my short term goal is to BE READY and have saved up enough for hopefully 20% on a new home or as much as possible, should i move out of my current socal area in about 3-5 years. i have no hope of buying locally, and dont want to make this into "how to get into the real estate market" thread, but thought it might be relevant)

cap1

Like a lot of people will say there are a lot of factors when consedering investments. Age, goals, purpose, and investable amount are a few factors, not to even mention situation. A quality advisor addresses all of these issues and tailors a portfolio or financial plan (or both) to acheive you goals.

With the information you provided its hard recommend either or. You did say that you would like to pull it out in a 3-5 year time frame, so if that is the case a Roth IRA or any type of retirement vehicle would not be the best avenue.

If you're looking for a 5 year investment i would talk to an advisor and have them put a equity (stock) portfolio toghther for you. It would make more sense to invest in the stock market since average returns historically of the S&P 500 have been anywhere from 10-12%. versus 4% in a savings account.

Hope this help in anyway. Sorry that its not anymore direct or what you weren't looking for.

S2Koupe

no, thats ok. thank you for your response. its what im looking to hear.

yeah, i think its just an issue of personal risk and whether or not i can beat the 4%, including the difference in taxes and whatnot - and still be somewhat liquid. id love to be guaranteed 10-12%, but who knows...

mingster

try emigrant direct - they offer 4.5% on savings accounts. it's liquid, it's safe (up to 100K anyway), and you don't have to worry about retirement restrictions on IRA - Roth or not

boredfast

emigrant direct, much like ings- > internet based?

kadeshpa

yep...there interface is a bit more cumbersome compared to ING though.

aklucsarits

The question of whether you should put it in the Roth IRA or not is a question of liquidity. You can put the money in the ING or whatver bank savings account and pull it out anytime you want for emergencies or whatever. Or you can put the money in the Roth IRA, where it will be tied up until your retirement (unless you pull it out and accept the heavy penalties) So I guess the bottom line is, is your goal to save for retirement? Or is it to save a easily accessible rainy day savings fund?

In the IRA, you will have tons of investment options that will pay off far more than 4% long term. Stocks/index funds traditionally return 10%+ annually over the long term. REITs can also offer attractive long term returns. Or if you ant guaranteed return rates, then invest it in government bonds that will easily exceed 4%. Even a short 2yr US Treasury Bond is paying 4.89% today. Municipal bonds can offer higher returns.

Andrew

tritium_pie

HSBC Bank is offering 4.8%. I moved all my ING $ to HSBC.

A bit of a process opening an account w/ them, but once done you can't beat returns like that while still keeping your $ pretty liquid. (3-4 business days to xfer into and out of my bank account.)

kadeshpa

^^^ that's only through 4/30. It's a teaser rate. Emigrant Direct still has the highest of the three popular savings accts.

The HSBC rate goes down to ~3.xx% after the promo. You might've been better off leaving it in the ING acct.

PilotKD

I've had an Emigrant Direct account for about 8 months now. It started at 3.25% and has steadily gone up to 4.5% now. I'm satisfied with it. I've also got a Roth IRA though, but that is definitely a long term plan. I opened the Emigrant account because I don't know much about investing (stocks) and I'm not about to gamble right now. I've got about $35k in the Emigrant account and I make $125 a month on interest. $1500 a year is not too shabby.