Just opened up a Roth IRA - now what?

[Anonymous]

Anonymous wrote:13:10 here

Ahh, I remember being young and idealistic. I agree with your sentiments. Unfortunately, when I tried to put it into practice, it gets really hard. By trying to eliminate one area (say oil and gas), invariably it led to funds that included something else (tobacco, guns, casinos etc.). Pretty soon the only way to go was with individual stocks. Even those end up being complicated (consider for example the impact of Boeing on carbon utilization). In the end, I think you are best off just buying an index, and making your social statements through other means (charitable giving, not buying products from certain companies etc.). Plus, this strategy has it's own social benefit-- it refuses to support the giant financial services industry that would like for you to buy actively managed funds or trade individual stocks.

Thanks for the advice. I did find a few funds that I think would be good, but when I tried to actually "buy" into them, I don't have the minimum amount. So, I guess I have to keep putting in cash until I gather the minimum for any fund. I didn't realize they had $1-5,000 minimums, so it will probably be awhile before my IRA is anything other than cash.

If anyone has anything else to add, please do. I welcome any and all investing advice

[Anonymous]

Anonymous wrote:Vanguard Total Stock market.

+1. Look no further.

[Anonymous]

If you found any that don't include Monsanto please share.

I can stomach McDonald's & the gas companies better.

[Anonymous]

If you are below the minimums for mutual funds, look at the ETFs - there are no minimum contribution amounts, you just have to buy whole shares. VTI (vanguard total market) is 97/share, VOO (vanguard s&p 500) is 171/share.

[Anonymous]

Anonymous wrote:If you found any that don't include Monsanto please share.

I can stomach McDonald's & the gas companies better.

OP here. I like New Alternatives Fund (NALFX) and Pax World Global Environmental Markets (PGRNX on a few first investigations but haven't decided on one because I don't have the minimum first investment yet ($1,000 for each). Within a few months I should be able to invest the cash into a fund. The links in parentheses are to each fund's holdings.

It was hard to find a balance of holdings that meet my criteria, have historically good returns (better or at the same level as the market within the last 3-5 years), and have lower-than-average fees. I'm still looking

Anonymous wrote:If you are below the minimums for mutual funds, look at the ETFs - there are no minimum contribution amounts, you just have to buy whole shares. VTI (vanguard total market) is 97/share, VOO (vanguard s&p 500) is 171/share.

Hmm, I haven't looked into ETFs at all. What's the difference between an ETF and mutual fund? Advantages vs. disadvantages to either?

[Anonymous]

A mutual fund is what it sounds like-- a bunch of people put money into the fund and the fund buy stocks (or other securities) with that money, and gives shares in the fund to its investors. Each day after the market closes, the mutual fund figures out what its holdings are worth and buys/sells its shares to people who want in or out.

An ETF is also a basket of stocks, but they have been bundled together into a new security, which is bought and sold on the markets like other stocks. That means that if you want to buy/sell it you don't wait til the end of the day and get a guaranteed price from the sponsor-- instead you find someone who wants to do the opposite of you and find a price you agree on (just like for your individual stock purchases). It's technically possible for the value of the ETF to deviate from the value of the bundled stocks in it, but this doesn't happen too often because most ETFs can be broken up and sold for parts if the values diverge too much.

So the differences aren't huge, but a mutual fund will never have transaction fees for buying/selling if you buy/sell from the fund-- if you are doing it through a brokerage then there may be charges imposed by the brokerage.

An ETF has transaction fees for each purchase/sale just like a stock would, plus there are some hidden costs in the buy/ask process. Some (most?) ETFs allow dividends to be reinvested without triggering transaction costs, but you might check with your brokerage as to how that's handled if you are planning to do that.

On the other hand, you can buy/sell an ETF any time during the trading day, while a mutual fund will only let you buy/sell once a day, after closing.