I'm fairly new to investing - is it a good idea to purchase into a mutual fund if I am not maxing out my Roth IRA?

I'm guessing most of you (if not all) - would tell me to max out my Roth first. Thanks in advance!

They're not mutually exclusive. Your Roth can contain mutual funds.

My Roth does contain MF. There are a couple of funds I am interested in that aren't available with a Roth option.

Virtually every company makes their funds available for Roth's... In fact, I am not familiar with a single company that doesn't (it would be insane not to make a mutual fund available to a retirement investment account). Are you perhaps saying that the funds you want are not available on your work's 401K Roth? Work 401K's are often very limited in the funds they offer.

You can set up as many IRA Roth accounts as you want (if you fall into the income guidelines), as long as you don't put in more than the legal limit for your age group into the bunch of them.

What funds are you interested in?

My work IRA does not allow the fund I want. I am not maxing out my Roth, but if I really start loosing money, I'd like to be able to pull my money out and not be penalized.

I'm intrested in some real estate funds (risky I know, but I'm not talking a TON of money)

you can open a traditional IRA with any company you want. mine with now with vanguard. my spouse's is with fidelity.

If you're just worried about being able to pull out without being penalized in the case of the fund going down, you can move your IRA any time you want. Instead of pulling out, just transfer it into something safer.

Work IRA? I didn't know such and animal even existed.

Real Estate is over. Done. Wait for the next cycle in a decade.

Go overseas, protect yourself from a weakening dollar. No metals though, thats a game for serious traders.

Go heavy on the oilers, RDC is one I would buy. It has a PEG ratio of .23, PE of 6.7. And for people like me, it has a killer trendline to the upside.

RDC is good to $48.

With a Roth IRA, you can pull out the principal at any time without penalties. Only the earnings are penalized and taxed if you withdraw them early.

A Roth IRA has nothing to do with were you work at. IRA = INDIVIDUAL RETIREMENT ACCOUNT

It's a 401K. I also have a Roth IRA.

Since you have a Roth IRA, you can buy the fund/funds you want within that IRA... if the company you have yours with doesn't offer the fund you want, simply open another account with one that does...

You can have as many Roth IRA accounts as you want... you just can't put in more than your maximum per year in all of them combined (i.e. $4K if you are under 50, $5K if you are 50 or over).

That was part of my question. If I am not maxing out my current Roth, and I don't have that much money in my current Roth, is it even smart to look at opening a MF or a second Roth?

I'm pretty new to investing, sorry for the dumb questions.

You can only put in $4000/year (right now) as a combined total into all your Roths, if you have more than 1.
If you aren't maxing out the one you have, and you want to put money into this specific investment, do it within a Roth. Just be sure the total contributions to the 2 doesn't exceed the maximum.

and don't forget the income CAP for ROTHs.

No where near the income cap.

TJ - DH and I are only putting in about $1200 a year into each of our Roths, we are way under the 4K allowed.

Less than 5% of the population is affected by IRA income caps.

just curious, where did you get this figure?

IRS income stats.

with the high number of dual income couples hitting the $166K cap is pretty easy.

Census bureau's most recent report says $166k household income is the threshold for the top 5%.

http://pubdb3.census.gov/macro/032006/hhinc/new05_000.htm

Not really considering that only 5% of the population does it. I know out in CA the cost of living has just gotten stupid, but the rest of the country has a much more reasonable cost of living. $100K buys a nice 3 bedroom house in OK, but won't buy a vacant lot in a CA metro area.

Let me see if I understand your situation. Your 401k won't let you invest in Real Estate funds. And your Roth IRA won't let you invest in Real Estate Funds. You are not maxing out your Roth. You want to take advantage of a hot tip about investing in Real Estate Funds, where you could make a ton of money. But you don't know whether you should open another Roth account that will let you buy that fund, or open up a regular brokerage account that will let you buy that fund. To make that decision, you just have to decide if this is long term retirement money or short term house/car/whatever money. If you can live without the money till your 65, then invest it in the Roth where it won't be taxed.

(btw, If the Roth IRA was with a full service brokerage, then you could buy any fund with it.)

If you have more money that you want to invest, I would recommend adding it to your current Roth IRA. Keeping it simple avoids more account fees & more statements to keep track of. But, If there isn't any investment options within your Roth IRA that you like, then maybe you should move the entire account to a brokerage that can do what you want. Just don't put it all in Real Estate funds.

Not exactly. The particular fund I am interested in is not with Merrill Lynch (who manages my 401K) OR T. Rowe Price (who manages my main Roth IRA) or USAA (who manages my MM/Roth).

I just didn't want ANOTHER Roth. But it sounds like that might be the way to go.

Thanks

Having all of your investments within one account means only one account fee. Is there something you don't like about T.Rowe Price's Real Estate Fund? TRREX link to morningstar

T. Rowe is currently charging me $10/year because I don't have 4K in my Roth yet.

ETA - I tried to add that to my current fund, and they want 1K to do that...

If you don't have at least $4k in your Roth don't open another account. Get all accounts over $10K each before opening another Roth.

Why $10,000?

I agree with 54regcab. Keep adding to your current Roth. Having a bunch of small Roth's is not worth the extra account fees and becomes too complicated to keep track of everything.

Thanks for getting me the answer I was looking for. I will stay where I am for the next year or so until I have 4K in there.

Reg, where you are usually right, I have to disagree with you on this one.

http://en.wikipedia.org/wiki/Roth_401(k)

Are you sure about this?

From the prospectus:



According to this, if you have over $2000 you don't pay the fee. Also, I am unsure how often you contribute, but if you call an account rep and set up a systematic purchase (monthly, quarterly, etc), you are also exempted from the fee. Unless you have an index fund, which personally I would suggest getting out of because the returns are so paltry compared to our other funds (Emerging Europe and Mediterranean, Latin America, New Asia, Emerging Markets Stock, European Stock are the best international, based on historical. Media and Telecomm is our best domestic fund currently based on historical). If you're still young, you need a little risk in your life. I have EEM and LAM in my 401K and had a 35% return last year.

-Matt (the resident T. Rowe Pricer)

I have systematic purchases - I contibute each month on the first. I am not charged a monthly fee, but rather an annual fee.

You may want to call and check with someone on that. We don't charge monthly fees, only annual ones. And according to the prospectus, since you're doing AAB, you're excepted from the fee.

I already responded:

I am NOT charged a monthly fee. I *am* charged an annual fee. Every year in July I am assessed a $10 fee...

(But you are saying since I do monthly automatic contributions I should NOT be charged this annual fee? I'm confused )

What is your disagreement?
54regcab said a Roth IRA has nothing to do with where you work, which is true.
You linked to information about a Roth 401(k), which DOES have to do with where you work.
They are two entirely different things.

I should have expanded on this more. Reg was saying that IRA's have nothing to do with where you work, which is wrong. You can have both SEP and SIMPLE IRA's, which can be through your work. These accounts are for small businesses. More information can be found here: http://www.troweprice.com/common/index3/0,...53D7622,00.html

In actuality, he was wrong in both respects. You can have a roth in a 401(k), and you can have an employer sponsored IRA.

From what I know from working here and what it says in the prospectus, you should not be charged an annual fee. I would suggest calling a rep at 1-800-225-5132 and asking about this.