AdviceIf you something on your mind and feel like asking for the advice of the other members, the Advice sub forum is the place to be.
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i came into some money recently and i was thinking about either dropping it into my mutual fund or maybe opening a wroth ira? i don't really want to put into my existing mutual fund because i want to diversify my money. Any finance ppl out there? any ideas?
And NO im not going to put it into my civic!
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To try to gather opinions, maybe someone knows something i don't. im definitely not solely relying on civicforums for my financial advice just wanted some input.
Clearly ur better at asking questions than posting ideas
Diversifying is one thing- and I totaly support it.
BUT heres the issue... with an roth IRA, you can only contribute so much every year (2,000 I think). Your money isnt going to grow at a fixed percent, the growth function is a little more complex then that- which makes it a little tricky to figure out the future value of your money. Your money growth is exponential with a roth IRA, which is why it has such a great advantage over other saving vehicles. Another plus is that contributions are tax-free, and so are withdrawls, so essencially your investing money for free, which is cool and kind of obvious because a roth IRA is a retirement account set up by the goverment. You take bigger hits to your money if you decide to pull it out early, aka before retirement, or age 59&1/2 (if my memory is correct).
It boils down to this....If your looking for taxable short term low-risk investments that provide small growth, go with investing your money into a mutural fund. If you are concerned about your well-being in the future after you have finished your career, then go with a roth IRA.
Another note... if you invest starting now, every year, you can easily make at least $1 million by the time you need to retire.
Before I write anything else, I will say this: IF YOU DO NOT HAVE AN IRA, OPEN ONE AND MAX IT OUT EVERY YEAR FROM NOW ON.
With that said, there are a lot of factors that go into making this sort of decision.
How much do you have in the market currently and in what type of securities?
If you don't know jack about the market, open a Roth IRA, max it out, and invest the rest in index funds. Also, do not bail when the market gets rough.
right now is a good time to get into the stock market, most stocks are undervalued. pick some good companies and ones that pay dividends
You make money two ways in the stock market:
1) through price appreciation
2) through dividend payments
Either will you give you money... even if the company does not issue a dividend, the value of the company still goes up. The easiest way to understand this is say a stock is worth $20.00, and the company issues a $1 per share dividend, the market price goes down to $19 dollars at this point to reflect the payment of the dividend. ...Its a backwards concept but the fact is you're making money if a dividend is issued or not by your company.
You make money two ways in the stock market:
1) through price appreciation
2) through dividend payments
Either will you give you money... even if the company does not issue a dividend, the value of the company still goes up. The easiest way to understand this is say a stock is worth $20.00, and the company issues a $1 per share dividend, the market price goes down to $19 dollars at this point to reflect the payment of the dividend. ...Its a backwards concept but the fact is you're making money if a dividend is issued or not by your company.
Werd. Dividend policy has no effect on stock valuation. The stock price will drop by the amount of the dividend on the ex-dividend date (just like Triz described).
The investor should be 100% indifferent to dividends. The only time dividends matter is in signaling to others (ie a company that has the $ to pay dividends is healthy financially).
Werd. Dividend policy has no effect on stock valuation. The stock price will drop by the amount of the dividend on the ex-dividend date (just like Triz described).
The investor should be 100% indifferent to dividends. The only time dividends matter is in signaling to others (ie a company that has the $ to pay dividends is healthy financially).
Well, if your looking at taxes- its a different story. Currently for 07/08 tax season Im fairly certain dividends have very favorable tax treatment- being taxed at 0% under the sunset provision, where as an appreciation in stock valuation would result in a capital gain at capital gain tax rates- most likely 10 or 15%. So, depending on what the taxes are doing in the year of the dividend payment/ selling of the stock- a very well informed investor would NOT be indifferent. But I do agree, aside from taxes, an investor will be indifferent between an appreciation in stock valuation and a dividend payment of the same amount.
Quote:
Originally Posted by white2K2EX
Thanks
If anybody needs advice, I'm a finance guy and would be happy to help.
And yes, thanks for the rep! And I'm an accountant/ future CPA, I'm down to help as well.
