IRA INFO: What to do and what not to do

Most people tend to procrastinate when it comes to investing and an IRA. One reason why is there are so many choices when it comes to picking the right IRA for your needs. There are three type of IRAS to look at when making your decision--the Roth, the deductible IRA, and the nondeductible IRA--all of which have totally different options and eligibility requirement depending on your needs.

With so many options to choose from many people just choose to not do anything at all.

Here are some dos and dont's to keep in mind when choosing the right IRA for you.

DO:

Think of picking an IRA as a way to take control of your financial portfolio against an unpredictable market. You cannot control the market's ups and downs, but you certainly can make sure that your investments are as good as they can be, keeping your investment costs low, and also make sure you take advantage of every tax-sheltered opportunity available to you, such as contributing regularly to your IRA.

Consider tax-managed funds. If the IRA Calculator tells you that you're eligible to contribute only to a traditional nondeductible IRA, yet another option to consider is a tax-managed fund. Planners often steer those who earn too much to contribute to a Roth to a nondeductible IRA, but you'll have to start taking withdrawals at age 70 1/2 from the IRA. A tax-managed fund, by contrast, offers no such strictures but offers the same tax-deferred compounding.

Dont's:

Forget about your spouse. When your married you and your spouse both can setup IRAs
helping you invest even more for the futre. A so-called spousal IRA is an option as long as you file a joint return and the working spouse is earning enough to cover the earnings qualifications to fund both his and her IRA contributions.

Assume you need a lot of cash on hand to invest in an IRA. Your 2008 Contributions can be spread throughout the year to help make it more affordable. Such a strategy, called dollar-cost averaging, which helps ensure that you're not putting money to work when the market's peaking. This option also makes an IRA a more affordable option for those who don't have the full contribution amount on hand. Your Broker can help you set this up to where you can average it out, you can afford to invest more smartly.

Mutual Fund Info

Mutual funds are becoming more and more popular as a long term investment. They are a great long term investment because it is a lower risk investment than can gradually grow but will not hurt you much, but on the other hand they will probably not make you rich either. Here are a few top companies that rate mutual funds to help you pick the best one available for you.

Morning Star:

Morning Star has been rating mutual funds for over 20 years now. They give ratings based on a point system that gives ratings from 1 to 5 stars. It looks at the companies initial risk at the time and then goes from there. The only problem with there system is that it bases it mostly on current risk and does not plan much for the future..


Business Week

Business week has Mutual Fund Scoreboard that is carried annually in their magazine, but savvy investors can access that scoreboard at any time by going to Business Week's website and accessing the Mutual Fund Scoreboard. The keep the Mutual Fund score board updated on a month to month basis. They rate funds in a few different, but they obtain the overall rating by checking out the funds performance over a five year period, based on risk adjusted returns. They deliver the ratings in a letter grade with A being the best fund rating and F being of course the lowest fund rating.

Selling My Company Stock Part II

Well a few weeks ago I wrote an article about selling some my company held Stock in Walgreens. I am now looking pretty good as it has dropped a few dollars a share for some reason. At the time I was not really worried about it dropping and I still do not want it to drop to much even though I did save a few hundred dollars by selling high, but I did not sell all my shares. I plan to keep the rest in there as a long term investment, and also keep adding to it by getting 2% taking out of my check on a stock purchase plan. I believe this stock over time will really make me some money, but in my current situation I figured adding to my down payment on my house would be worth much more as it is a good investment aswell.