Should money I deposit into an IRA be put into stocks, bonds, or mutual funds? Or leave them in the default?
Question:
Currently, all the money is in a "money market" account, FDRXX I believe is the symbol. This pays dividents (interest) monthly.
Is it common to split Roth IRA money into stocks or bonds? Yes/No and Why?
Answer:
Why not ask the folks at Fidelity for advice?
If you're new to investing, I suggest staying with mutual funds, which can include both stocks and bonds. It's good to have your retirement account invested in both stocks and bonds. Read some good books on investing. To start, I recommend Larry Swedroe's THE ONLY GUIDE TO A WINNING INVESTMENT STRATEGY YOU'LL EVER NEED.
It is best to diversify your investments. If you are not a knowledgable investor, you should stick with mutual funds for your retirement portfolio. Mutual funds will manage your investments for you and have an experienced team of adept investors on your side. The way you diversify your portfolio should be partially based on your time frame. If you're younger (20s-30s), you want to go with more aggressive investments (i.e. mutual funds that have a higher rate of return and are mostly comprised of stocks and oversea investments.-around 13% or 14% annual rate of return) This is because you can afford to lose more on paper and still have sufficient time to recover. If you are older, you will want to go with moderate or conservative investments (i.e. mutual funds with a lower rate of return around say 7% or 8% return.) There are different types of mutual fund fees depending on if you have a loaded or nonloaded fund. I can go into the fees but I need to know what type of fund you mght be looking at. In my roth, I am currently vested in several funds at American funds. The minimum amount to purchase a fund is $250 dollars but you can buy or sell shares afterwards so you can have less than 250 in each. Research your mutual funds, look at their historical performance, and if you do choose individual stocks (not recommended) don't pick individual stocks or bonds based on today's hot stock tip.
By all means!!...Get into some funds...leaving your money in the " core account" (FDRXX) is like leaving it at the bank. The reason you go with an outfit like Fidelity is to let all the fund managers, analysts, accountants, etc. go to work for you.
I've been with Fidelity 10-11 years ...accounts for five different people. I highly recommend the site.
If you are TOTALLY unfamiliar with funds and investing...learn to use their research...go to the research tab...then to funds...you'll see lists and lists of funds. In every different category, you will see some funds "recommended" by Fidelity.. click on a few and compare.returns, holdings, etc...look back at " performance" 3, 5, and 10 years.
Depending on the amount of money you're talking about,you may want to get into more than one fund.one mostly conservative and something else attempting some quick capital growth.
Or you can rely on Fidelity 100% and get into the " Freedom Funds".simply put the "number" of the fund is your projected retirement date.
But, if you are young ( a long time to recover from mistakes) you may want to "get into" investing and move money yourself...one caution, when you buy into a fund you are usually required to stay in it for anywhere from 1 to 6 months ( in research look at "short- term trading fee" when you buy in)
I'm making this sound more complicated than it is, sorry.
As for your last question about splitting your money.yes, I trade in the IRA's that I manage all the time, but you should always have some of your money sitting in a nice fund for safety. You won't have much to do that with if this is your first IRA...
This answer is getting WAY too long...but there is a way to split if you're interested...look into ETF's.smaller " buy-in" than funds,( more diversity".)...
Some Fid funds you could look at: FGBLX... FRESX...FNMIX...FEMKX..others I like...ICENX..EUROX
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