ROTH IRA SET UP

2008-07-18T01:12:05Z

I am still confused and learning as I am going along about how to invest and what exactly to do to prepare for my future. After doing some research, I decided to open up a ROTH IRA account because of the tax savings in doing so. From my perception of the advantages of opening up such an account, I think it helps tax my investments at a lower rate. Being a recent college graduate, I do not really have a stable income and plan on having annual income far greater than what I have now. Therefore, ROTH IRA account is better because it taxes my investments at a lower rate now? I am also not really sure about the whole contribution limit concept. I am allowed to contribute a maximum of $4000 for year 2008 and if I go above that I get charged 6% of the additional contribution. Does that mean, hypothetically if I invest 4000 dollars and make a profit of lets say $50 to make the total in my ROTH IRA $4050, do they charge me $3 for the additional amount? After setting up my account, I decided the first stocks I would purchase would be SPY and GEX. I decided to purchase SPY because of what I believe is a great price and an ETF that is going to bounce back in the near future once we get passed the recession *fingers crossed* The other stock I purchased is GEX, which is an etf that tracks alternative energy companies. I am a big believer that alternative energy is going to be pretty important in the coming years, as we look toward using less oil and finding new sources of energy. GEX also looked attractive to me because it had companies from all over the world, so it did not invest all of its assets in U.S based companies. So far the two stocks have done pretty good but I am looking to add my investments in my portfolio...I am currently looking for a etf or index fund that gives a yield and have been thinking about DVY or SDY. I am also looking at purchasing Pfeizer because of the great dividend it provides and strong company profile. Also I believe that it is at a great low price to buy and it looks sure to bounce back. I am also thinking about adding XLF to my portfolio but I am not sure if the financials are ready to bounce back or if the last few days was just a tease... Any help or advice would be appreciated as I try to begin to invest for the future. Currently I am using sharebuilders automatic investing which allows me to put a dollar amount every week. I put SPY and GEX on automatic investing at $150/week each and am thinking about tinkering with that number, while adding more investments.. my other watch list of stocks/funds are:GEKFTBNDBACXLGXLP

Beginning to Invest

ROTH IRA SET UP