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SW Iowa | Start with a Roth and do that as long as you can. With a Roth you pay taxes now but anything you pull out later is tax free, so the longer it has to grow the more you come out ahead. At some point you may earn too much to be eligible for Roth or rules may change, but if you're not very far removed from being a broke college sudent your marginal income tax rate is likely pretty modest currently and the tax-free growth is worth way more than a deduction right now IMO. There may be some limits, but with a Roth I believe you can still generally withdraw the $ you've contributed (but not any of the growth) without penalty... so if you put $5k a year in for 10 years, you'd have $50k you could pull out if you needed to.
Results with Edward Jones may depend on the person you're working with, but the guy I used for a while pushed really hard to put me into front-load mutual funds and other stuff with high fees. My understanding is a lot of the money they make is sort of under the table through kickbacks from the mutual fund companies/etc... I didn't feel my guy was really representing my interests of maximizing return as much as his interests of making money off me. After a few years of observing Edward Jones recommendations/results and learning more myself, I closed that account and moved everything to an online broker account.
If you want something you can put money in and largely walk away from, my advice would be to buy into index funds or index ETFs. You can go open an account with a company like Vanguard and buy their index funds direct, or any brokerage account should give you access to various index ETF variants. Any index tied to S&P 500 will give you good diversification and should have decent growth potential without a huge risk or need to pay a lot of attention to it. Doing some mid-cap and/or international for further diversification is also not a terrible idea.
Vanguard (and I assume some others) also have funds that are targeted for a certain retirement year (so for a 40 year working career you could look for something like 2060 or 2065) that automatically adjusts assets to be more conservative as you near retirement that also might be worth considering if you want something you can throw money in and forget about.
Don't invest anything you can't stand to lose. I'd lean towards being fairly conservative with retirement funds, and if you decide you want to trade more actively or do anything "risky" do it in a non-IRA personal account so if you're wrong you can write off the loss. | |
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