Now comes the almost impossible part for me, for us, we have no idea how to find out what the investments are that each company uses for their ROTH, and if we did know, I am so sure we would not understand anyway. Fidelity, Vangard, my own credit union, and this Prudential agent, they all offer a ROTH and we have no idea about the quality of one against another. Any suggestions for us ? We are totally unknowledge - able when it comes to investments - the more we read, the less we feel that anybody is. The famous Madoff is prime example here and his investors.
Country/State/Province of question: MIAMI DADE COUNTY FLORIDA
Internet searches, talking with our credit union investment agents, now, Just Answer
Fidelity, Vanguard, and Prudential are all high quality reputable companies that have been in business for many years. Each of them offer mutual funds which invest in various types of investments in accordance with their repective investment objectives. Some invest in stocks, some in bonds, some in real estate investment trusts, and some in money market securities. Each type of investment has different risks and return potential. Long term, stocks have historically provided the highest rates of returns. However, in the short and mid-term investment periods they can be very volatile. If you don't want any risk then you may want to consider a money market fund, a certificate of deposit at a bank or credit union, or a fixed annuity from an insurance company. However, because they are basiciall riskless, the current rate of return will vary from almost 0% to maybe 3%. If you want an investment that has some appreciation potential but less risk than all stocks then you might consider a balanced mutual fund which invests in stocks, bonds, and money market funds. You may want to consider consulting with an investment professional to assist you in determining your investment profile and making recommendations. Fidelity also has branch offices accross the country which you may want to visit for assistance.
That all becomes way too confusing to the normal person, us, and we got lost in it. We did try mutual funds and lost so much, yuck, a bitter taste still from that, we want a retirement ROTH but had no idea that they were written by every different company, much less that there were different investments used by each company, or that there was any risk with a ROTH.
Are you telling me that the rate of interest earned differs with each company who issues a ROTH ? That I will earn a different amount on the money from Fidelity, from Vanguard , from Prudential ? and also my own credit union, the Pan American Federal Credit Union, that survived even though Pan Am did not, and is now the Peoples Alliance Federal Credit Union ?
There is only risk with a Roth IRA if you invest in assets that can lose money. You could invest in a bank CD or a fixed annuity and those assets will not lose money.
Ok, got that, but, however, it is the tax exempt aspect of the ROTH that makes it more desirable , at least that is my understanding. We have a bank cd now and it pays interest so low that it is dis-respectable to even call it an investment, I do not know what a fixed annuity is so ?
I understand correctly now that a ROTH can lose money ?
EA, CEBS - 32 years experience providing financial advice
I am beginning to see hat what I thought I knew , I did not know. I thought a ROTH IRA worked like a cd from our credit union - we add money each month, earn some interest, and watch it grow, but had added plus features like the tax exempt thing. Yes ? No ? If I put $5000 into a Fidelity ROTH IRA , then, it is possible for me to lose that ? Ot into a Vanguard ROTH IRA ?
I am beginning to see that what I thought I knew , I did not know. I thought a ROTH IRA worked like a cd from our credit union - we add money each month, earn some interest, and watch it grow, but had added plus features like the tax exempt thing. Yes ? No ? If I put $5000 into a Fidelity ROTH IRA , then, it is possible for me to lose that ? Ot into a Vanguard ROTH IRA ?
A Roth IRA is merely a type of retirement account that provides for qualified tax-free withdrawals after certain requirements are met. How much the account will be worth in the future depends on the type of investments in the account. If you put $5,000 in a Fidelity or Vanguard Roth account then it is possible to lose money depending on the type of investments. If you invest the Roth funds in a certificate of deposit from the credit union then you will not lose money.
That is the definitive answer that I have been looking for. I knew there had to be a difference but I couldn't grasp what it was. Now, thanks to you, I know.