I am 31 and going to open a Roth IRA…

What makes the most sense? Opening an account with Fidelity and investing in like the Contrafund or investing in exchange traded funds like SPY or QQQQ? I will be maxing out my contribution each year. Please tell me the reasoning behind your answers

 

  • Tick-Tack 7:57 am on February 12, 2010

    Given the volatility in the markets I would go the ETF routes. My reasoning is the ETF merely replicates an index while the Mutual Fund performance might be dependent on active management (ie portfolio manager picking stocks).

    But per your initial question = Contra has been a great fund and it wouldn’t be a bad choice at this point. I would also diversify into small caps and int’l/emerging market equity.

  • src50 7:57 am on February 12, 2010

    ETFs must be purchased through a brokerage each time – like stocks. So although they have lower expense ratios, you’ll incur those brokerage fees which you won’t if you use mutual funds within a Fidelity IRA account.

  • Spike 7:57 am on February 12, 2010

    Contrafund is a good fund, but diversify. Get some international funds or emerging markets are starting to expand now. USO (crude oil) is an ETF I would put some funds into now.

    With a family of funds like Fidelity make sure that the top ten holdings in each fund are very different, otherwise you aren’t diversified. If one company has trouble you don’t want every fund to suffer.

  • Jim Z 7:57 am on February 12, 2010

    You can open the account with Fidelity, but why not consider TDAmeritrade. You can shift your money around so much easier, if you are going to self manage. Re/ Mutual Funds or ETF’s why not do a combination of both. You don’t want all your eggs in one basket. Get ready to roll, the market will kick off the bear market rally as early as last Monday, or before the end of April. DOW should go to about 9500. Experts aren’t convinced last weeks rally is the start of it; but they do say it will kick off before the end of April.

  • sunshinesoon 7:57 am on February 12, 2010

    Personally I would choose elf’s as you can trade those whenever without the limits on mutual funds. Also I believe in most cases the eta’s fees are lesser than funds.

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