ETFs offer you the liquidity of stock investing, in case you need the money soon, with the diversity of a mutual fund so that your small amount of funds are diversitified. Whatever you buy hold onto it for a couple months, prices will go up and down DAILY but the true gains will be annualized.
Good Luck, Cheers
Starting young is a great idea. The market will go up and down. Please don't exit the market when it goes down.
Target retirement funds are funds that have an asset allocation (how much in stocks, now much in bonds, etc.) that matched your retirement target year. There are retirement accounts (Roth IRA, traditional IRA, etc). You can buy different funds in these accounts, including target retirement funds. In a retirement account, your money grows tax-free. When you contribute to a Roth IRA, you do not get a deduction for the contribution, but the money grows tax-free, and when you take the money out at retirement, you don't pay tax on it. When you contribute to a traditional IRA, you get a tax deduction for the contribution, and the money grows tax free, but when you take the money out at retirement, you pay income tax on it. Basically, with a Roth, you pay the income tax up front, and with a traditional IRA you pay the tax at the end. Since you'll almost certainly be in a higher tax bracket when you retire than you are now, it's better to pay the tax now, so a Roth is a better choice for you.
You can contribute a maximum of $5,500 to your IRA accounts, and you can divide that however you want. As I mentioned earlier, you should put $5,500 into a Roth IRA and put zero into your traditional IRA.
If you have more money to save for the future, you can open a regular taxable account. You can still buy the same target retirement fund from that account, but you will pay taxes on realized gains each year, so your money won't grow as fast as it will in an IRA or Roth IRA. Of course, put the full $5,500 total per year into your IRA accounts first (which, as I mentioned should be all into your Roth IRA). You can't put more than that per year, so if you have more money to save for retirement, put it into a regular taxable account.
Open a ROTH and fund it with the first $5500 you can lay your hands on. TDF is a good investment for long term retirement.
If you want a stock tip, consider Facebook (FB) The "experts" expect the mobile market to be huge. FB has positioned itself to make a ton in the next several years (whatever that weighs). They expect the stock to increase 50 to 300%. (I bought some, but I have been wrong before)
I currently hold account in Vanguard!
One is a Target Retirement account 2045 it has roughly $ 14,600
Another account I have with them is a Tradition IRA it had $ 3,500
I'm just trying to see if I should open up a different fund with them for example, the Star Fund? or just stick the $5,000 in my target retirement account, because realistically speaking I can take it out when I need the cash but I plan now to, this is for a long term goal to reach $500,000-$1,000,000 dollars when I retire.
I do invest $500 a month in the target 2045 retirement account already.
But the traditional IRA i do not invest in at all.
I am 25 years old by the way, still fairly young, so have an average of 40 year horizon to invest.
