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Catch-up with Your IRA Investment

Updated on June 20, 2016
OMG, it's too late!
OMG, it's too late!

At its core, investing in your IRA or Roth IRA requires patience and research. Patience for your investment stock\ETF\Mutual Funds to grow, while conducting research on the contents of them and their long term performance. The problem is that it can be unclear about what your reading online about your portfolio is accurate or skewed. Like media news, whether its MSN, CNN, Fox, etc., the hordes of advice about a stock’s performance may be skewed to benefit the organization producing the content. I suppose, that is why many veteran stock players disregard any ratings given to a specific stock and also because it could change rapidly, especially with volatile stocks. In the end, it is rather hard to know who to really believe. This is like an expert movie reviewer who pans a movie, and yet, you go anyway and wonder what the hell the reviewer was thinking because you loved it! Well, maybe investing is less influenced by opinion, but it is there.

So, you hire a personal financial consultant, thinking they know it all. Really? They do know more than you, but their advice is speculation based on many of the same research you can do yourself if you have the time. There many website like Fidelity that can assess your asset allocation free by using their online software. It asks for specific information about you and goals. For all you know, your consultant may be using the same software that you pay for.

For the average person, it really comes down to making money. Buying low and selling high. Keeping the investment for at least 3+ years. Many entering retirement find themselves trying to catch up by being aggressive with asset allocation to make up. Time is now too short until retirement age of 66, so being aggressive is really the only option in a 3-5 year time slot. If they have more time, say 10 years, then they can be less aggressive, but time is no longer on their side. That is why if you have done a poor job with IRA and Roth IRA investing and you are in the 50’s, you still have time, 10-15 yrs., for the investment to grow safely. If you are close to 60 or more, you don’t have much of a choice when it comes to IRA’s.

As an investor seeking to make the most of what you have in a short time, what you want is an ETF stock that successful at the 3-5-10 yr. benchmarks. You probably want the highest rate of return for the 3 to 5 year benchmarks, showing steady percentage gains and no ups and downs. You also want the highest return in annual percentage for the lowest per share price. As to rankings given to stocks, I would say believe them if different research shows consistent ratings. I have seen Morningstar rate a stock with 4 stars, and Fidelity gives is 2 stars. Just a different opinion?

Some of the best ETFs to invest in are listed here, sequentially.

  1. RETL (Major retailors) $37 a share, unbelievable growth in all benchmarks, 35%+
  2. TMF (Minerals) $106 a share, more volatile, but 25% growth. Which is the better investment?- RETL.
  3. PSCH, PNQI- both are similar. $69-75 a share, growth of 14-19% annually.
  4. IHI ($132), FDN ($72), RHS ($123), SPHD($37), RYU($85) – These stocks all produce similar results from 13-17% growth annually. Some are rated better than others. So, all things being even, which is better? I would try FDN and\or SPHD.

Less volatile assets produce less growth but are steadily growing over a longer period of time. If you have 10 yrs+, or just need more stability in your portfolio, the following are decent:

  1. VOE ($88), VTV ($83), VTI ($105), IGV ($104)- they all produce between 6-12% annually, most are rated good and more stable. Try VOE or IGV, both tend to give higher yields.
  2. If you need a bond, which would really stabilize your volatility to a degree, two good rated bond funds are MUB ($113), LQD ($120). Since both are similar in results and cost, go with MUB. Both produce 3-5% annual growth.

What is the perfect ETF? One that has 20%+ annual growth consistently in the 3-5-10 year benchmarks. Volatility is limited overall, but expect it in the first two years of investing. Remember, to make the most of your now limited time (assuming you are 60+ and your portfolio is insufficient for retirement). Contribute the maximum allowed to your IRA’s and keep working. Being idle in retirement can get boring.

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