I'm a recently deployed, 22 year old male, and soon to be married. With all that being said I've grown a interest in/with the stock market. If any one has knowledge to share please do. Anything is appreciated. Thanks


I started a long time ago on Updown.com getting schooled on the stock market. Here are some others to try out.





I'm an old fahrt retired for more than 30 years.  I recommend that you get diversity with ETFs (Exchange Traded Funds) and invest on a regular basis even if the amount is small.  Slow and steady wins the race.  I made a mistake in going with mutual funds.  Although they have performed in a fantastic manner (more than 300%) I am getting killed on taxes as I have no control over when they realize capital gains which are passed on to the fund holders.  I thought I would be in a lower tax bracket when I retired, but find myself in a higher one.

I currently have a mutual fund and Roth IRA. Can you explain a bit more why the mutual fund isn't a good idea?

Both mutual funds and ETFs have small management fees taken out each year.  Both are managed by Professionals.  In most cases the fees on ETF are a bit smaller.  Although you have to pay a small brokers fee to buy an ETF, there is no huge "front end sales load" as there is on some mutual funds.  The problem with mutual funds is that they are "pass through" vehicles.  They don't pay either income or capital gains taxes.  They pass those on to the shareholders, sometimes with very little notice.  If they sell a position and reap a huge capital gain and it happens to be in a year when you are in a high tax brackett, you can get "clobbered".  Don't ever invest in a mutual fund near the end of the year as you would wind up paying taxes on someone elses gain.  Most ETFs have plans where you can purchase on a regular  bases with little or no commission. 

Thank you so much for your response. So with your experience what should I do next?

Subscribe to a good magazine such as Money or Forbes.  Find a management company like Vanguard, T Rowe Price, or others that will let you invest a small amount each month without charging you brokerage fees.  For example I buy Honeywell stock through American Stock Transfer.  They adjust the share units to 3 decimal places and Honeywell pays the fees.  Reinvest all of your dividends and distributions in new shares.  You will be amazed at how fast an account will grow if you do this.  Don't pay any attention to fluctuations in the market.  Just keep putting a set amount each month.  You may change the ETF or other stock but don't stop investing on a regular basis.  My cost basis on my Honeywell is $30 per share.  It is trading close to $90 today.  Slow and steady wins the race.

So what do you think I should do with my Roth IRA?

If you believe that you will be in a higher tax brackett in later years(highly likely), you should grow the Roth as fast as you are able.  Better to pay the taxes when you are in a lower brackett.  Although a traditional IRA would give you a lower AGI (Adjusted Gross Income) now, the withdrawals will be taxed at your rate then.  Who knows what that will be but it will likely be higher.  Moreover the withdrawals on a Traditional IRA are mandatory once you hit 70.5.  There is no such mandatory withdrawal in Roth IRAs.  Mutual fund investments are taxed every year while you hold them and again when they are liquidated.  As you know, Obama has recently increased the tax rate on Capital Gains.  Who can guess what tax rates will be years from now.  It didn't make sense for me to convert my IRAs to Roth.  By the time Roths became available to me, the conversion costs would have eaten me alive.  Withdrawals from Roths are tax free and the earnings grown tax free.  They can even be tapped without penalty prior to 59.5 years of age under certain conditions (first time home purchase, etc.).  You can get diversity by using ETFs in your Roth IRA.

Old Nav,  I am deciding how best to invest a modest inheritance.  Would you recommend ETFs?  If so, which?