Home › Forums › Money & Finance › IRA…Traditional or Roth?? Stock trade or mutual funds? › Reply To: IRA…Traditional or Roth?? Stock trade or mutual funds?
Pay off any debt you have first, but then go get a Roth IRA. Go with growth stock mutual funds. My preference is for index funds.
The difference between a normal IRA and a Roth is that with a normal IRA you pay taxes when you take the money out, with a Roth you pay taxes now. But since between age 22 (your age now) and age 60 the money will have grown A LOT you are better off paying taxes now on a much smaller amount of money.
As for mutual funds vs single stocks go for the mutual funds. There is too much risk in single stocks. I mean if 10 years ago you had put $25,000 into Enron it would be worth 0 now. With a mutual funds you average out the ups and downs over many many stocks.
FWIW Warren Buffet recommends index funds and puts much of his money into them