As I wrote about yesterday, Mr. BFS and I just fully funded our 2012 Roth IRA’s last week with the last $8800 that we needed to contribute. I’d love for it to be that easy, but we also had to figure out what to invest in with that cash. Here’s what we came up with…
Crystal’s 2012 Roth IRA Investments
I’m easy. I like target date mutual funds. Specifically, my 401k is invested in Fidelity Freedom 2035 (FIHFX) and my Roth IRA is fully invested in Fidelity Freedom 2045 (FFFGX). Both returned about 12-13% over the last year and only lost about 25-30% of their value during the crash (not too bad when some people lost 50% or more). My two accounts have completely rebounded and have even grew some since the crash since that was also when I contributed more cash.
So, the $3800 I had left to contribute to my Roth IRA was used to buy more shares of FFFGX. It’s probably not a sexy choice, but I like target date mutual funds since they are like investing in a great portfolio that is automatically adjusted to be less risky as time goes on. I really appreciate smart and easy.
Hubby’s 2012 Roth IRA Investments
Mr. BFS is not as easy as I am. He likes choosing investments. That is why he runs our Scottrade account for stocks. He ended up using his $5000 to invest in two main stocks:
- Walmart (WMT) - He said he chose this one for $3500 since he thinks it will continue to be a sales leader and they are doing a big, patriotic push in advertising that may go over well. Their price has also dropped a little over the last 6 months, so he think it would be a good time to buy. And he likes their dividend and how often they are known to raise their dividend. Finally, he says we don’t have much other stock in this niche, so it’s diversification.
- Microsoft (MSFT) - He put the other $1500 into Microsoft since he thinks it also has dropped enough to be a nice buy. They also have a good divend and history of dividend growth. And we don’t already have a tech company in our portfolio, so he diversified again. Plus, the crappiness of Windows 8 has already been factored into the stock and the new X-Box console should be released in the next 18-24 months.
Overall, I’m just happy that we have two fully funded Roth IRA’s for 2012. :-) Yay! But my competitive nature now wants to see how well my target date mutual fund does against his specific investments in 2013, lol.
Do you have a Roth IRA? What do you invest in?