What just happened with Bear Stearns really scared me. I've been reading and learning and researching and really am ready now to finally open my (long overdue) Roth IRA. It's a Roth IRA, so it's a buy and hold type of thing, but I'm kind of worried by what's happening with the market now. Should I be? Would I be better off waiting? Or investing in something else?

I'm interested in your thoughts.

Thanks!

I'm more or less in the same boat. Although I have decided to go ahead with my Roth IRA, the thought of a looming recession and the possibility of longer term economic stagnation does not make investing seem very enticing to newbies like myself! Of course, one can be consoled with the thought that what matters in todays economy is the number of shares that one can pick up on the cheap, and not their (depreciating) value. What is scary though is that we (or at least I) do not know when the economy will pick up again.
I am eager to know if there are any investors here who are currently achieving a positive rate of return on their investments and if so, how they do it.
I have a small investment in Indian mutual funds that is doing quite well, but other than that don't know of any other options.

It can be very scary considering what is happening in the financial markets today, my wife is set to retire at the end of August and will have to roll her 403B into IRA's and we have been discussing where to go, I notice that Pentagon Federal is paying up to 5% on seven year Ira,s and that seems to me to be the most safe place to go at the moment with a decent return, several retired people that we know have been seeing their retirement either sit stagnant or in some case in a slide.

I am getting a positive return on my money, but I am actively managing it. I made money betting (by selling short) that Bear Sterns was going down. I'm also betting that UBS, Morgan Stanley, Washington Mutual, Citigroup, Fannie Mae, Freddie Mac, and a few others are all going down. It's just a matter of time. They are all more or less insolvent because of overleverage and poor lending practices.

If you are looking for someplace to park your money for a while, try the Vanguard Treasury funds like VUSTX, VFISX, VFITX. They all hold only US Gov Treasuries, and will earn a postive return. Or, better yet, go to www.treasurydirect.gov, register for an account, and buy your own T-bills direct from the treasury. You won't get much of a return (4-5% max) but you will get a return, and won't have to worry about losing money. In a recession like this, return OF capital is a higher priority than return ON capital.

Sure, stocks are cheap now, but they are only going to get cheaper. The bottom will be here when people stop saying, "this is the bottom." Good luck to you!

You can open up a ROTH IRA and invest overseas as well.

Some experts, and I tend to agree, note that this is agreat time to be investing in the market. Since the market is down you are (depending on what you are buying) buying low. My 401k is invested in mutual funds but I have been using my IRA money to buy stocks in companies that I like and use. I've been able to get some real bargains and since I plan to buy and hold I should in the long run make out well.

If you wait to invest until the market is up then you end up buying funds or stocks, in general, at higher prices.

Sam the problem with that is 2 days ago Bear Stearns was a cheap stock at $60 and lots of people invested in it.... well a day later it got a lot cheaper to $30. Point being that even if you think a stock is cheap now you can stil lose your shirt because this may not be the bottom yet. Bear Stearn was a $150 stock a few months ago. This is a very volitile point to get in the market

Stock markets always have and always will be very volatile. Present volatility is not unusual. It also shouldn't matter that we may not have seen the bottom yet. When you buy stocks, you are buying shares. So you only lose something if you lose part of your share, or sell at a loss.

Also, one company is not the market, and this is exactly why people diversify. There will continue to be dramatic price drops among companies, sectors and even whole markets. This is part of the normal function of markets, not the exception.

It is human nature to give more weight to current events, but if your waiting for things to settle down, you may never see that day.

Perhaps I misread the original post, but I didn't read the original post that "Shall07834" was looking to invest in Bear Stearns but that the Bear Stearns bail out freaked Shall out. I wasn't suggesting that Shall run out and invest in Bear Stearns or other financials (although other experts have suggested that buying stock in banks/mortgage companies may be a good idea for those that are risk tolerant) but I was suggesting that now is a good time to be buying bargain stocks/funds just like, depending on your market, its a good time to be buying real estate. The basic premise for investing is to buy low and sell high - when stocks or funds are low (as many are now) its a good time to buy if you have a longer time period to hold the investment.

A very simple example, but demonstrates where I'm coming from. Say I like company A (stock was $100 a share in 01/07) and in 02/08 I buy stock at $60 (a bargain compared to 01/07), stock continues to fall in 03/08 down to $55 (I buy more) and in 02/09 stock is at $90. Do I get freaked out when I buy at $60 and the stock falls to $55 (I don't b/c I'm planning to buy and hold) the next month? Am I happy a year later when the stock is back up to $90? Yes. Is there a risk that the stock continues to fall during 2008 and 2009? Again, yes. Do I freak out? Again, I don't because I'm holding the stock and the profit or loss is not locked in until I sell it - which for me could be years.

Everyone has different risk tolerance, but to try to time the market when its "stable" is to me impossible. I appreciate when the market is down because it allows me to buy more in my 401k and IRAs.

I wasn't suggesting to buy Bear Stearns. I was merely saying that just because it looks like stock prices are cheap right now does not guarentee you are going to make money now or in the future. By the way it looks like JP Morgan is going to buy BSC at considerably less than $30 a share. Many on this site have been saying for weeks that the worst is over and continue to invest.

I am sitting on the sidelines , you've gotta be blind not to see where this is all going. Bear Sterns is on the verge of bankruptcy, there is talk of Lehman , Citi, Bank of america in dire need of cash as well. The fed is trying to bail the banks out but who knows if it can.

That's what I'm doing. Instead of $250 bimonthly into my Roth IRA (making it $6,000 by year end), I'm buying at $500 bimonthly and hoping I'm getting my mutual fund shares cheaper and they'll either go up later this year, or even if not, will go up eventually, and I'll have gotten them cheaper anyhow (and hopefully they won't keep going down). Then, I'll hit my $6,000 earlier in the year on the bet that things will turn around later in the year, and I won't be buying shares that are higher in the second half of the year, if they were to go up.

I guess on the other hand, if the market were going gangbusters, I might do the same thing.

Well hope you werent planning on buying Bear Stearns... its not going to be sold to JPM for $2 a share. The stock was valued at $150 a few months ago... $60 3 days ago, $30 2 days ago and tomorrow will go for $2.

Wanna place bets on who is next? Sorry but i'm not in the gambling mood with my money. Nobody thought Bear Sterns was going to go down a week ago... so who will be the next Bear Stearns this week??

No, when I say shares, I mean shares in a Vanguard targeted fund.

Lehman Brothers Holdings (LEH) and Morgan Stanley (MS).

But, by all means, keep buying!

My personal finance strategy isnt changing. Im still contributing to my investments which are mainly overseas indexes. I'm in this for a very long while. The whole of the market is being brought down by banking/investment companies which screwed up. The entire market didn't create this, so there are a good deal of stocks that are being undervalued right now simply because of the mood of the market.