01 Feb Should I make my own investment decisions?

Q. I have a Roth IRA and a regular IRA held by a large firm that moves money around as they determine. I’m considering moving to Vanguard and making my own investment decisions for this year’s $6,500 contribution. What do you think? And because I receive a pension and am considered retired but work part-time, does this impact me being able to fund an IRA?
— Semi-retired and still saving

A. We’re glad you asked.

Making your own investment decisions can be very rewarding, but at the same time, can be a daunting task.

Vanguard has a great reputation and is known for low-cost investing, said Brian Power, a certified financial planner with Gateway Advisory, LLC in Westfield.

He said having an IRA at Vanguard is “a fine idea.”

“The daunting task isn’t where to house your money, however, it’s once you have the money at the investment firm, what do you invest it in?” Power said. “Vanguard literally has hundreds of mutual funds and exchange-traded funds (ETFs) to choose from.”

You need to think about what research criteria you will use to make your investment decisions, Power said.

He suggests you ask yourself how this account will fit in with your overall investment game plan, and what would happen if the investment doesn’t work out. When do you switch out of it?

“If the $6,500 represents a small portion of your overall investments, have at it,” Power said. “It’s okay to have a little fun with a small portion of your investments — if that’s what you’re looking for.”

In terms of being “considered retired,” Power said, as long as you have “earned income” — income from working versus a pension — and you’re under the age of 70, you can make an IRA or Roth IRA contribution.

Good luck!

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This post was first published in February 2017.