30 May Aggressive investing for my heirs?

Q. I won’t need my Roth IRA for retirement so I want to invest aggressively for my two kids who will inherit it eventually. How do I pick the best investments?
— Planner

A. Congratulations on saving more than you think you need.

Just remember that people are living longer, and you may have many years ahead of you. Don’t do anything rash in case you do need the money, for example, if you need long-term care down the road.

On selecting investments, there is no one way to pick stocks.

“Better to think of every stock strategy as nothing more than an application of a theory — a best guess of how to invest,” said Alan Meckler, a certified financial planner with Cornerstone Financial Group in Succasunna.

He said you can sit down with a qualified financial planner to help you choose the proper stocks or mutual funds, or if you want to do it yourself, you can do the research on your own.

There are plenty of sources to research mutual funds, such as Morningstar, Meckler said. For researching individual stocks, there are also plenty of research platforms to use, such as Fidelity.com.

Depending on how much is in your Roth IRA, you may want to consider using mutual funds, which are at their core a managed portfolio of stocks and/or bonds, Meckler said.

“You can think of a mutual fund as a company that brings together a large group of people and invests their money on their behalf in this portfolio,” he said. “Each investor owns shares of the mutual fund, which represent a portion of its holdings.”

This gives you diversification and also professional management, Meckler said.

All mutual funds charge fees, so you want to do your research on performance and fees.

Meckler said investing in a share of a mutual fund is different from investing in shares of stock.

“Unlike stock, mutual fund shares do not give its holders any voting rights,” he said. “A share of a mutual fund represents investments in many different stocks or other securities instead of just one holding.”

If you choose to invest aggressively — whether you choose to invest this account on your own or with the help of a professional — just make sure you won’t need the money. Or at least keep a close eye on it, along with your other investments, just in case your situation changes and you, in the end, need the funds for yourself.

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This post was first published in May 2017.