Market Beat: Starting your investment portfolio |

Market Beat: Starting your investment portfolio

Ken Roberts
Market Beat

Recently, I interviewed Doria Lavagnino from CentSai on the radio.

CentSai is an excellent website full of financial advice for younger people, primarily millennials and those from generation X. I find these different terms for the various generations to be somewhat confusing, and don't really understand the purpose of lumping people together by age group and labeling them.

According to the Pew Research Center, millennials were born between 1981 and 1997 and the Generation X people were born between 1965 and 1980. Baby Boomers were born between 1946 and 1964. Hope that clears things up a little bit.

Anyway, Doria had some great advice for young people on how to get started with investing.

One thing is to set realistic expectations. Know the timeframe that you plan to invest for, and understand what the normal returns are for your asset allocation. Your long-term funds should be invested in stock funds, and you should be prepared to hold on through periods of high volatility. In the last 20 years, we've seen two drops of about 50 percent. One was when the dot-com bubble burst, and it happened again when the housing bubble burst.

You'll need to decide what type of account you're going to open. If you have a 401k at work with a matching dollar, you should max out the matching contribution. You can open a traditional IRA or a Roth IRA if you don't have an employer-sponsored plan.

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The difference between a traditional IRA and a Roth is the way they are taxed. With a traditional IRA, contributions are tax deductible and you pay ordinary income tax on withdrawals; with the Roth you contribute an after-tax dollar, but the withdrawals are free from income tax. Withdrawals from retirement accounts prior to age 59 years, six months, are subject to taxes plus penalties.

If you want access to the funds prior to retirement age you can open a taxable brokerage account. Accounts can be set up in single name, or as joint tenants. Some other account types are known as joint tenants with rights of survivorship and tenants in common. These types of accounts can be useful estate planning tools.

Put some time into researching brokerages and pick the right brokerage for your needs. Today, there are several good discount brokers with reasonable fees, and excellent trading and research platforms. Educate yourself and get started early.

Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.