Should I invest in Mutual funds or Stocks in a Roth IRA ?

Stocks If you're a rookie in investing or stocks, go to www.finance.yahoo.com. Open up a portfolio without using real money. You can give yourself as much or as little money to try out the market. The stocks you want to focus on is consumer staples, consumer discretionary, and healthcare. These are DEFENSIVE stocks that will survive through good and bad times. Most of my positions are in these stocks. Some names include 3M, Procter & Gamble, Kimberly Clark, Exxon Mobil, Walmart, Costco. Everybody's got to eat and wipe their butts regardless of the state of economy. Many of these companies survived through the Great Depression. That's the benefits. You can sleep at night knowing your money is doing well. There are NO guarantees that you won't lose money. It's just that these stocks are the best. They pay good dividends too. Then once you're comfortable and test the waters of the market, you can finally put some real money in. Go to Scottrade.com. They're excellent for beginners. If you're new to stocks, DON'T DAY TRADE. You'll a rookie in a world of professionals. I tried day-trading with Citigroup and AIG when they were a little bit over $1. I had some luck at first, making about $30 a day but I was way over my head. My luck didn't last long and I had to rethink my strategy. Day trading involves A LOT of commissions to the broker. With all the commissions deducted from each trade, you'll be lucky if you only lose half your money. I would just day trade using Yahoo! Finance. Open a stimulation account, give yourself $100 worth of fake money and play it in the stimulation format. You'll see what I mean by losing money every easily. Good luck.

Here is one thing to keep in mind about the Roth IRA account. There is never any tax on it where as there is on your 401k. This becomes important when considering your asset mix. Income producing investments are taxed at the full tax rate as will be your 401k. Hence it makes sense to invest at least some of your 401k in income producing assets--bonds, LPs, REITs. The income from each of those is taxed at the full tax rate anyway. Now since the Roth IRA is never taxed, it also makes sense to put those types of assets into the Roth IRA also. And also equity investments. What you neglected to mention are investments outside of these two vehicles. If you have some, they should be investments that would be taxed at the capital gains rate--equity investments. Actually, unless you are in the highest tax bracket it makes sense to have a portion of your equity investments outside of a 401k. By doing so your total tax bill will be decreased, especially if you are a long term investor. If you have the least hankering to invest some of your money in gold and silver those absolutely should be within a Roth IRA. Both are taxed as collectibles otherwise. Another thing to consider in regard to the 401k is that in future years the tax rate might actually be higher, perhaps much higher, than it currently is. Since you really have no choice of placing non-mutual fund investments within a 401k except for perhaps company stock, it certainly does make sense to invest Roth IRA money in company stocks rather than mutual funds. But be careful. It is very tempting for many to speculate with their Roth IRA account especially short term trading which otherwise would be taxed at the full tax rate. That would be a good way to reduce that value of the Roth account. Be just a little cautious. Invest in the likes of MCD, WMT, JNJ, BDX, KO, etc. Or maybe ETP with its 8% dividend or PAA with its 7.5% dividend. And do not invest it in fewer than 5 different companies.

Only you can really answer that. It really depends upon what you are comfortable with. Personally, I have 2 Roth IRAs. One Roth is my "aggressive" Roth. It's mostly invested in individual stocks. My other one is my "conservative" Roth. It's invested in mutual funds.

Depends on your investment philosophy or risk levels. Individual stocks are more risky since your only own a few individual stocks compares to mutual funds that in general have over 100 equities or stocks in their portfolio and give you divisification and management expertise. Overall, the safe move is to invest in a good mutual fund unless you know how to pick great and safe stocks. You may want to do a combination of both for instance buy one stock and with the rest buy a mutual fund. Good luck!

Initially, I would invest in mutual funds. As your Roth IRA grows (say in five years or so), you might want to invest PART of it in good quality stocks. But stay diversified.

Have you heard of exchange traded funds (known as ETFs)? They are considerably less expensive than mutual funds and they have the flexibility of stocks. They also outperform mutual funds 90% of the time over 5 years. I suggest you start with SPY, DIA, or QQQQ. All of these mirror the major markets and are MORE diversified than mutual funds. Once you figure out what they do, you can move on to ETF's that invest in sectors, overseas, and comodities. You will need to open an account with a brokerage firm (it is free) like Scottrade. Trades are $7 rather than paying the mutual fund company day after day and year after year. Know what you are doing before you invest. In my opinion mutual funds are obsolete, expensive and detrimental to my retirement.

mutual funds INVEST IN STOCKS - unless you are very knowledgeable about researching individual stocks, you're better off with a mutual fund

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If your 401k is already vested in mutual funds, you should consider diversifying into individual stocks. That's trickier because you have to be sure you're not buying stocks already held in the mutual funds. That also assumes that you're comfortable stock picking. If you aren't then you should continue with the mutual funds. Be careful that you aren't also over-saving for retirment. I also have a 401k and fully funded Roth IRA but, that's because I'm cautious - probably to a fault.