Investing without experience? Consider target-date fund – Orlando Sentinel

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Q: I have $40,000 in my checking account not earning anything. I don’t know much about investing, what should I consider? — J.A., The Villages

A: You should consider a target-date retirement mutual fund. The target date can reflect an approximate year you may retire, i.e. 2030. These funds are balanced with stocks and bonds appropriate with the time frame before retirement. The fund should own thousands of stocks and bonds which will provide good diversification. — Mike Salmon

Q: Some of my IRA is invested in a variable annuity that I bought about 10 years ago. The annuity charges fees of about 2.5 percent. Should I consider selling this annuity and investing in something else? — T.P., Longwood

A: You should investigate your options. Find out if you are subject to surrender charges if you close the annuity. Determine whether there is a life-insurance benefit inside the annuity that you might need. Run an analysis of the growth of a low-cost investment such as an index fund or ETF vs. the higher cost annuity. After the analysis, you should be able to determine which investment will give you the highest expected return going forward. — Paula Taylor

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