Some Low Yields Are OK

Q I own some stocks that have dividend yields of 2 to 5 percent, and others with yields of 10 percent or more. Since all the companies seem sound, why shouldn’t I move all the money into the higherdividend ones?

— C.R., online

A You should keep your money focused on your best ideas. But there’s more to a company than its yield. For example, one yield might be 10 percent, but the company might be growing very slowly. Another might offer a 3 percent dividend, while growing more briskly and hiking its dividend regularly and significantly.

Q I have about $4,000 I’d like to invest in something. I would like to set up a Roth IRA, but I want to pull the money out whenever I need to without paying a penalty. What should I do?

— G.H., online

A Well, remember that you shouldn’t invest any money you’ll need within a few years in stocks, as they can be rather volatile in the short run. So stick with investments such as CDs or money market funds for short-term money.

While Roth IRAs are terrific for most of us, you’re expected to leave your money to grow in them for at least five years and to not begin withdrawing your earnings until age 59½. Otherwise, a 10 percent early withdrawal penalty fee may apply. Glean additional details at www.rothira.com and www.fool. com/retirement/ira/index.aspx.

Alternatively, you might want to simply open a regular brokerage account for investments that are not tax-advantaged, where you can withdraw funds at will. Learn more at www.broker.fool. com. Don’t dismiss the Roth too quickly, though — its tax benefit can be very powerful, though, as long as you can leave the money to grow.

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