Q: I’m writing because I need some “Ilyce wisdom,” regarding a Roth IRA question I have.

At the investment company where I’m thinking of opening up an account, they’ve asked me to check an “investment objective” (i.e., income, aggressive income, tax exempt income, growth, aggressive growth, speculation, tax deferral, death benefit, investing for heirs), and then the form gives me a bunch of percentage brackets.

Of course, I have very little idea what any of this means. What would you suggest?

A: My general suggestion is to start to read up about Roth IRAs — and other retirement options. You’ve got a lot of learning to do, and hopefully a long life in which to do it.

At your age, your investment objective should be aggressive growth. That’s because you have about 40 more years to go until you retire. That’s 40 years in which to ride the stock markets ups and downs and still come out okay (if history teaches us anything).

“Speculation” is an insane option for anyone who doesn’t have $2 million in other safe investments already. Tax-deferral is silly inside a Roth IRA where everything grows tax-free anyway. I’m really concerned that the investment company where you went didn’t sit you down to explain any of this.

The “death benefit” sounds like they’re trying to sell you an insurance option. Unless they’re talking about listing someone as the beneficiary of the account in case of your death. You will need to list someone as the beneficiary of your account. I assume that this will be your family until you are married — or perhaps you will list your boyfriend or girlfriend. You don’t mention kids, so I’m guessing you have no heirs at the moment.

The key thing to know is that life changes and so will your financial objectives.
Right now, you don’t have kids, and you’re not married. When you marry, you will need to think about things like changing the beneficiary into your husband’s name and merging your financial lives. When you have children, you will need to write a will, again change beneficiaries (your children will be second to inherit on your financial accounts), name guardians, etc.

The easiest investment you can make is to take whatever you plunk into your Roth IRA and invest it in a combinations of index funds.

Index funds are designed to meet the investment return of the index on which it is based: An S&P 500 index fund contains shares from the biggest 500 companies listed in Standard & Poors. When you buy a share of an index fund, you are effectively buying shares in all of the companies that are held in the index. It’s a neat and simple way of diversifying your investments (a smart thing to do).

There are all kinds of index funds besides the S&P 500. You can invest in the total stock market (there is an index fund that tracks this) and you can invest in the 2000 smallest companies. Or, try an international index fund or a bond index fund.
Fidelity Investments and Vanguard have the least expensive index funds and they’re a good place to open up your accounts. You don’t have to do it locally where you live. Everything is available on the Internet. Once you set up the account, you can transfer money in money, daily, or whatever you like.
Another investment option to consider are Exchange Traded Funds (ETFs). ETFs act like index funds, which are mutual funds, but you can trade them daily like stock.

Find out more about index funds and ETFs at www.Morningstar.com. I also encourage you to pick up a copy of my book “50 Simple Things You Can Do To Improve Your Personal Finances”