I'm trying to choose either a low risk mutual fund or a roth ira. Any help would be really appreciated.?

A Roth IRA grows tax-sheltered, and no taxes when you pull the money out.

a mutual fund will generate taxable interest, dividends and/or capital gains, depending on what it's invested in. Morningstar reports show the amount of turnover; the higher the turnover, the more likelihood you will pay capital gains tax. Of course, the max. capital gains tax right now is 15%.

CD interest is taxed at the same rate as your salary--ordinary income, which can be as high as 35%.

From a tax standpoint, the Roth IRA is the best bet longterm because all gains are sheltered ("under current law"--I would not hold my breath that Congress will not change this someday).

Do you have an emergency fund of 6-8 months' living expenses in the bank or credit union? If not, you need to start with that before you even think of investing. Good luck!

Read Money, Smart Money and Kiplinger's magazines to educate yourself before investing.

It's not an either or choice. An IRA, whether a Roth or a traditional IRA, is a type of tax-advantaged arrangement. A mutual fund is a vehicle for investing. Thus, an IRA can be invested in a mutual fund, certificate of deposit, or even a savings account.

A Roth IRA can double as your emergency account if you find that you are unable to invest in both right now. Since you fund a Roth IRA with post-tax dollars, if you have to, you can withdraw your contributions (but not earnings) at any time without penalty or taxes.

If you are concerned about risk, then invest your Roth IRA in a certificate of deposit instead of a mutual fund. Your expenses will be lower and you won't have to worry about losing principal. Historically, the stock market has returned the most over time, but the average investor only achieved a 1.87% annual return over the past 20 years - primarily because the average investor buys high and sells low.

Consider a credit union for your Roth IRA. They tend to offer the lowest fees and the highest rate of interest. And, their accounts are federally insured up to $250,000 for IRAs.

Doreen is right - you can invest in a mutual fund either way. If you set it up in a taxable account, the advantage is that you can access the money at any time without penalty. The downside is that you have to pay taxes every year on the earnings distributions (both capital gains and dividends). The opposite is true if you set up your mutual fund in a Roth IRA account - if you take the money out before retirement, you will have to pay taxes and penalties, but if you keep it in the account until retirement, you do not have to pay taxes on the earnings.

The stock market has ALWAYS been defined by uncertainty in the short term (less than 5 years). Over the long term, stocks (and funds that invest in stocks) have AVERAGED about 10% growth per year - better than any other asset class. Will there be years when your account value goes down? Yes - historically, about 1 in every three years. However, if you're invested for the long term, stock funds are definitely the way to go. As you get closer to retirement, you'll want to shift your investments to more conservative investments like bond funds. One common (but crude) rule of thumb is to subtract your age from 100, and invest that percentage of your portfolio in stocks (personally, I think that's too conservative - I subtract my age from 120).

If you want to be extra cautious, you can use what is called dollar-cost averaging (DCA). What that means is that, instead of investing all of your money at once, break up your investment into 6-12 equal portions, and invest one portion each month until the entire amount is invested. That way, if the market goes down during that period, you can take advantage of the lower share prices.

I hope that helps. Good luck!