opening up a roth IRA

[lesch2k]

i want to open up a roth IRA before the year is out (technically i have until april 15th for 2006 but i'd like to do it now when i have time)

any advice on who to go wtih (vanguard, ameritrade, t.d. price...) and are there any good promotions i should be aware of.

 

[DaveSimmons]

www.Vanguard.com is my first choice if you want to buy and hold funds, since then you can pick from their most excellent funds without paying any trading fees.

The only promotions I've seen with brokerage accounts is free trades, but those deals may specificlally exclude retirement accounts, and you shouldn't be doing much trading in an IRA account anyway.

For Vanguard you might want to wait until next week and then fund both 2006 and 2007 at the same time. Vanguard funds have a $10/year fee for balances under $5,000.

 

[alrocky]

More important that any promotions is what mutual fund company you're going to use to fund your ROTH IRA. I suggest you first look at Vanguard, Fidelity or T. Rowe Price.

 

[CTrain]

Originally posted by: DaveSimmons
www.Vanguard.com is my first choice if you want to buy and hold funds, since then you can pick from their most excellent funds without paying any trading fees.

The only promotions I've seen with brokerage accounts is free trades, but those deals may specificlally exclude retirement accounts, and you shouldn't be doing much trading in an IRA account anyway.

For Vanguard you might want to wait until next week and then fund both 2006 and 2007 at the same time. Vanguard funds have a $10/year fee for balances under $5,000.

Funny but I'm waiting for the same thing.
I was going to put $4K into a Roth at Vanguard but the limit per year right now is $4K.
And they charge $10 for anything under $5K.
Waiting till 2007 so I can put $5K into a Roth just to save $10...damm I'm cheap.

 

[Whoozyerdaddy]

Shop around... Maybe you'll find an after Christmas 2 for 1 sale. 😀

 

[Jadow]

Fidelity, Vanguard, and T.Rowe Price are all good. You can't go wrong with any of them.

 

[alrocky]

Originally posted by: CTrain
Funny but I'm waiting for the same thing.
I was going to put $4K into a Roth at Vanguard but the limit per year right now is $4K.
And they charge $10 for anything under $5K.
Waiting till 2007 so I can put $5K into a Roth just to save $10...damm I'm cheap.

In January toss in the whole $8000 for both 2006 and 2007 and stop being so cheap on your self!

 

[lesch2k]

dont know if i'll have the whole $8k first of jan though...

 

[ttown]

I'll second Vanguard and T.Rowe Price.
Both offer good products that I've been holding for years.

Another worth considering is Charles Schwab, which I also use.
There was a pretty high minimum (25 or 50k, iirc) with Schwab when I started with them years ago. I haven't kept up with their fees for low balance accounts -- they may have reduced or eliminated them.
The nice thing about Schwab is that they offer products from other fund companies (including T.Rowe Price and LOTS of others (but not Vangard)).

 

[Reckoner]

Vanguard Target Retirement Fund

 

[slvrsol]

I'm in the same position and was looking at vanguard... I think they charge the 10 dollar custodial fee if u have less than 5k at the end of the year so I'm going to wait till next month to start.

 

[Reckoner]

Originally posted by: slvrsol
I'm in the same position and was looking at vanguard... I think they charge the 10 dollar custodial fee if u have less than 5k at the end of the year so I'm going to wait till next month to start.

you'll still get tacked with that fee when you open up an account

 

[slvrsol]

Originally posted by: PaulNEPats

Originally posted by: slvrsol
I'm in the same position and was looking at vanguard... I think they charge the 10 dollar custodial fee if u have less than 5k at the end of the year so I'm going to wait till next month to start.

you'll still get tacked with that fee when you open up an account

damn.. so i guess theres no avoiding it? or will the 8k mentioned above work?

 

[AmigaMan]

I was looking at Fidelity's Freedom Funds which are very similar to Vangard's Target funds. http://personal.fidelity.com/products/funds/content/freedomfunds.shtml.cvsr

 

[Reckoner]

Originally posted by: slvrsol

Originally posted by: PaulNEPats

Originally posted by: slvrsol
I'm in the same position and was looking at vanguard... I think they charge the 10 dollar custodial fee if u have less than 5k at the end of the year so I'm going to wait till next month to start.

you'll still get tacked with that fee when you open up an account

damn.. so i guess theres no avoiding it? or will the 8k mentioned above work?

yeah, if you put 8k in during january I would imagine it would

 

[CTrain]

Originally posted by: PaulNEPats

Originally posted by: slvrsol
I'm in the same position and was looking at vanguard... I think they charge the 10 dollar custodial fee if u have less than 5k at the end of the year so I'm going to wait till next month to start.

you'll still get tacked with that fee when you open up an account

Sure about that ??
This is what I got from Vanguard:
Account fees and minimums »
-For most Vanguard funds, a minimum initial investment of $3,000 per fund to open a Roth IRA.
-No enrollment, transfer, or advisor fees.
-Low expense ratios that vary by fund.
-$10 annual custodial fee on each fund in your Roth IRA with a balance of less than $5,000.

So why would they charge me $10 if I open up with $5000 ??

 

[Reckoner]

Originally posted by: CTrain

Originally posted by: PaulNEPats

Originally posted by: slvrsol
I'm in the same position and was looking at vanguard... I think they charge the 10 dollar custodial fee if u have less than 5k at the end of the year so I'm going to wait till next month to start.

you'll still get tacked with that fee when you open up an account

Sure about that ??
This is what I got from Vanguard:
Account fees and minimums »
-For most Vanguard funds, a minimum initial investment of $3,000 per fund to open a Roth IRA.
-No enrollment, transfer, or advisor fees.
-Low expense ratios that vary by fund.
-$10 annual custodial fee on each fund in your Roth IRA with a balance of less than $5,000.

So why would they charge me $10 if I open up with $5000 ??

You can only contribute $4000 per year (49 and younger) for a Roth IRA

 

[CTrain]

Originally posted by: slvrsol

Originally posted by: PaulNEPats

Originally posted by: slvrsol
I'm in the same position and was looking at vanguard... I think they charge the 10 dollar custodial fee if u have less than 5k at the end of the year so I'm going to wait till next month to start.

you'll still get tacked with that fee when you open up an account

damn.. so i guess theres no avoiding it? or will the 8k mentioned above work?

You don't need the whole $8K.
$5K will do if you don't the $8K right away.

 

[CTrain]

Originally posted by: PaulNEPats
Vanguard Target Retirement Fund

Yeah, I planned to allocate 100% in the 2045 or 2035 Target Retirement Fund

 

[Reckoner]

Originally posted by: CTrain

Originally posted by: PaulNEPats
Vanguard Target Retirement Fund

Yeah, I planned to allocate 100% in the 2045 or 2035 Target Retirement Fund

I've had some nice gains (~10% this year) with the TR2045 fund. It's allocated as 90% stocks, 10% bonds

 

[CTrain]

Originally posted by: PaulNEPats

Originally posted by: CTrain

Originally posted by: PaulNEPats

Originally posted by: slvrsol
I'm in the same position and was looking at vanguard... I think they charge the 10 dollar custodial fee if u have less than 5k at the end of the year so I'm going to wait till next month to start.

you'll still get tacked with that fee when you open up an account

Sure about that ??
This is what I got from Vanguard:
Account fees and minimums »
-For most Vanguard funds, a minimum initial investment of $3,000 per fund to open a Roth IRA.
-No enrollment, transfer, or advisor fees.
-Low expense ratios that vary by fund.
-$10 annual custodial fee on each fund in your Roth IRA with a balance of less than $5,000.

So why would they charge me $10 if I open up with $5000 ??

You can only contribute $4000 per year (49 and younger) for a Roth IRA

Which is why you can contribute $5K on Jan 1.
$4K for 2006 and $1K for 2007 then you have until April 2008 to contribute the other $3K for 2007.

 

[CTrain]

I keep hearing all these damm economists talk about reccession and it makes me want to be safe and just settle for ~6% CDs for my Roths.

 

[Heddis]

Either way you look at it you're going to have to pay the $10 fee to open a Roth with Vanguard because you can't contribute more than $4,000 per year legally. Whether you pay it this year or next. So you might as well open an account now with $4,000 then have all off 2007 to contribute another $4,000. This way you'll have an entire year to earn interest on $4,000(which should be more than $10) and you can still earn interest on your contributions all through 2007. Earning you more money.

Also, why not look at other companies that don't charge the fee? I'm using ING right now for my ROth Ira and I've gotten great returns over the last 4 years, roughly 20% but I do believe they charge some fees. But when I invested with them I was young and stupid and maybe 10 years down the line I'm going to hate myself. But hey, I'm young and stupid. It's what I do.

 

[alrocky]

Originally posted by: Heddis
Either way you look at it you're going to have to pay the $10 fee to open a Roth with Vanguard because you can't contribute more than $4,000 per year legally.

That information is not correct as per CTRain's explaination two post above yours.

 

[CTrain]

Originally posted by: Heddis
Either way you look at it you're going to have to pay the $10 fee to open a Roth with Vanguard because you can't contribute more than $4,000 per year legally. Whether you pay it this year or next. So you might as well open an account now with $4,000 then have all off 2007 to contribute another $4,000. This way you'll have an entire year to earn interest on $4,000(which should be more than $10) and you can still earn interest on your contributions all through 2007. Earning you more money.

Also, why not look at other companies that don't charge the fee? I'm using ING right now for my ROth Ira and I've gotten great returns over the last 4 years, roughly 20% but I do believe they charge some fees. But when I invested with them I was young and stupid and maybe 10 years down the line I'm going to hate myself. But hey, I'm young and stupid. It's what I do.

You are incorrect.
Qoute "Annual IRA contributions can be made between January 1 of that year and April 15 of the following year. Because of the extra three and a half months, if you send in a contribution to your IRA custodian between January and April, be sure to indicate the year of the contribution so the appropriate information gets sent to the IRS. Remember, contributions to a Roth IRA are never deductible from a taxpayer's income (unlike a traditional IRA)."

So essentially on Jan 1 2007 you can contribute $4K and state that its for 2006 and then contribute up to another $4K for the 2007 year.