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Let us discuss ROTH IRA's
Baidol
I will hold him offEscape while you canRegistered User regular
I will hold him offEscape while you canRegistered User regular
I am a 24 year-old graduate student making approximately $20k a year after taxes. I have zero debt. Expenses are currently low (rent an apartment, no car, single with no dependents) and I have enough money in the bank right now such that, if something were to happen, I would be fine for a while. I am going to open a ROTH IRA.
The initial question is just where to open the account. Vanguard and Fidelity have good reputations, so I guess I'm looking for nuances to check for. Fees and such that I may not be currently aware of to look out for.
The initial question is just where to open the account. Vanguard and Fidelity have good reputations, so I guess I'm looking for nuances to check for. Fees and such that I may not be currently aware of to look out for.
Steam Overwatch: Baidol#1957
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I generally recommend Vanguard, but if Fidelity is cheaper for the fund you want to invest in then it is also a fine choice.
AND IT'S ALL MINE.
when I'm 60.
MINE!
Let 'em eat fucking pineapples!
Also, I'm sure someone more knowledgeable can chime in on this, but I think at your income level, you can get a tax credit for opening the roth. This might only be for SEP-IRAs or 401ks though, not sure.
Good luck!
If you're married you can each contribute up to 5000 dollars to a Roth IRA.
To do so, you need to both have your own Roth IRA.
I've been contributing to mine since I was 14, and will hopefully be able to retire early. Starting one young is a fantastic move on your part!
Son of a bitch. You have almost a decade on me; by the time you're 60 that's gonna be some crazy compounding madness.
Let 'em eat fucking pineapples!
What does earn you money is what you invest inside it. A few posters have mentioned the returns they have earned on their Roth. The mutual funds they have inside their Roth is what has earned them a return. Picking what mutual fund to invest in is a far more important question to have an answer to than where to open the Roth itself. Any brokerage firm can invest in any mutual fund. Some will give you discounts on their proprietary funds - but they will be nominal discounts.
A general rule of thumb is 100 - Age = Equities. Thus - I'm 25, and should have roughly 75% of my invested assets in equities (ie, stocks - as opposed to bonds. Mutual funds can cover both stocks and bonds. Many will cover both.)
Wherever you choose to invest your money - I would ask for help. There are an army of people paid good money to help people in your situation. They might not be the best, and they might not be the brightest - but at the end of the day, the big brokerage firms keep a pretty close eye on what their reps are recommending, and make sure that it's appropriate. I would earnestly assess the risk tolerance shared by you and your spouse - make sure you're not being unreasonably risk-averse (which many people are) and go talk to some investment professional about what your true goals are, and what you're truly capable of handling.
Word of caution - saying "I want to make as much money as possible while facing as little risk as possible," is a great way to get a vague recommendation made in the spirit of not getting sued. Get a good understanding of risk under your belt before you talk to someone. And remember - every investment fluctuates. Risk tolerance does not mean "how much of your money are you looking to lose?" but really it means, "How patient are you willing to be if this goes through a downturn and drops 40% in value before going way back up?"
Pretty much this, if you're putting money into your Roth, both companies will have an option for a mutual fund specifically designed for investing for retirement. For example, Vanguard has "Target Retirement 20XX" where the 20XX is the number of the year you expect to retire at. Fidelity has something similar called "Fidelity Freedom 20XX".
The point is that when you dump money into your Roth account, you'll still need to make a decision on how/where to invest it so that it actually earns more money. The recommended (by the companies at least) thing to do is to put that money into their retirement specific mutual fund of the year you expect to retire. The people managing the fund will manage the bits about how much risk (equities vs. bonds) is being taken by adjusting it for the year of retirement on the account. For example, if the account is "Target Retirement 2045" then as we in 2012, they'll put most of the money in stocks or higher risk/higher return investments, but near 2035 and 2040 they'll start switching the investments out of the higher risk stocks and more into lower earning but less risky bonds. This is why if you go this route, you want to pick a year close to when you're actually going to retire.
The reasoning behind putting your money in one of these mutual funds, is that usually when you start out, you aren't really going to have enough money to diversify so that you own a bunch of different types of stocks and bonds to balance risk. With a mutual fund, you're buying "x shares of this big pool of stock that we're collectively buying for a big group of people."
The difference in the management of the mutual fund is probably going to be the best way to decide where you're going to stick your Roth money, that is, unless you're going to wing it and make your own stock/bond investments. Therefore, you might want to compare how it's managed between companies, what the historical returns on the funds are, and what the fees are for those specific funds before making a decision.