Where should I open a Roth IRA?

[skunkworks]

I was right about to open a Roth IRA with Vanguard themselves (since I'll be putting it in VFINX anyway), but then I noticed someone in Bruiser's thread mentioned E-Trade. So which is it? Isn't it just a matter of how much they charge to maintain your retirement account and mutual funds? /images/graemlins/confused.gif /images/graemlins/confused.gif /images/graemlins/confused.gif

Sincerely,

Investing Noob.

[nef]

I have a vanguard roth IRA and they charge like 0.2% and $10 a quarter. The $10 is waived once you hit $5k, which is only your second years worth of contributions in an IRA.

[GeorgeF]

Basically it is all costs. It is fairly easy to change companies at a latter date if something changes (although your heirs might not be able to, but let's not think of that).

There has been some rumbling in Washington about a national sales tax to replace income taxes. If this occured the obvious loosers would be people with Roth IRAs (who prepaid their income tax), municipal bond owners (who accept a lower income tax free yield), and possibly home owners (no mortgage tax deduciton as there is no income tax).

http://www.foxnews.com/story/0,2933,128499,00.html

[TGoldman]

If you're sure you want to put your money in VFINX (A good choice IMO), then open a Vanguard account and invest directly through them. Just make sure you get your account balance over $5,000 the next year to avoid their $10 fee.

However a better idea, in my opinion, would be to open your Roth IRA at a discount brokerage. In which case, Scottrade would be ideal. Don't buy VFINX through your discount broker. You would have to pay both transaction costs and Vanguard's maintenance fee. It would be a much better idea to buy and hold the ETF "SPY" that also mirrors that S&P 500. You'll still have to pay the commission, but you'll get the same results as VFINX with a slightly lower maintenance fee. This will also give you more flexibility if you later decide you want to sell your index and invest in individual stocks. You won't have to pay capital gains from your Roth IRA account, so depending upon your tolerance towards risk, it may be a good idea to use your Roth IRA for your more aggressive investing in the hope that future gains are not taxable.

[Kopefire]

I happen to work for a large financial institution. If you are planning on significant investing activity, meaning you want to open a Roth, maybe have a few stocks, 401k etc., then i'd suggest a medium-service account where you can get some sound financial advice as part of your account services.

If you are just going to open the Roth, deposit a couple grand a year in it, adn that's all the investing you'll do, then find the lowest cost way of doing that. Some funds it will be direct accounts, other funds will be better served wtih a discount broker.

[skunkworks]

Thanks for the advice. I ended up going with Ameritrade because the minimum to start a Roth was low ($1000) and there is no annual maintenance fee. I do plan on some significant investing activity as I learn more about the basics (and squirrel away some money to spare for some stocks). Was this a bad decision?

[skunkworks]

Okay, now I'm starting to get a little confused. I got an account with Ameritrade and there are no annual fees. If I put my money into VFINX through them, do I get charged the maintenance fee by Vanguard as well?

If this is the case, then I could see why you suggest going with SPY through a discount brokerage since I would have the flexibility to sell the mutual fund and move my money to more aggressive options.

As an aside, are there any 2+2-type forums for learning solid investment strategy? It seems somewhat ironic that I was motivated to start investing in the stock market from a gambling website /images/graemlins/wink.gif

[midas]

Also, add the ETF "MDY" which is the S&P mid-cap index which will avoid over-concentration in large cap stocks (MSFT) if you buy other mutual funds.

[TGoldman]

VFINX is a "No Load" mutual fund. This is good if you invest directly through Vanguard, as it costs nothing to buy and sell the fund. You're only responsible for VFINX's 0.18% annual fund maintenance fee.

Ameritrade charges $17.99 to buy, sell, or redeem all "No Load" mutual funds. You're also still responsible for paying Vanguard 0.18% for their annual fund maintained fee. This is why it's a bad idea to buy VFINX using Ameritrade--you're paying more for the same results. You're able to avoid this if you purchase an ETF instead.

As for a recommendation for a good "investment strategy" forum, people generally say fool.com is good. Just be sure to read everything (Even recommendations from "professionals") with a healthy dose of skepticism.

[Aceshigh7]

Open your IRA with Scottrade. Good service. And it is completely free of fees. I've had my IRA with them for several years now, and haven't paid 1 penny. You can get Vanguard and many other mutual funds through Scottrade with absolutely no transaction fees.

[skunkworks]

Anyone know how I can transfer my Roth IRA account from Ameritrade to Scottrade? The transaction fees are going to handcuff me from making most trades.

[AceHigh]

I think ScottTrade will have to request it for you. So you should open the ScottTrade account and fill out the paper work with them. They will forward it to Amertrade.

[TGoldman]

[ QUOTE ]
You can get Vanguard and many other mutual funds through Scottrade with absolutely no transaction fees.

[/ QUOTE ]

Not true. Scottrade charges $17 in handling fees for all "No Load" mutual funds. See http://scottrade.com/frame_mutualfunds.asp for their terms and conditions.

[Aceshigh7]

[ QUOTE ]
[ QUOTE ]
You can get Vanguard and many other mutual funds through Scottrade with absolutely no transaction fees.

[/ QUOTE ]

Not true. Scottrade charges $17 in handling fees for all "No Load" mutual funds. See http://scottrade.com/frame_mutualfunds.asp for their terms and conditions.

[/ QUOTE ]

Sorry, you are wrong.
Scottrade only charges transaction fees if the trades are placed by phone or in person with a broker. Online no-load mutual fund purchases are completely free.

http://www.scottrade.com/frame_commissions.asp

[TGoldman]

Well I'll be… It looks like you're right after all--I apologize.