Roth IRA

benji86 · 10-23-2005, 01:48 PM

Hi,
I was thinking about opening a Roth IRA and depositing $100 every month for next twenty or thirty years or so (I'm 19). I was wondering if this is a better idea than a traditional IRA. I'm 19, my paycheck is just under $800 a month, but my expenses are low (tuition is paid for by scholarships, housing paid by scholarships and grants, recently took myself off car insurance and gave my mother my car so no expenses there, i really just buy food every month and pay for utiilities). Anyways... I'm thusly in a lower income bracket and believe I will continue in a lower income bracket (I hope to teach high school english).
Is a Roth IRA best for me?
How do I go about opening one, and where is best?

laurence · 10-23-2005, 02:10 PM

There are many on this board (including myself) that sees our current tax rate as the lowest it will be for a long time. Since you are not in a high tax bracket in a time of low taxes overall, I would say you are an ideal candidate for a Roth IRA.

wildcat · 10-23-2005, 02:10 PM

Yes, Roth.

Fav among the board - www.vanguard.com

Just order the Roth IRA kit and fill out the forms

benji86 · 10-23-2005, 03:15 PM

Woot! Thanks guys!

pagar · 10-23-2005, 06:18 PM

Recommend www.scottrade.com Much easier to work with, lower account
minimums, lower fees etc. All my grandchildren's accounts are with them, there are
company offices in various locations, where you can get answers when you need them. All the paperwork you need to get started is on their site.

wildcat · 10-23-2005, 08:38 PM

Quote:

Much easier to work with, lower account
minimums, lower fees etc. All my grandchildren's accounts are with them, there are
company offices in various locations, where you can get answers when you need them. All the paperwork you need to get started is on their site.

Well, I don't think that is 100% accurate. Lower fees on IRAs? You are gonna pay Vanguard exp ratios/fees and have to meet the min investment regardless of where you open it up. Lower fees on buying other funds outside of the Vanguard family for example is true. Or if you want to buy stocks within a retirement account is true. Fewer Vanguard funds available via Scottrade. Scottrade is good don't get me wrong but everything in terms of service or needs is subjective. I for one don't need a branch location. Service has been pretty good with Vanguard in my case. Just all up to what you prefer I guess.

yAyA · 10-24-2005, 02:09 AM

Quote:

Originally Posted by pagar

Recommend* * * * * www.scottrade.com* * * * *Much easier to work with, lower account
minimums, lower fees etc.* * All my grandchildren's accounts are with them, there are
company offices in various locations, where you can get answers when you need them.* All the paperwork you need to get started is on their site.

Okay, I feel silly asking this question but er...I will. I was trying to sign up for a Roth account with Scottrade and had to leave. So, I saved my application and printed out the info. I need to go back to it. The only problem is that there is no place on the site to log on to find my application. I was planning on feeling dumb and calling a branch tomorrow and pray they don't take up too much of my time cause I won't have much tomorrow. Do you know wher on their site I can go to log in to find my half complete IRA form?

pagar · 10-24-2005, 09:10 AM

Quote:

Originally Posted by wildcat

Well, I don't think that is 100% accurate. Lower fees on IRAs? You are gonna pay Vanguard exp ratios/fees and have to meet the min investment regardless of where you open it up. Lower fees on buying other funds outside of the Vanguard family for example is true. Or if you want to buy stocks within a retirement account is true. Fewer Vanguard funds available via Scottrade. Scottrade is good don't get me wrong but everything in terms of service or needs is subjective. I for one don't need a branch location. Service has been pretty good with Vanguard in my case. Just all up to what you prefer I guess.

Scottrade info reads: No inactive account fees or Account Maintaninence fees
Vanguard info read: Low Balance fee $10; IRA custodial Fee $10

Scottrade info reads $500 to open an account.
Vanguard info reads: $1000 minimum.
For a person who had only a small amount to invest, I would think knowing that you can invest with a lower mimumun to get started and not have to pay any of these fees would be important

Scotttrade: personal broker in a local office who will tell you their name and what experience level they have. I would think this would be a absolute requirement
for someone just getting started in savings and IRA's.

I don't have a clue how to find a half completed form. But once you have the phone number for the branch nearest you, I suspect the phone will be answered
quickly by someone who can help you.

soupcxan · 10-24-2005, 11:16 AM

Scottrade sucks. $17 to trade a mutual fund? Fees like that will be the death of a low-balance Roth IRA. Their selection of no-transaction-fee funds is limited and does not include Vanguard. And their bait-and-switch for mutual fund investors in early 2005 has still left a bad taste in my mouth (transferred all my accounts elsewhere).

Go straight to Vanguard, even if it means saving up your cash until you have the minimum...you will be glad you did in the long run.

**Martha** · 10-24-2005, 11:57 AM

Wherever you decide to set up the Roth--Vanguard, Scottrade, or whoever, the real important thing is to do it and at least pay attention to fees and expenses.

SLC Tortfeasor · 10-24-2005, 12:57 PM

I just set up my Vanguard account to automatically deduct $83/week from my checking account and put it into my Roth IRA!* I love the fact that it will all happen automatically.*

Why doesn't everyone do this?*

Why didn't I do this sooner?

As you can tell, I'm pretty excited.* Who knew that automated investing could be so much fun?

JPatrick · 10-24-2005, 01:06 PM

Got to agree that for mutual funds the average person is far better off using the services of the parent company.* That is to say, Vanguard or Fidelity or others.
I have been with scottrade for 7 or 8 years doing day trading and options* relating stuff, but I wouldn't think of using them as middlemen in fund transactions.
BTW, I am currently looking for a better broker so I'm not recommending scottrade for anything period.*

brewer12345 · 10-24-2005, 01:18 PM

Quote:

Originally Posted by JPatrick

Got to agree that for mutual funds the average person is far better off using the services of the parent company.* That is to say, Vanguard or Fidelity or others.
I have been with scottrade for 7 or 8 years doing day trading and options* relating stuff, but I wouldn't think of using them as middlemen in fund transactions.
BTW, I am currently looking for a better broker so I'm not recommending scottrade for anything period.*

If you are mostly trading stocks, ETFs and options, I have been happy with Schwab. Not so good with mutual funds, though.

JPatrick · 10-24-2005, 01:47 PM

Oh yeah Benji.
I got off track and overlooked your real question.
Do the Roth for sure.* At 19 you will be light years ahead of everyone else. Also, be sure to scrub behind your ears young man*

I'd also look at Fidelity which is my favorite of the fund companies.* Why? Greater selection by far, in many cases the minimums are lower.* Fees are quite competitive as is performance in many funds.* I admit I am perhaps the only believer (on this board) in Fidelity.
Lastly, I'd tell you not to automatically get some sleepy index fund in your Roth. Given the nontax nature, this is the perfect place for the fund that is going to go up 500% in your long lifetime.*

yAyA · 10-24-2005, 04:22 PM

Quote:

Originally Posted by SLC Tortfeasor

I just set up my Vanguard account to automatically deduct $83/week from my checking account and put it into my Roth IRA!* I love the fact that it will all happen automatically.*

Why doesn't everyone do this?*

Why didn't I do this sooner?

As you can tell, I'm pretty excited.* Who knew that automated investing could be so much fun?

LOL

I totally understand your joy. After reading the automatic millionaire, I'm all about saving automatically. I don't even miss the money and the next thing you know, you're rich...hehehehehe.

I do have a question. How was the setup with Vanguard(easy, long, etc.). Also, is there a way to set up the roth where they take the money out before it even goes to your checking. I have my TSP set up like that I like it cause I don't even accidently get to see the $$ in my checking before it's taken out

Thanks

SLC Tortfeasor · 10-24-2005, 05:06 PM

In answer to your first question, it is EASY and FAST.* It just takes a few minutes.

And yes, in answer to your second question, you can set up direct deposit also.* You can send as much of your paycheck as you want directly to Vanguard, and give Vanguard instructions about how to invest it.* Here's their FAQ on the issue:
* https://flagship5.vanguard.com/VGApp...sitContent.jsp

yAyA · 10-24-2005, 06:01 PM

Thanks SLC. I will check it out.

JP, thanks for the Fidelity tip(I know it wasn't for me) but it really helped. I was just at their site and now I question going with Scottrade. I also have to check out Vanguard now. Oh my, so many choices but that's a good thang

wildcat · 10-25-2005, 11:13 AM

Just so everything is clear and I did a little research to see if Vanguard funds could be bought @ Scottrade for a Roth & have all fees waived -

Scottrade's response is - investors will be subject to all fees & expenses listed in the fund's prospectus. So that includes exp ratios & account maint fees. Not sure about custodial fee charged on Roths but that fee is waived once the amount invested in a fund is above a certain $ amount ($5,000) or if your total Vanguard assets are > I think 50k

Make your own choices but these are da facts

justin · 10-25-2005, 02:31 PM

It seems like getting dinged with a couple of $10 custodial fees for a few years at Vanguard in exchange for access to 0.2-0.3% excellent mutual funds is a good deal. In a couple of years, your balance will be $5k, and no more custodial fees. Compare that to $17 per month for buying in to the same funds at Scottrade. Pick one of the Vanguard non-index funds if you don't want to pay the $10 index fee for balances less than $10000. Lifestrategy and target retirement set of funds at Vanguard are great for avoiding the $10 index fee, and getting superlow expense ratios.

If you're going to be a gunslinging trader in your Roth IRA, maybe go with Scottrade. Good luck giving away all your savings in commissions though!

I haven't looked at Fidelity for IRA's. They don't have as many low expense ratio index funds as Vanguard.

wildcat · 10-25-2005, 02:42 PM

I was trying to be unbiased. In reality, I prefer Vanguard and do all of my biz there. $10 custodial fee on accounts below $5000 is no biggie to me.

10-23-2005, 01:48 PM	#1
benji86 Confused about dryer sheets Join Date: Oct 2005 Posts: 2	Roth IRA Hi, I was thinking about opening a Roth IRA and depositing $100 every month for next twenty or thirty years or so (I'm 19). I was wondering if this is a better idea than a traditional IRA. I'm 19, my paycheck is just under $800 a month, but my expenses are low (tuition is paid for by scholarships, housing paid by scholarships and grants, recently took myself off car insurance and gave my mother my car so no expenses there, i really just buy food every month and pay for utiilities). Anyways... I'm thusly in a lower income bracket and believe I will continue in a lower income bracket (I hope to teach high school english). Is a Roth IRA best for me? How do I go about opening one, and where is best?

10-23-2005, 02:10 PM	#2
laurence Moderator Emeritus Join Date: Feb 2005 Location: San Diego Posts: 4,790	Re: Roth IRA There are many on this board (including myself) that sees our current tax rate as the lowest it will be for a long time. Since you are not in a high tax bracket in a time of low taxes overall, I would say you are an ideal candidate for a Roth IRA.

10-23-2005, 02:10 PM	#3
wildcat Thinks s/he gets paid by the post Join Date: Feb 2005 Posts: 1,896	Re: Roth IRA Yes, Roth. Fav among the board - www.vanguard.com Just order the Roth IRA kit and fill out the forms __________________ "These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"

10-23-2005, 03:15 PM	#4
benji86 Confused about dryer sheets Join Date: Oct 2005 Posts: 2	Re: Roth IRA Woot! Thanks guys!

10-23-2005, 06:18 PM	#5
pagar Dryer sheet aficionado Join Date: Oct 2005 Posts: 31	Re: Roth IRA Recommend www.scottrade.com Much easier to work with, lower account minimums, lower fees etc. All my grandchildren's accounts are with them, there are company offices in various locations, where you can get answers when you need them. All the paperwork you need to get started is on their site.

10-24-2005, 11:16 AM	#9
soupcxan Full time employment: Posting here. Join Date: Aug 2004 Posts: 765	Re: Roth IRA Scottrade sucks. $17 to trade a mutual fund? Fees like that will be the death of a low-balance Roth IRA. Their selection of no-transaction-fee funds is limited and does not include Vanguard. And their bait-and-switch for mutual fund investors in early 2005 has still left a bad taste in my mouth (transferred all my accounts elsewhere). Go straight to Vanguard, even if it means saving up your cash until you have the minimum...you will be glad you did in the long run.

10-24-2005, 11:57 AM	#10
Martha Administrator Join Date: Feb 2004 Location: minnesota Posts: 9,866	Re: Roth IRA Wherever you decide to set up the Roth--Vanguard, Scottrade, or whoever, the real important thing is to do it and at least pay attention to fees and expenses. __________________ . Do not rely on the information provided--my posts are not to be taken as legal advice. Needless to say you must consult with your legal representative. I am not responsible for errors. If I offended you with cya I apologize. If I did not, I tried.

10-24-2005, 12:57 PM	#11
SLC Tortfeasor Recycles dryer sheets Join Date: Jun 2005 Posts: 214	Re: Roth IRA I just set up my Vanguard account to automatically deduct $83/week from my checking account and put it into my Roth IRA!* I love the fact that it will all happen automatically.* Why doesn't everyone do this?* Why didn't I do this sooner? As you can tell, I'm pretty excited.* Who knew that automated investing could be so much fun?

10-24-2005, 01:06 PM	#12
JPatrick Thinks s/he gets paid by the post Join Date: Jun 2005 Posts: 1,503	Re: Roth IRA Got to agree that for mutual funds the average person is far better off using the services of the parent company.* That is to say, Vanguard or Fidelity or others. I have been with scottrade for 7 or 8 years doing day trading and options* relating stuff, but I wouldn't think of using them as middlemen in fund transactions. BTW, I am currently looking for a better broker so I'm not recommending scottrade for anything period.* __________________ If you do what you've already done, you'll get what you've already got- - - -<

10-24-2005, 01:47 PM	#14
JPatrick Thinks s/he gets paid by the post Join Date: Jun 2005 Posts: 1,503	Re: Roth IRA Oh yeah Benji. I got off track and overlooked your real question. Do the Roth for sure.* At 19 you will be light years ahead of everyone else. Also, be sure to scrub behind your ears young man* I'd also look at Fidelity which is my favorite of the fund companies.* Why? Greater selection by far, in many cases the minimums are lower.* Fees are quite competitive as is performance in many funds.* I admit I am perhaps the only believer (on this board) in Fidelity. Lastly, I'd tell you not to automatically get some sleepy index fund in your Roth. Given the nontax nature, this is the perfect place for the fund that is going to go up 500% in your long lifetime.* __________________ If you do what you've already done, you'll get what you've already got- - - -<

10-24-2005, 05:06 PM	#16
SLC Tortfeasor Recycles dryer sheets Join Date: Jun 2005 Posts: 214	Re: Roth IRA In answer to your first question, it is EASY and FAST.* It just takes a few minutes. And yes, in answer to your second question, you can set up direct deposit also.* You can send as much of your paycheck as you want directly to Vanguard, and give Vanguard instructions about how to invest it.* Here's their FAQ on the issue: * https://flagship5.vanguard.com/VGApp...sitContent.jsp

10-24-2005, 06:01 PM	#17
yAyA Dryer sheet aficionado Join Date: Oct 2005 Posts: 45	Re: Roth IRA Thanks SLC. I will check it out. JP, thanks for the Fidelity tip(I know it wasn't for me) but it really helped. I was just at their site and now I question going with Scottrade. I also have to check out Vanguard now. Oh my, so many choices but that's a good thang

10-25-2005, 11:13 AM	#18
wildcat Thinks s/he gets paid by the post Join Date: Feb 2005 Posts: 1,896	Re: Roth IRA Just so everything is clear and I did a little research to see if Vanguard funds could be bought @ Scottrade for a Roth & have all fees waived - Scottrade's response is - investors will be subject to all fees & expenses listed in the fund's prospectus. So that includes exp ratios & account maint fees. Not sure about custodial fee charged on Roths but that fee is waived once the amount invested in a fund is above a certain $ amount ($5,000) or if your total Vanguard assets are > I think 50k Make your own choices but these are da facts __________________ "These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"

10-25-2005, 02:31 PM	#19
justin Thinks s/he gets paid by the post Join Date: Jun 2005 Posts: 4,010	Re: Roth IRA It seems like getting dinged with a couple of $10 custodial fees for a few years at Vanguard in exchange for access to 0.2-0.3% excellent mutual funds is a good deal. In a couple of years, your balance will be $5k, and no more custodial fees. Compare that to $17 per month for buying in to the same funds at Scottrade. Pick one of the Vanguard non-index funds if you don't want to pay the $10 index fee for balances less than $10000. Lifestrategy and target retirement set of funds at Vanguard are great for avoiding the $10 index fee, and getting superlow expense ratios. If you're going to be a gunslinging trader in your Roth IRA, maybe go with Scottrade. Good luck giving away all your savings in commissions though! I haven't looked at Fidelity for IRA's. They don't have as many low expense ratio index funds as Vanguard.

10-25-2005, 02:42 PM	#20
wildcat Thinks s/he gets paid by the post Join Date: Feb 2005 Posts: 1,896	Re: Roth IRA I was trying to be unbiased. In reality, I prefer Vanguard and do all of my biz there. $10 custodial fee on accounts below $5000 is no biggie to me. __________________ "These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"