Opening Roth IRA - which fund(s)?

[target2019]

inquisitive resurrected this thread yesterday.

The OP hasn't posted since last February.

Thanks. Saw that.

Thought it a good idea to add the target fund's AA, and also correct the Roth contribution mistake.

 

[inquisitive]

So I am deciding between Tradeking and Fidelity to open a Roth IRA. Does every company basically have the same selection in terms of no load mutual funds and retirement funds? I am going to start with the full $5000 so the minimums don't bother me.

I noticed that some of you are recommending retirement funds such VFIFX. Didn't all of these get destroyed last year? I pulled up a chart of the S&P 500 for the past couple years and there is no clear uptrend. Wouldn't it be safer to be in bonds or a money market fund and then switch into a stock fund later (and are there transaction fees for doing so?)? Instead of these 2050 type funds, wouldn't it also make more sense to get into the most aggressive funds now, eg an emerging market fund or small cap fund?

 

[CCdaCE]

So, you're going to wait until the S&P recovers (gets more expensive) and then buy? Sounds like dirty market timing, to me. Which seldom works, apparently. How do you know that this market isn't going to be the cheapest it'll be for 10 years? Or, maybe a couple 10% "corrections" are coming. If it's all so obvious, how come some fund manager isn't consistantly "knocking one out of the park".
I'd figure out your risk level, adopt an asset allocation (stocks vs. bonds, then types of funds) and stick with it. Maybe read some books like Bill Bernstein's 4 Pillars or Bogleheads Guide to Investing. Until that, I'd pick one of those Target Retirement funds or something similar. They give you exposure to everything - stocks, bonds, international, emerging markets, etc. Until you figure out if you want to "slice and dice" and/or chase past performance.

Re-read jIMOh's post above.

-CC

 

[LOL!]

So I am deciding between Tradeking and Fidelity to open a Roth IRA. Does every company basically have the same selection in terms of no load mutual funds and retirement funds? I am going to start with the full $5000 so the minimums don't bother me.

Absolutely not. For example, to buy a Vanguard fund at Fidelity will cost you something like $75 in commissions. To buy a Fidelity fund or a fund in the Fidelity no-transaction-fee (NTF) network will not cost you a commission, BUT the ongoing annual expense ratio will be higher than the corresponding Vanguard fund unless you use the Fidelity Spartan funds.

Or you can purchase an ETF, but both Fidelity and TradeKing charge commissions for that, while some other brokers do not charge commissions if you keep enough money with them.

I noticed that some of you are recommending retirement funds such VFIFX. Didn't all of these get destroyed last year?

Vanguard is well-known for its index funds. If a fund got "destroyed" it is because the underlying index(es) got destroyed. One should figure out their risk level and then dial in that risk level with their desired asset allocation. It seems that rather than jump in and buy a target retirement fund based on some date in the name, that one should figure some things out first.

Good luck!

 

[kybec29]

If I have my Roth with TD Ameritrade instead of through Vangaurd, will it cost me more somehow if I try buying Vanguard mutal funds in my roth through TD Ameritrade?

 

[ziggy29]

If I have my Roth with TD Ameritrade instead of through Vangaurd, will it cost me more somehow if I try buying Vanguard mutal funds in my roth through TD Ameritrade?

First of all, do you know that Vanguard funds are available through Ameritrade?

Even if they are, chances are that there will be transaction fees involved. Vanguard tends not to participate in those "no fee" mutual fund supermarkets; doing so would require their expenses to increase and Vanguard tries to keep them as low as possible.

 

[kybec29]

I've researched about 10 popular Vanguard funds and all are accessable through TD Ameritrade.

 

[LOL!]

Yes you can buy Vanguard funds through TDAmeritrade, but if you buy the open-end mutual fund it will cost you lots in commissions. If you buy the ETF share class (if it exists), then it will likely be cheaper and cost a commission of $10. You can easily read the commission/fee schedule for your brokerage account much easier than we can, so why not do so and tell us what your costs would be?

Of course, you can avoid the commissions altogether for Vanguard funds by opening a mutual fund account directly with Vanguard or by opening a PMA account at WellsFargo with a WellsFargo brokerage account and by having $25,000 in combined assets at WellsFargo.

 

[armor99]

One of the things that I do that you might find helpful, is to fund my Roth IRA at the end of the year.... for the previous year. I have set up my deductions etc, that for now, I almost always get back around 3k or so. It is really difficult to make 5k dissappear at once into your Roth IRA... so by doing it that way it is sort of a "forced" savings on myself. So when my tax return comes back, it get put back right into the Roth IRA.

I could probably do inventments that have a slightly better return with the money during the year.... but this way I have a fairly good idea where a large percentage of my Roth IRA money is going to come from in advance.