Fidelity. Vanguard, or T rowe Roth IRA?

[rerod]

I'm trying to decide who to start a roth IRA with. I can afford 4000 now. But I'm not sure if I can do that every year. Im 40 years old.

Fidelity: Has a no-fee IRA.
https://accountsetup.fidelity.com/ft...pp/openAccount

Vanguard has a $10 annual fee under $50,000 .
https://flagship.vanguard.com/VGApp/..._Event=FeeInfo

T rowe has $10 annual fee under $50,000
http://www.troweprice.com/common/ind...3D7769,00.html

What am I missing here? And who would you recommend?

My moms financial adviser recommended that I invest in Balanced index with Vanguard.

Thanks

[kv968]

I just started a Target Retirement Fund with T Rowe Price. Their target funds are more aggresive with the stock/bond ratio than the other funds and you can make automatic monthly deposits for as low as $50/month. However, there's nothing wrong with the other fund companies you've mentioned. They all have good products. However if you do go with Vanguard, you might want to look at their target retirement funds instead of the balanced index. That fund may have too high of a bond allocation for you. It all depends on what your risk tolerance is.

[meaghanchan]

All 3 are good companies, and I think they all have certain advantages and disadvantages. I know that T. Rowe Price lets you do start out with just $50 a month, which is a good advantage; but their expense ratios tend to be a bit higher than Vanguard or Fidelity.

Fidelity's index funds have very low expense ratios, but their other funds are more expensive than some.

Vanguard has high minimums and charges fees for low balances, but because of those fees, they can afford to have very, very low expense ratios.

If you have $4000 to start out, I would consider a Target Retirement fund with Vanguard. You would meet the $3000 minimum, the expense ratio is very low, and the TR funds offer good diversification, with money in stocks, bonds, and international stocks, and the funds automatically get more conservative as you get older.

One thing I like to consider is that unlike T. Rowe Price or Fidelity, Vanguard is neither publicly traded nor privately owned.... It is client-owned. They don't have to worry about increasing profits to keep shareholders happy, because they don't have shareholders. The people they have to worry about keeping happy are the people who invest with them.

[disneysteve]

I don't think there is a wrong choice there. All 3 companies are excellent.

As to what fund to invest in, we would need more info to answer that question. Without knowing about the rest of your portfolio, other investments you already own, it is impossible to recommend one fund over another for your Roth.

Do you contribute to an employer-sponsored plan (401k or 403b)? If so, are you putting in enough to get the full company match? If not, I'd put the money there first. It is silly to pass up free money.

If you are getting the full match (or don't have an employer plan or don't have a match), then the Roth is the way to go.

[rerod]

Thanks.

Right now I have a retirement plan through TIAA CREF with my employer the U of Iowa. They contribute $2 for my $1. Iowa Public Employees Retirement System (IPERS)

15.00% CREF Growth
15.00% TIAA-CREF International Equity Fund - Retirement Class
25.00% TIAA-CREF Large-Cap Value Fund - Retirement Class
10.00% TIAA-CREF Mid-Cap Growth Fund - Retirement Class
10.00% TIAA-CREF Small-Cap Equity Fund - Retirement Class
15.00% TIAA Real Estate
10.00% CREF Bond Market

These allocations were recommended to me 6 years ago and "seem" to be doing ok.

I dont have any other investments other than my home.

I dont owe anything and need to invest some savings money not even keeping up with inflation.

After I start a Roth IRA, I need to educate myself on how, or how not to make investments.

Vanguard sounds good to me for the IRA.

Correct me if Im wrong. But with rates going down. The balanced index high bond allocation might be a better choice?

Thanks again.

[kv968]

Originally Posted by rerod

Correct me if Im wrong. But with rates going down. The balanced index high bond allocation might be a better choice?

I would say that you're right and you're wrong. You're right in the fact that IF rates go down, bond rates would go up. However, if that's the only reason you want to invest in the balanced fund (bond rates going up) then I think that would be wrong. You shouldn't dictate whether or not your bond allocation should be high or low depending on interest rates, you should determine your bond allocation due to your risk tolerance level. In a "typical" portfolio that's seeking growth, bonds act as a sort of ballast to offset the volatility of the equities and not as the main money maker. That's not to say that you can't hold a high amount of bonds in your portfolio. It's just more about how much risk and volatility you can handle rather than how much the bonds will yield overall. And besides, who knows if the rates are going down?

[disneysteve]

Originally Posted by kv968

you should determine your bond allocation due to your risk tolerance level

And, I would add, your time horizon. At age 40, you've got 25 years before retirement. What interest rates are going to do in the next 12 months or so shouldn't even be a concern in how you invest. Now if you were 60 and asking the same question, you might get a different answer.

[Fern]

Originally Posted by rerod

I'm trying to decide who to start a roth IRA with. I can afford 4000 now. But I'm not sure if I can do that every year. Im 40 years old.

Fidelity: Has a no-fee IRA.
https://accountsetup.fidelity.com/ft...pp/openAccount

Vanguard has a $10 annual fee under $50,000 .
https://flagship.vanguard.com/VGApp/..._Event=FeeInfo

T rowe has $10 annual fee under $50,000
http://www.troweprice.com/common/ind...3D7769,00.html

What am I missing here? And who would you recommend?

My moms financial adviser recommended that I invest in Balanced index with Vanguard.

Thanks

That reference about T. Rowe Price didn't look right to me, so i looked it up. There's only a fee if the IRA is under $5,000, not $50,000.

I would go with T. Rowe Price, tho all 3 firms are reputable.
A low $10 fee per year is charged for each IRA mutual fund account under $5,000.

[kv968]

Originally Posted by disneysteve

And, I would add, your time horizon.

Thanks Steve. Your time horizon should be a huge factor when deciding your risk level.

[CraigThor]

I just started up my Roth through T. Rowe Price using the asset builder so they will take $50 a month and I can make deposits over $100 anytime I choose. Starting small but thats what I have to work with right now myself.

Craig

[disneysteve]

Originally Posted by CraigThor

Starting small but thats what I have to work with right now myself.

I think this is a big key to financial success - doing what you can. We started our first mutual fund account in 1992 right after we got married - $50/month. Over time, we gradually increased that and added other accounts. Now, 14 years later, we've got an investment portfolio of over $350,000. And it all started with $50/month.

[tinapbeana]

Originally Posted by disneysteve

I think this is a big key to financial success - doing what you can. We started our first mutual fund account in 1992 right after we got married - $50/month. Over time, we gradually increased that and added other accounts. Now, 14 years later, we've got an investment portfolio of over $350,000. And it all started with $50/month.

every little bit counts! reminds me of the question: would you rather have a thousand dollars today, or a penny today that is doubled every day for the next month?

[glock35ipsc]

Originally Posted by tinapbeana

every little bit counts! reminds me of the question: would you rather have a thousand dollars today, or a penny today that is doubled every day for the next month?

I'd take the penny even over a million!

[LuxLiving]

YEAH for you CraigThor!! You're doing it! That puts you a step above the rest who know what they should do - many just think about it, or research it but fail to take action! Good on you for actually getting it started!!

Did you do a little happy dance???? You should!!

It's all these separate small specially crafted steps that make the dancing worthwhile to watch rather than just a herky-jerky mess!!

Zippity-Do-Dahhhh!!!

[rerod]

I finally opened one also. A Roth IRA with Vanguard in the 2025 target with $4000 adding $100 per month to start.

Now my next step is not only to readjust my T cref. But to reallocate a well diversified portfolio between both retirement account. But the vanguard is worth less than %10 of my T cref at the moment and will always.

[Ima saver]

Yes, I would take the penny too! Vanguard only charges $10 if the account is under $5000 too. Steve, that is how I started $50 a month every month. I had to pull some out to buy some property but my mutual funds are approaching $300,000 too.

[smartatmoney]

I am considering the same companies you mentioned. You all mention fee's but what about the funds? Does one company tend to have better performing funds?

[disneysteve]

Originally Posted by smartatmoney

Does one company tend to have better performing funds?

You really need to compare the specific funds you are considering. As far as index funds, the differences will be miniscule, but pay attention to the expense ratios as that is often the main difference. If you are looking at actively managed funds, that's a whole different story and you really need to research a little deeper to compare.

[PRICEPLUS]

I started with T Rowe using the asset builder and I am still with them. The service is excellent and the on-line site is easy to use. I would also take the penny!