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Old 01-10-2017, 08:36 PM
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Default Need advice on where to open Roth IRA

Hi,

I am planning on opening and funding a Roth IRA for the full amount for last year (2016) at $5,500.

I wish to choose an account that has the least fees / expense ratio.

What would be a good company/account manager to sign up for?

Can I get an account where some of the amount I get to allocate on my own and the rest the account manager decides to allocate?
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Old 01-10-2017, 09:58 PM
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Quote:
I am planning on opening and funding a Roth IRA for the full amount for last year (2016) at $5,500.
Do you have the $5,500 cash ready to invest, or will you be dribbling it in over the course of the next 20 weeks?

Quote:
I wish to choose an account that has the least fees / expense ratio.
Vanguard is the "low cost leader". It has minimum initial balance requirements of $3,000. That's good if you want to drop all the money into a single "targeted retirement" fund. Not so good if you want to invest in multiple funds.

Of course, those targeted retirement funds are "funds of funds", so you actually are investing in multiple funds...

Quote:
What would be a good company/account manager to sign up for?
Vanguard, Fidelity and Schwab are good and I use them. There are others, too, that I don't have experience with.

With Fidelity and Schwab, make sure to buy their "no transaction fee" ETFs. Otherwise, you get nibbled to death by transaction fees.

Quote:
Can I get an account where some of the amount I get to allocate on my own and the rest the account manager decides to allocate?
I chose Fidelity for my Roth IRA because my company's 401(k) is with them, and I like not having to bounce around to lots of web sites.

Schwab is good, too.

None of us recommend full service (read: expensive) brokers like Edward Jones.
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Old 01-10-2017, 10:23 PM
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Vanguard. Search complete.

You're crossing your wires, however. If you want an asset manager, you'll pay significant fees for the privilege. If you want low costs, go with a self-managed index mutual fund portfolio.

As stated, Vanguard has some of the industry's lowest-cost mutual funds, and they're a great company. I started elsewhere, and happily switched to Vanguard & never looked back. Target date funds are good as a starter mutual fund, which can act as a managed fund with none of the expense. Once you build up your balance, you can branch out into a few core funds, like VTSAX, VTIAX, & VBTLX.

Best advice? Keep it simple, keep it cheap. You can be very successful with just 2, 3, or 4 broad market index mutual funds. And as you've already touched on, you want to minimize your investment costs as much as possible. Every dollar spent in expenses is $5 out of your nest egg at retirement.
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Old 01-11-2017, 05:44 AM
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I also agree with going with Vanguard and using index funds to keep it simple and low cost. Forget about paying a manager. Understand that managers fail to beat the indexes almost always, especially over the long term, and that sub-par performance comes with higher expenses.
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Old 01-11-2017, 05:57 AM
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Quote:
Originally Posted by sethmachine View Post
Hi,

I am planning on opening and funding a Roth IRA for the full amount for last year (2016) at $5,500.

I wish to choose an account that has the least fees / expense ratio.

What would be a good company/account manager to sign up for?

Can I get an account where some of the amount I get to allocate on my own and the rest the account manager decides to allocate?
Vanguard or Fidelity would be fine. And forget about having somebody else manage it; you can and should do it yourself.

https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_start-up_kit
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Old 01-11-2017, 06:02 AM
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It really is easy to set it up even though it can be intimidating. The more difficult part can be picking the funds. You don't want to keep swapping over time, so make sure you get the right ones up front if possible.
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Old 01-11-2017, 06:38 AM
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Yet another voice for Vanguard and of course the participants at SA are delighted to recommend specific funds as your holdings grow over time. You can set up DCA which automatically transfers money to your holdings if you think 2017 will be a bumpy ride. It's not written in stone and you can make changes as you become comfortable with ROTH IRA
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Old 01-11-2017, 01:25 PM
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None are perfect but Vanguard and Fidelity seem to get the most positive mentions while on the flip side eTrade and T Rowe Price receive many negatives.
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Old 01-17-2017, 07:25 AM
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I personally use T Rowe Price for my investing, and am actually very happy. Not sure why they are getting negative mentions...

At any rate, I would avoid a financial advisor or money manager right now. Most will not work with small/start-up investors, and even the ones who will - you will find the fees to be pretty outrageous in proportion to your investment. Once you have built up some adequate assets and have yourself more established would it be advisable to seek the services of a qualified financial professional.

Stick with Vangaurd, Fidelity, T Rowe Price, or some other reputable provider (those three mentioned are the big dogs in the industry). You can set up an IRA very easily (just as easy as setting up a bank account), and you can set up automatic investments.
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Old 01-22-2017, 04:27 AM
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Quote:
Originally Posted by dczech09 View Post
I personally use T Rowe Price for my investing, and am actually very happy. Not sure why they are getting negative mentions...
I don't get why T Rowe would get negative mentions either. I have my Roth with them and just to compare "apples to apples" their target date funds have outperformed Vanguard's by 20-50 basis points over the past 10 years and around 100 basis points better than Fidelity's. It could be said that the difference is attributed to them having a higher equity allocation than the others (which is typically true), however when using risk-adjusted measurements such as the Sharpe or Sortino Ratios they are equal or if not better that the others.

Not knocking Vanguard nor Fidelity because I have investments with both as well and am quite pleased with them, but T Rowe should also be a major consideration when choosing a fund company.
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Old 01-22-2017, 05:30 AM
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Expenses.

TRP 2050 fund - 0.76%
Vanguard 2050 - 0.16%

TRP 2050 would need to do 50 bpp better than VG just to be even with VG.
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Old 01-23-2017, 10:21 AM
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Quote:
Originally Posted by tomhole View Post
Expenses.

TRP 2050 fund - 0.76%
Vanguard 2050 - 0.16%

TRP 2050 would need to do 50 bpp better than VG just to be even with VG.
And that's what my point is...it DOES do 50 basis points better and then some...

10 Yr. Avg
TRP 2050 - 5.65%
Van 2050 - 5.27%

Again, I have nothing at all against Vanguard and do a lot of investing in their offerings. However you can't let expense drive ALL of your investing decisions and just blindly assume cheaper is ALWAYS better.
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Old 01-23-2017, 01:20 PM
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Originally Posted by kv968 View Post
And that's what my point is...it DOES do 50 basis points better and then some...

10 Yr. Avg
TRP 2050 - 5.65%
Van 2050 - 5.27%

Again, I have nothing at all against Vanguard and do a lot of investing in their offerings. However you can't let expense drive ALL of your investing decisions and just blindly assume cheaper is ALWAYS better.
This data would indicate that Vanguard 2050 is returning 0.22% more than TRP 2050 after expenses. Unless I am doing the math wrong.

TRP 2050 5.65% - 0.76% = 4.89% ROI
Van 2050 5.27% - 0.16% = 5.11% ROI

5.11% - 4.89% = 0.22% better for VG
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Old 01-23-2017, 01:40 PM
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Quote:
Originally Posted by tomhole View Post
This data would indicate that Vanguard 2050 is returning 0.22% more than TRP 2050 after expenses. Unless I am doing the math wrong.

TRP 2050 5.65% - 0.76% = 4.89% ROI
Van 2050 5.27% - 0.16% = 5.11% ROI

5.11% - 4.89% = 0.22% better for VG
That's not right, Tom. Stated fund returns are net after expenses.
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Old 01-23-2017, 02:21 PM
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Quote:
Originally Posted by disneysteve View Post
That's not right, Tom. Stated fund returns are net after expenses.
Learn something new every day. Thanks!
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Old 01-23-2017, 02:43 PM
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Quote:
Originally Posted by tomhole View Post
Learn something new every day. Thanks!
The bigger problem with this particular example is that it isn't comparing comparable products. The composition of the 2 funds is different even though they are both 2050 funds.

Vanguard:
53.7% US stock
36.2% foreign stock
7.2% US bond
2.9% foreign bond

T. Rowe
59% US stock
29% foreign stock
6.8% US bond
2.8% foreign bond
1.8% cash
0.5% convertibles
0.3% preferreds

Those differences, especially an extra 4.3% in US stocks, is more than enough to explain a difference in performance.

A better comparison would be their S&P 500 Index funds.
10-year average annual returns:
Vanguard - 6.82%, ER 0.16%
T. Rowe - 6.69%; ER 0.27%

Both are very cheap, but the fact that Vanguard is almost half the ER of T. Rowe probably explains the slightly higher return.
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* There are no shortcuts to anywhere worth going.

Last edited by disneysteve; 01-24-2017 at 07:34 AM.
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Old 01-24-2017, 07:16 AM
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Quote:
Originally Posted by disneysteve View Post
The bigger problem with this particular example is that it isn't comparing comparable products. The composition of the 2 funds is different even though they are both 2050 funds.
I agree, these aren't a total "apples to apples" comparison in the fact that they're constructed slightly differently. I was just pointing out that cheaper, passive management doesn't always mean it's the "best" all of the time. Had Vanguard mirrored T Rowe's allocation they probably would have done better but they didn't.

I was also commenting on "dczech09"'s post that T Rowe gets "negative mentions" which I don't feel they deserve if they are in fact getting those mentions.
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Old 01-24-2017, 07:36 AM
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Quote:
Originally Posted by kv968 View Post
I was also commenting on "dczech09"'s post that T Rowe gets "negative mentions" which I don't feel they deserve if they are in fact getting those mentions.
I agree with you here. I often lump together Vanguard, Fidelity, and T. Rowe when suggesting companies to consider. I think Vanguard is the best of the bunch and low fees are a major reason for that, but any of the 3 is a good choice.
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Old 01-24-2017, 10:40 AM
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fidelity/vanguard.

Mine is through tdameritrade, but that's because historically that's where I had my accounts, and I don't want to switch multiple accounts over. I do buy mostly vanguard efts through this account.
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Old 02-18-2017, 02:46 AM
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I'm with everyone on Vanguard and suggest getting a John Bogle book or one by the Bogleheads to help you pick your index funds
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