Where to open Roth IRA for young broke people

[Ima saver]

I think so too, but I don't know if he could commit to a definate $50 a month. I am surprised that a bank would charge a fee for a roth ira, but it has been so long since I have one at a bank (20 years) I did not know if there are charges or not.

[LuxLiving]

Hi - I may be coming late to this party, but ING has one w/a low minimum. Something like $250 I think! You'll be limited to putting that all into one fund early on, but here's how I did it w/my teen. He has had a small 'Retirement Savings Account' at ING since age 16. We just put his money in there until he turned age 18 (their minimum age to start an IRA unless you make it a custodial account). Anyway, once he turned 18 he opened an ING Roth IRA (this is at INGdirect.com).

He invested his first $250.00 all in the Real Estate Fund and makes an automatic $50 monthly contribution there.

Meanwhile back at the ranch he is able to put another $30 or so dollars a month back for retirement. He is letting that little bit build up inside his old 'Retirement Savings Account' still at ING and when it goes over $250 he'll invest it into his Roth but by buying into another sector such as their Financial Fund. Hope this is clear.

Once he has a few various funds he'll be on his way to more diversified portfolio there. Plans are once he reaches over $2500 or so, he'll probably roll it over to someplace like Vanguard or T.Rowe Price.

-LuxLivingFrugalis

[TinyFish]

Remember to ask how the IRA is invested. You do not 'buy' an IRA, so don't get mixed up and end up putting it into an account that is not then invested or is invested in CDs (unless you really want to invest in CDs, though that might be an odd choice for a young person).

I highly recommend Fidelity. I have several accounts there and been very pleased with the service. Whenever I call with a question they are very nice, helpful. I think they can really help a beginner.

Personally, I think a lot of young people like us should invest their IRAs in index funds, but that's just my opinion. You might want to read about them at Motley Fool or something and make up your own mind.

I'd also recommend making your contributions automatic. That way, your retirement can build while you don't have to think about it all the time.

Good luck.

-TinyFish

[Ima saver]

I would invest in Index mutual funds too. that is where my ira and my roth ira both are.

[greedy4chips]

I feel left out of the Roth IRA, because we don't have one yet. Don't ask me why other than it would cost too much in taxes to convert the regular IRA and we just did not feel like a Roth was absolutely necessary to tie our money up for 20+ years until we could absolutely afford to part with it.

Our other investments will hopefully earn the est. 10% we hope for and can easily be happy with only 8% return till we retire in 30 years.

[Ima saver]

I got the prospectus from T. Rowe Price today, but it still did not say anything about opening an account with just $50 if you used automatic investment.

[LuxLiving]

Originally Posted by greedy4chips

I feel left out of the Roth IRA, because we don't have one yet. Don't ask me why other than it would cost too much in taxes to convert the regular IRA and we just did not feel like a Roth was absolutely necessary to tie our money up for 20+ years until we could absolutely afford to part with it.

Dear Greedy 4. Chip$ -

We are in the same boat - only now The Hubster has passed that magical 59 1/2 point! So no penalties! YEAH!! bUT, tax consequences if withdrawal amounts pushes us into a higher tax bracket - AND also to consider is once you put it in the Roth there is a 5 year waiting before withdrawal! They really don't want you to spend it!! ;0

If you can jump all those hurdles here's why I think a young man such as yourself might want to consider it -- a Roth is directly inheritable by spouse. On a Traditional your bereaved widow would have to sell out of perhaps profitable positions at a time when she is grieving and try to make an educated decision at that awful time as to how to successfully reinvest it!

We are going to start this year moving some of The Hubsters over to the Roth. Small incremental movement over the next few years is the plan!

[Ima saver]

When the roth came along, I did not want to pay the taxes, so i left my ira the way it was, int he vanguard index 500 fund. Then I opened up a new account, a roth IRA in the same vanguard index 500 fund. Same with my husbands account!

[TinyFish]

Actually, I believe in some ways the ROTH is more flexible. You can withdraw the principle at any time without penalties last time I checked. Now, that isn't to say that is a really good idea, you can't put it back, so you'd be losing 'time'. But, in the case of a major emergency (beyond your emergency fund), like an illness or a devastating disaster, you could still crack that piggy bank, so to speak.

In fact, I remember reading a very good article by a finanicial planner who keeps some of his emergency fund in a MM account and some in the Roth. That way he has some money readily available for things like the furnace stopping working, or unexpected dental bills, and the other money is available for serious emergencies, like long-term job loss, or if his wife were to be ill. I think he had the 'emergency' money in the Roth fairly conservatively invested. He pointed out that this is not ideal, but with the world of money there is the ideal to strive for and then there is reality. This way he had emergencies covered AND he had a bit more retirement savings if those emergencies never came.

Oh, and young people who have money to put towards their retirement are not 'broke'. Don't sell yourself short!

-TinyFish

[yellow heel]

you don't need a lot of money to start with fidelity. You just have to continuously contributing each month (its automatic).

[rickatheslicka]

If you work in education, health care, research, etc - consider TIAA-CREF. Here is a link to their no-fee IRA's...

http://www.tiaa-cref.org/product_profiles/iras.html

I'm not sure if they have a minimum requirement, but I do remember that when I set mine up online, the website walked me through assessing my risk comfort level and helped me determine how I wanted to distribute my assests. I have been happy with the performance of my investments, and in general the customer service is good.