Roth IRA v/s 401k

[kv968]

Originally Posted by TMoney

Does anyone know the key differences between Fidelity and Vanguard when looking to open a Roth IRA? Which did you choose, and why?

Thanks.

I researched Vanguard and Fidelity but I actually chose T Rowe Price for my Roth IRA. Two reasons...First, T Rowe allowed me to open an IRA using a systematic puchasing option for only $50/month and secondly, I'm investing in a Retirement Target fund and their's was more aggressive than the other two. Not to mention the funds themselves are great. Nothing against Vanguard and Fidelity because they have great products too but that was my choice.

for what it's worth (and both are fine companies), the Vanguard 2045 fund is outperforming the TRowe Price 2045 fund ever so slightly - and we're talking a miniscule difference here - but it's doing it with a lower expense ratio (.76 vs. .21 according to each's website)

but it's just as likely to be the other way around next year (performance that is), I doubt you can go wrong with either.

(Fidelity's has only been open since June so YTD performance is indeterminate but it carries an expense ratio of .79)

with Vanguard you will have a $10 annual maintenance fee until your fund reaches $5000 (but that should really only be your first couple of years), I'm not sure of any fees with the other two.

as always, the most important thing is that you do it!

[disneysteve]

Originally Posted by kv968

I'm investing in a Retirement Target fund and their's was more aggressive than the other two.

This is a good point. Not all the targeted funds are the same. They allocate their assets differently. So just picking 2035, for example, gets you 3 different things with the 3 companies.

If you want to be more aggresive, just pick a later retirement year. If you want to be more conservative, pick an earlier year. For example, if you anticipate retiring in 2035 but feel that fund is too conservative, pick the 2045 fund instead.