Need advice on where to open Roth IRA

[disneysteve]

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.

[kv968]

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.

[disneysteve]

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.

[~bs]

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.

[FLA]

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