Starting my Roth IRA
Posted on Apr 03, 2007 under Financials, Investing, Personal Finance, Stock Market |I started my Roth IRA a little over a year and a half ago. Everyone talks about what a great thing the Roth IRA is so I thought I’d share what it took to get one up and going.
First of all, you can set up an IRA at pretty much an brokerage firm or even bank. I looked at all my different options which included Sharebuilder, Scottrade, Etrade, TD Ameritrade or Charles Schwab. Each one has different rules and fees. I chose to set mine up with Scottrade because each transaction costs just $7. I don’t have to execute a certain number of trades in order to qualify for a lower transaction fee.
To set up the account, I went to Scottrade’s website and applied for the account. You have to fill out the application with your information and specify that you want the account to be either a traditional or Roth IRA. If I remember correctly, you may have to print out a form, sign it, and mail it in with a check to open the account.
Another reason I chose Scottrade was because I could make online transfers into the account. Unfortunately they had some issues a while back and took that feature away. They’ve since re-instituted the online transfer for regular accounts, but I’m still waiting to have the feature back for my IRA. Until then, I just write checks to the account.
With Scottrade (and I assume the other online brokerages) you’re able to pick from hundreds of different mutual funds, index funds, ETF’s and individual stocks and bonds. I choose to buy individual stocks, but the options are open for you to decide what’s right for you.
Hopefully this has been helpful for you. There is so much written about the benefits and reasons to have a Roth IRA, but some are still a little hazy as to how exactly to go about setting one up.
Let me know if you have any questions. I’d be happy to help you out. Comments are also welcome.
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by frugal zeitgeist, on April 3 2007 @ 6:30 pm
It’s also super-easy to do this via any of the major mutual funds. Contributions can be spread out over any number of funds, so going this route doesn’t mean concentrating risk all in one sector or fund type.
by Sherry, on April 4 2007 @ 12:01 pm
I agree, Fidelity and Vangaurd are our favorites. No charge for contributions and a low yearly maintenance fee. Mutual funds are less risky than buying individual stocks and no brokerage fees to pay.
by limeade, on April 4 2007 @ 3:59 pm
Ultimately you need to do what is most comfortable for you. If you read the prospectus’ of mutual funds though, you will find that there are fees just for having them. You can find no-load mutual funds but read the fine print and then see what you think.
It’s also a matter of opinion and not fact that mutual funds are less risky. I have never seen a mutual double in value in a year or even in 4 years. I have seen individual stocks double in less than a year (check out the last year for Jack in the Box). I actually look at a companies financials before I buy it instead of blindly trusting a fund manager. You can decide for yourself what method carries the most risk for you.
by Anonymous, on May 16 2007 @ 1:07 am
Any advice for newbies on how to pick what you’ll invest in with the IRA, especially for those not savvy with stocks, etc.?
by limeade, on May 16 2007 @ 4:26 pm
Check out this new post where I tried to share a few ideas to help you out:
Answering a Reader’s Question
-limeade
by Fiscal Musings » Blog Archive » The Roth IRA Re-visited, on January 28 2008 @ 6:30 pm
[…] you may want to go back and read Answering a Reader’s Question, Best of the Roth IRA, and Starting My Roth IRA. The options are plentiful when you’re looking into setting up a Roth IRA, but the benefits […]
by Weekend Edition: A Few Notables | Fiscal Musings, on February 23 2008 @ 4:17 pm
[…] As some of you might know, I have my Roth IRA with Scottrade. I’m not going to go over how and why I started it right now since I’ve already covered it, but they have finally made a change that I’ve […]