Thinking about a Roth IRA and no load mutual fund?

Does it matter where I open either a Roth IRA or a no load mutual fund, or are all the banks (brink-and-mortar) the same? How much should I put into a no load mutual fund annually? I think ING offers a Roth IRA option. While I don't mind using their savings account feature, would it be wise to invest in an online Roth IRA? Are there any advantages? If you feel you can shed light on either of my questions above, please do! Also, I'm 23, a year out of college, and I make about 36K annually, so any general saving for retirement advice would also be much appreciated. I've just about tucked away my 6-month cushion of living expenses into a savings account, so I'm looking to invest in my future now. Thank you!

Public Comments

1. Roth IRA's is the way to go at your age. credit unions will do it for free. make sure you max out your 401K each year and after you fund your Roth fully each year a no load fund is a wise safe choice. also look at some riskier stocks as since you are so young you can afford to ride somethings out, by risky I mean up and coming companies not penny stocks or any hot stock tips you hear about. do a little research and know what the company does before you invest. there are closed end bond funds that are free from local and federal tax that are good, just make sure to automatically reinvest the dividend. you are doing great keep up the good work
2. First of all the question you asked indicates that you are a novice. Nothing wrong with that just a fact. A Roth IRA and a no load mutual fund are not mutually exclusive. You can, in fact, open a Roth at a no load mutual fund. Your age would make a Roth accou very adviseable. I highly recommend that you do not use a brick and motor bank for any of your money. Your six months reserve should be in a money market fund at a mutual fund company. At the same company you could open up a Roth account. The next issues will be fund selection. A no load mutual fund will give you no guidance. Most people investing on their own do a poor job of selecting the funds to invest in. Select an equity or growth fund. Stay away from a sector growth or equity fund nad use a widely invested fund. T. Rowe Price is a good no load mutual fund company. There are many others. Be careful but also be aggressive with how much you invest in your Roth. Be careful because it is very expensive (in penalties and taxes) to take the money out before retirement (except for a few specific defined reasons). Be aggressive because of a saying that goes: "live like now one else, so you can live like no one else". The money you invest now will compound to make you independently wealthy while most of your peers are just beginning to think about providing for thier future. Fee free to email me if you have questions. I hope that this helps. Your success to this point and the questions that you are asking are very impressive
3. The term "Roth IRA" refers to how the account is classified for tax purposes. The term "no load mutual fund" refers to the entity whose shares you have in the account. They are not mutually exclusive. I have a Roth IRA which contains no load mutual fund shares. If you want to be able to meet with a person, face to face, use a brick and mortar place. Some persons find this important to their feelings. As far as investment performance, the data indicates that it does more harm than good. If you are likely to move to somewhere outside the area that the brick and mortar bank serves, you may be better online. Contribute the maximum that is allowed to either an IRA, a Roth IRA, or both. This is a total of only a few thousand dollars per year. (It is the same maximum total limit whether it is all in the same type of account or split between the two.) If you decide later that you need the money, you can withdraw Roth IRA contributions (although not earnings and not traditional IRA contributions) without a tax penalty. Other comments: 1. If your employer matches 401K contributions, that may be a better deal than a Roth IRA. 2. If you plan to return to college (for a more advanced degree) and spend at least one to two years not working, it may be better to contribute the money to a tradional IRA temporarily, for the tax deduction, and then convert it to a Roth IRA in the year when you are not working (it is taxable income in the year of conversion, but if you are not working, you may be in a lower tax bracket). 3. Remember to save enough for a downpayment on a house. This may be more than the 6-month living expense savings that you mention. The amount that you can withdraw from retirement savings to buy a house at your age without a tax penalty is very low ($10,000??), not enough for the downpayment at current real estate prices in many places. 4. With the exception of student loans (which usually have very low interest rates), pay off any debts (credit cards, car loans, etc.). Once you are not paying interest on those things, you can save faster.
4. The advantages of a brick and mortar vs. online investing is that you can talk or complain to someone face to face. Otherwise there isnt much difference. The thing to look out for is the annual fees they charge for the Roth. And the expense ratio of the funds. Vanguard and T. Rowe Price may be good options for online. Put about 20 percent in bonds and the rest in growth or aggressive growth stock funds. Max out your Roth every year if you can. If your employer offers a retirement plan contribute to that atleast up to the amount they will match. If its a vairalbe annuity, B share funds, or something else with high fees, just contribute to the match and put the rest in your Roth or taxable mutual funds.
5. 1. find out if/how much your company will match of 401k contributions.... and do at least that amount. 2. if possible max out your 401k... since your rainy day account is funded go ahead and go for the max.... but i'll be impressed if you can do it.... $14,500 for this year and 15,500 this year off your gross income won't leave much available to spend. 3. will you be living where you reside now for the foreseeable future? if so start shopping for a house... get something small that you can afford rain or shine and take pride in owning it... get a fixed rate traditional mortgage. 4. after buying a house and funding your 401k... shift your rainy day funds into the roth ira ... you can access contributions at any time without penaly and capital gains / dividends/interest will grow tax free inside the account..... so this means you can keep your rainy day fund in laddered cd's at 5% tax free cd's for emergency... 5. after 401k and house park extra money in the roth.. but dont be depressed if there isn't any extra... you'll be living on a gross of 21,500 and after living expenses be happy if you can just pay your bills.... but at your age.. if you can keep it up and let it compound youll be able to retire 10-15 years before your friends and co-workers! just my 2cents good luck
6. good idea, but wait till the market finishes correcting.
7. You're off to a great start. A Roth IRA is a type of account. You can hold many different types of investments within this account, such as a no-load mutual fund. So, the IRA is the name of the account, whereas the mutual fund is the investment within this account. You can hold no-load mutual funds in other types of accounts as well. Let me give you some basic advise on retirement investing. I have a book written on the subject. The two most important chapters are chapter 19 on costs and chapter 23 on choosing your asset allocation. It will take about 45 minutes to read both chapters combined. These two chapters contains the core information that all investors need to know. You can download it free at http://www.invest-for-retirement.com In general, you should be wary of mutual funds from a bank or insurance company. These institutions often have mutual funds with loads and/or 12b-1 fees. So, yes, it does matter which firm you invest with. Some firms charge fees that are much higher than others. For the best, low-cost mutual fund with no loads or 12b-1 fees, there are clearly two leaders: - http://www.vanguard.com (my personal favorite) - http://www.fidelity.com (also a good choice) How is your company-sponsored retirement plan? Do they have low-cost funds? Does your employer offer a matching contribution? If so, make sure you contribute enough to at least get that. The Roth IRA is a great account for retirement since you get to withdraw the money in retirement without taxation. Make sure you understand the basics of the account. If you want a quick primer on Roth IRA's, here is an article at investopedia: http://www.investopedia.com/articles/retirement/04/091504.asp
8. first things first- max out your 401k-if u have one- before u even consider a roth. definately contribute to the 401k to the point where they match your contributions. think about it- assume that if your employer matches the first 10% you contribute- do you really think there is any other investment that is gonna give you a 10% return day one?? ull also save money on your taxes and the money grow tax deffered. so first thing to do is check that out. secondly- remember the old saying "you get what you pay for" no-load funds do not have great management they are not managed as actively or rebalanced as often and the company is not gonna give you any help with chosing investment options. your gonna have to do all that by yourself. think about it- would a big company like ing give you something for free? you need to talk to a financial advisor- someone who deals with the market and investments every day. pay an advisor to help you. its their job. a good advisor will meet with you 4 times a year to go over your investments. do you think you are better suited to make investment decisions then someone who deals with this stuff every day? also- your friends are the worst people to get financial advice from- because they heard it from their friends who heard it from their friend....etc. they are not advisors. dont be penny wise and dollar foolish.
9. First off, good for you, very few recent college grads have a 6-month emergency savings account. If you're interested in saving for your future, I found some good info on http://www.plannerconnect.com/retirement-planning-investing-for-retirement.html and another page http://www.plannerconnect.com/retirement-planning-retirement-income.html that talks about all different retirement savings options. Anyway, I think ING and lots of other investment companies offer a Roth IRA. I personally have an ING Orange savings account and a Roth IRA with Fidelity, because I like their different mutual funds. Each company is definitely different - different fees, different funds you can invest in. I personally set mine up through a financial planner who was able to make some good recommendations. How much are you able to put away? You're always best off putting as much as you can into a Roth IRA (max $4000, I think) because when you take out the money, you don't have to pay taxes on it. If your employer matches 401(k) contributions, ie. puts money into your 401(k) account based on how much you put in, I'd say do that first, since that's free money and 401(k) accounts aren't taxed until you take out the money. By the way, don't worry about no load mutual funds, if you do a good job of setting up your Roth IRA through a financial planner, it really doesn't come into play.