Hello Experts and members, I'm a novice when it comes to finance and I've been reading this forum for quite a time now. I've already read the basic questions/FAQ threads which moderators have recommended. I've some doubts regarding IRA setup and I'd like you to help me out in this.
I don't have any 401K plan from my employer and I've not yet started any kind of investment planning. I'm planning to start with IRA for me and my wife (she is a housewife). This is what I've been suggested by many to start with. I was going thru ING's IRA plan and got confused with it. I've all my cash in my savings a/c only. And I want to now put IRA max limit 6K (3K on my name and 3K as spouse IRA). Now I know that I've to put it in IRA, I don't know where to start and what are the websites/procedure that I can try out. Has anyone invested in ING IRA's plan? It looked to me a straight forward process.
I'd like to open only the "Traditional IRA" at this time. Regarding the type of investment for IRA, I'm planning to start with a "Conservative Portfolio" with a mix of bonds as shown here at ING Direct's site ING's Conservative Portfolio
Let me know if you can help with with some links/procedures/any other information on this. Thanks
P.S: I've already searched this in this forum and all I can see is that various questions about IRA plans but none of them speaks about how to start? If you know the link about this in group, feel free to post it.
RJSachs said:By the way, you'd be foolish to open an IRA at a high-cost provider like ING. Go with Vanguard.
What do you mean by "high-cost provider like ING"? Pardon me if this a dumb question, but I'm just trying to learn here the basics before I open the a/c.
All mutual funds have expenses associated with them (management fees, 12b-1 fees etc.) These fees are not explicitly charged, but affect the funds' performance.
ING has high fees (see prospectus here, page 10 for example). Vanguard has low fees.
I would highly recommend Scottrade or Fidelity in addition to Vanguard as good IRA custodians. A call to any of them will get you started opening an IRA. Scottrade has a huge range of no-transaction fee mutual funds (including bond funds) available, and can be opened with as little as $500. You will not get any hand-holding though, so while this is the cheapest way I am aware of to open an IRA and trade mutual funds, it is not the easiest. Do you intend to open a Roth or Tradidional IRA?
Fidelity and Vanguard are both more full-service companies, and offer investment advisement on their websites and over the phone for when you have questions. Both have a large range of low-cost options for you. I happen to use Fidelity because I also have a 1.5% Cash Back credit card from them, and use their ultra-low cost index funds.
I would highly recommend some research at Morningstar.com before you begin. They have a bond forum as well. Their Discussion Forums are the best I have found on the net for a beginning investor.
This recent discussion there has some good advice, including recommended reading.
In my opinion, not knowing your situation, I would park the money in ING for a month or two while you read a good book on investing and research your options for a broker, and more importantly how you want to invest the money once you have the account open.
For Bond advice; bonds come in so many flavors, it depends on your needs. Some good starters to research:
Short Term Corporate VFSTX Tips Funds Vipsx Total Bond Market Index Fund VBMFX Good luck!
You can call fidelity or vanguard and they will hold your hand through the process. Either provide very low cost funds with competitive returns. Invest in more than just bonds - something balanced like VGs lifestrategy or target retirement funds.
Quick question. As dissent said "I would park the money in ING for a month or two while you read a good book on investing and research your options for a broker", is it possible for me to invest right now with ING or any other bank for the time being till I understand more about financial world and then later I move that fund to any other better bank/option. Does this cause any penalty/issue with the IRA setup with that bank or is it a straight forward process moving to another bank?
Also to answer dissent's question, I'm planning to start with Traditional IRA to save some money on taxes.
The poster probably meant that you should put the money in a regular ING savings account until you decide which company to do the IRA/Roth with. You should notopen an IRA first and plan to move it to a different company, because there are usually sizable fees associated with that which can easily be avoided by doing research FIRST.
I would highly recommend Vanguard also. I have moved all of my taxable, IRA, and Roth accounts there and am quite happy with the service and low costs.
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