I'm going to startup a Roth IRA - which company to go with? Schwab? Vanguard?

I will be starting up a Roth IRA shortly and I'm deciding between Charles Schwab or Vanguard. I just want to hear what your experiences are between the two... and if you'd recommend any other brokerages. I'm young and i'm looking for long term growth.. but i'm also looking for something aggressive.

Thank you in advance,

John

You might also want to consider BrownCo. I've been happy with my Roth IRA there. $5 trades, no inactivity/maintenance fees, plus trading in some funds is free (notably JP Morgan & American Century products). The biggest downside is the $5k minimum to open an IRA. That was reduced to $3k earlier this year, around tax time. There are some good threads comparing brokers in this forum, so it's worth searching the archived threads too.

Fidelity for actively managed mutual funds and Vanguard for index mutual funds.

Geckojohn: What type of investment do you want to make with your Roth IRA?

If you are just starting out as an investor and are planning to invest individual stocks, Scottrade's low commission rates and very low fees may be very attractive. If you are looking at mutual funds, they are starting to add transaction fees for many no-load families.

Schwab offers a huge repertory of investment guidance tools but small IRAs will face very high annual account fees and relatively expensive commissions. Read the fine print of Schwab's IRA customer agreement before signing on - be sure to look for quarterly "low-balance" or "inactivity" fees as well as an annual IRA fee.

Similar advice would also apply if you are thinking of setting up an IRA at Fidelity and Vanguard. If you are keen on investing in Fidelity's or Vanguard's funds, it may be worth buying these directly from them rather than going through a different brokerage since these two companies do NOT participate in "NTF" programs.

If you are not interested the stock market and are an ultra-cautious, risk-averse investor willing to accept the relatively modest yields of CDs, your best bet is opening a Roth IRA at a credit union. Whether at a CU or a bank, pay close attention to charges that will eat up some of your investment principal like "IRA set-up fee","IRA annual account fee", "IRA low-balance fee", and so forth.

pacman777 said:
Not sure about mutual funds since I don't buy those... I always buy stocks and have done way better than any fund. Bought Philip Morris for my IRA back when it was $20 about 4 years ago... now its at $60 plus all those quarterly dividends I've received since then. I would recommend buying into a reputable stock that has a decent yield and holding onto it rather than buying a mutual fund... of course it depends on your risk tolerance. Now thinking about buying Merck while its in the gutter. Gotta buy when people are selling.

How many different stocks do you typically hold at a time?

SonOfZeus said: pacman777 said: Gotta buy when people are selling.

This is the most naive assertion ever made on this board. Hey, pacman777... did you do well in Enron using this rule of thumb?

If nothing is for sell than what will you buy?

ok; in liquuid markets like stocks with many buyers and many sellers there is nearly always something to buy and somebody to buy at a particular price...

OP, first you have to decide what you are going to invest in. After you do that, then pick your custodian. You say you are looking for aggressive long term growth. That's a pretty generic statement, but one thing I get out of it is that you want to take on more than average risk. If this is the case, Vanguard is probably not for you. Vanguard specializes in index funds, most of which follow broad indexes. These indexes, by definition, will be "average" in most respects. Average growth, average risk, etc. Now, you can choose to invest in the narrower, riskier indexes, but you are still not very high up on the aggressive scale. Vanguard does have actively managed funds, but they are not the focus over there.

You may not want to invest in mutual funds at all. You could invest in individual stocks instead and easily have a high risk portfolio. In my view, this is not a smart thing to do in a tax-advantaged retirement account, but it is certainly an option. In this case, you'd want an online broker with low commissions. I think that rules out Vanguard and Charles Schwab.

If you stick with mutual funds, you might look at Fidelity. They have more of a focus on managed funds with the added bonus that their index funds are currently cheaper than Vanguard's. This may change in the future, but there is nothing that says you have to stick with your custodian for life.

By the way, with mutual funds, it is generally true that the more agressive funds charge higher fees. This coupled with the fact that high risk entails the possibility of both oustize gains AND outsize losses means that you are likely to underperform the lower risk indexes. But you might not! And that's what risk is all about.

Do yourself a favor and pick up (or check out) "The Only Investment Guide You'll Ever Need". It's short, easy to read, and actually directly addresses your question.

SonOfZeus said: pacman777 said: Gotta buy when people are selling.

This is the most naive assertion ever made on this board. Hey, pacman777... did you do well in Enron using this rule of thumb?

Obviously you gotta do some research... Even Buffett preaches buying stocks when they are out of favor... no balls, no glory. Go ahead and stick to your CD investments yielding a whopping 2%.

If you have to ask that question I suggest buying a target retirement 20xx fund and learning more about investing.

larrymoencurly said: Fidelity is trying to push all new customers into general brokerage accounts, and if you open an account online with them that's not in some kind of IRA, this is the only choice you're given, and some of their employees wrongly insisted that brokerage accounts were required even for IRAs.

Strange, this must be brand new because I signed up with Fidelity just a few months ago (for their Deposit $10,000 and get $100 promotion) and there was no trouble opening a mutual-fund only account.

The only thing I don't like about Vanguard is that their website doesn't let you save transaction pages to disk but only print them, unless you use a screen capture utility, such as SnagIt.

Not sure what you're talking about here... I can save my Vanguard transaction pages to disk as an HTML file just like any other web page, or I can click on "download transaction history" to save it to Quicken, MS Money, or .csv format. What exactly is it that you can't seem to do?

bluegenie said: If you have to ask that question I suggest buying a target retirement 20xx fund and learning more about investing.

That's exactly what I'm doing. I go through scottrade. I have a question, though. I own a vanguard fund through scottrade, so will I get charged vanguard's $10 yearly fee for accounts under a certain dollar amount? I haven't had to pay any transaction fees for mutual funds through scottrade and this is the first I've heard of them starting to charge fees. That sucks.

Vanguard all the way for my IRA. I like that they have low fees and have a good variety of funds for my retirement portfollio.

thanks for the tips! let's keep this discussion going. i will purchase that book mentioned above and read it before i invest.

Vanguard charges 10 dollar fee a year if you keep less than 5g's in your retirement account. So all you have to do is max out your Roth Ira this year at 3gs (not today the 31st as they may charge you 10 dollars). Then anytime after April 15th add in the additional 2gs before the end of the year. You skip out on the 10 dollar fee a year (which I assume they charge at the end of the year).

Any combination of money before the April 15th and afterwards but before December 31st totalling 5gs should allow you to avoid the fee.

I know it requires a lot of saving for a Roth Ira to avoid 10 dollars, but I plan to max out on it while I can.

A

I have a question: I opened an IRA account with Vanguard, and buy a index fund, if I want to sell part of the fund and buy another fund, will Vanguard charge any fee for the exchange?

riverwater said: I have a question: I opened an IRA account with Vanguard, and buy a index fund, if I want to sell part of the fund and buy another fund, will Vanguard charge any fee for the exchange?

No exchange fee if they are all VG funds, but check other fees like short-term trade fees, etc.

76hhma said: riverwater said: I have a question: I opened an IRA account with Vanguard, and buy a index fund, if I want to sell part of the fund and buy another fund, will Vanguard charge any fee for the exchange?

No exchange fee if they are all VG funds, but check other fees like short-term trade fees, etc.

And taxes

Eddie said: 76hhma said: riverwater said: I have a question: I opened an IRA account with Vanguard, and buy a index fund, if I want to sell part of the fund and buy another fund, will Vanguard charge any fee for the exchange?

No exchange fee if they are all VG funds, but check other fees like short-term trade fees, etc.

And taxes

should be no taxes on Roth IRA, am I right?

quick question, is $2500 the minimum buy-in for any fund through fidelity? my gf put $3k in for last year and bought one fund for $2500 (figured it was a typical initial investment). but when i try to buy any fund with the remaining $500 it says something about a $2500 min again.

was that an answer to me?

A lot of people seem to think that mutual funds are the only way to go for an IRA -- hence, the recommendations that you choose Vanguard/Fidelity/etc as the custodian, so you can have access to their funds.

But consider the wide selection of ETFs (Spiders and Vipers and iShares, oh my!) now available for different market sectors that have ridiculously low expenses. And these can be held at any brokerage with no fees.

If you really believe that actively managed funds are the way to go (and you should read A Random Walk Down Wall Street first), go with mutual funds. But most people can achieve excellent diversification with currently available ETFs in an ETrade/ScottTrade/Ameritrade/etc account.