What are investment options within a ROTH IRA? Any benefits of using

[Guest Invester turned 50]

My working wife and myself are both considering starting a ROTH IRA.

What are the investment options within this investment instrument?

Does it matter what institution use for investment? In oterwords, if only have limited investment options, does it matter if go thru a local bank or thru a broker?

Thanks,

Investor turned 50!

[John G]

Your choices for custodians include banks, full service brokerages, discount brokerages, internet brokerages, a mutual fund or fund family, etc. The common IRA investment options include individual stocks, mutual funds, bonds, and CDs.

Each custodian has a different package of investment options, some are extensive others narrow or limited. Banks traditionally have emphasized CDs, although more sophisticated banks have an array of mutual funds or brokerage options. Some of the brokerages provide access to thousands of mutual funds in a broad array of families. Annual fees for IRAs vary from zero to rediculous. Commission rates and mutual fund expenses vary from ultra low to excessive. If you are inclined toward mutual funds, I suggest limiting your search to NO LOAD funds... the loaded funds (front or back end commissions) are more common at full service brokerages and banks. Mutual funds are attractive for folks just getting started.

Convenience and service for custodian should be considered. Some folks like the local counter service, others have no problem with far away internet based firms.

There are hundreds of custodians that will do a good job for you. Within some catagories like internet brokerages, the cost differences are just not that big and most offer too many investment options. You only need a couple of broad based mutuals funds.... there are more than 8,000 to chose from.

You may want to read the retirement section in the March issue of Consumer Reports. They do a decent job reviewing some of your options and boiling down the list of mutual funds.

I would collect information from atleast three different custodians. Ask them about fees, investment options, etc. Get started, then after two years if you don't like your choice you may do a direct custodian to custodian transfer of your IRA.

Good luck.