Roth IRA

[Guest mfrank]

I think I would like to start a Roth IRA account. I have an existing traditional IRA but I am 28 and don't have a ton in there yet. I would think changing it over now would help me more in the long run. My question is, should I expect to have to pay fees and commissions on a Roth IRA? Can you recommend where I would go to start one (pref. with no fees and commissions)?

[John G]

The most common custodian options are banks, brokerages and mutual funds. They vary in terms of their levels of service, automation, efficiency, and the types of investments they support. If you are just getting started, I think mutual funds or brokerages that offer mutual funds is probably the best way to go because you get good diversification and can buy in discrete dollar amounts instead of being concerned with shares.

There are many custodians that either charge a small annual fee, have no annual fee, or waive the annual fee either upon request or if your total assets climb above 5 or 10 k. Just avoid anyone that wants to charge you per fund or a single large fee. If I recall, Etrade and many of the internet based brokerages have no fee IRAs. Schwab drops the fee if you assets are over 10k. You actually have many choices and can readily search the web.

Don't focus entirely on fees. Customer service, hours of operation, convenient locations, and supported investments should probably have a bigger impact on your choice.

[Guest mfrank]

Thanks for the tips! One more question, what interest rate should I look for? I read 9 steps to Financial Freedom by Suze Orman and she mentioned 8 or 10%. Is this accurate? I think with the IRA I have now, I'm only earning 4.9%.

[Guest Jeff V]

T. Rowe Price charges no fees and has no-load mutual funds. I like their online access. And their customer service is always efficient and friendly.

[Guest mfrank]

you are awesome!

[Guest Jeff V]

mfrank,

I looked at my reply to see what made me so awesome...

I didn't mean to imply that T. Rowe Price does not charge management fees on their mutual funds, just that there's no fee for the Roth IRA. But they are NO-LOAD, which Suze is a fan of.

If you compare their management fees to most other mutual funds, I think you'll like TRP.

And, no, I don't work for them.

Hope I didn't mislead you.

[Guest mfrank]

not at all. I just appreciated your help. I have looked into the TRP and I think I will go with them.