My first Roth

[Guest jido]

We would like to put some money in a ROTH - where do we go? Our experience with brokers has not been pleasant, we prefer NOT to use a broker.

[Guest mpedroza]

For purpose of convenience, I would start with a local bank. Chances are the bank you are already using for your regular banking needs can also service your retirement account needs. See a new accounts counselor, ask about brochures, fees, etc....you have until April 15th to make a maximum contribution of 2,000.00 for 2001. Good luck!

[mbozek]

You could also invest your money in a low cost mutual fund family such as Vanguard funds out of Valley Forge, Pa. Check their web site or call the 800 operator. Banks will either put u into CDs or charge heavy loads for their mutual funds.

[John G]

I am wondering what problem you had with a broker? Brokers come in more flavors than BaskinRobbins, everything from internet version to local discount to full service. And the employees that are the "face" of brokerages vary from simple clerks to knowledgeable analysts to pushy sales people. I have had plenty of experiences with poorly trained, unorganized and pushy brokers. I just don't give them my business. You might want to try a different broker as I would suspect there are plenty of folks in that industry that you would find pleasant and helpful.

You did not indicate your age. If you are between 20 and 40 years old, you probably need to emphasize equities (stocks). I would suggest that banks often have rather limited choices for IRAs and often are too conservative (CDs, bonds and "blue chips" emphasized) for long term investing. For example, CDs right now are at best about 1% above the rate of inflation. You just will not get much mileage out of your retirement funds if you are that conservative. You might want to ask your bank about their options, but I wouldn't use a bank for an IRA account.

Aren't stocks risky? Well, yes and no. Any given day month or year stocks can be up or down. However, over the long haul 20+ year, stocks perform very well. It is probably related to how the economy grows and that capitalizm is a vigorous economic system. Up years out number down years by anywhere from 6 to 1 to 3:1 depending upon what time period and data you use. If you are educated about investing, you can become comfortable with the risk/rewards of equities. A mutual fund, because of its wide diversification, moderates the shocks of a specific stock.

The above recommendation about Vanguard funds is a good place to start. Vanguard has many index funds which are broadly based. They are no load, meaning they do not charge commissions up front or on the back end. And, the imbedded expenses of an index fund are very low.

The March issue of Consumer Reports each year does a great job of reviewing retirement planning and investment options. You might want to review this issue for some guidelines.

[Guest jido]

Thanks for your input - I found to open an account on the bank side(FDIC insured) there is only the annual fee....about $12 or so.

[John G]

Annual fees: not everone charges them. You can also ask for it to be waived, some custodians will do that if asked. If you have other business with the firm, they may waive IRA fees. If your IRA assets grow to 5k or 10k, you often qualify for the fees to be waived.

All that said, $12 is a pretty low number (some go as high as $45) and I would place more value of the service, convenience and investment options that any custodian offered.

FDIC insured? Don't bet on it. The only investments that are FDIC insured are savings accounts and CDs and there are limits to the maximum that can be covered (when your account grows you can exceed these limits). If your bank told you that mutual funds or stocks are insured they are lying. The govenment doesn't insure investment performance but rather "safety" from bank closure or fraud. Electing FDIC insured investments means that you are being extremely conservative and may not achieve the long term results that you want. Also be wary of promises that banks make that involve "teaser" rates, like CDs that yield a lot for three months and then reprice.

I would be interested in what types of investments your bank recommended. Please post if you can, and give some indication of your current age. I will try to give you some specific comments.

I could understand doing something very conservative until you understand more about investing. You should be able to teach yourself the basics in a few months by reading Money, Worth, Kiplinger magazines or some general investment guides you would find at the library.