ROTH IRA

[Guest DEAN]

HELLO,

I HAVE BEEN OPENING A ROTH IRA FOR 3 YEARS NOW AND HAVE YET TO GET STARTED .

CAN ANYONE GIVE ME SOME ADVICE TO GET STARTED AND MAY BE HELP ME THROUGH THE PROCESS.

THANK YOU

DEAN

[John G]

OK, I rise to the challenge. Dean, Congress has created a wonderful tax shelter in the Roth IRA and if you have "earned income" (a paycheck!) you are likely to qualify. Roths have been a round for a few years, the rules could change in the future or (better yet) your income could rise spectacularly so that you no longer qualify. So light your rocket and get moving. The sooner you start the more likely you will meet your investment goals.

You can get a Roth up and running with a couple of hours work scattered over a week. I am going to make this extremely simple and cut a lot of corners so that you will be confident that you can get the job done in the least amount of time.

Step 1: Selection of custodian (2 minutes)

There are many choices, I am going to boil all those down to just one. You are going to contact Vanguard, a mutual fund family either by calling their 800 number or visiting

<a href='http://flagship.vanguard.com/VGApp/hnw/PersonalHome'>http://flagship.vanguard.com/VGApp/hnw/PersonalHome</a> See on this page "invest now in a fund or IRA"

Step 2: Selection of investment option (2 minutes)

Someone getting started will do just fine with any no load, broadly based mutual fund. Vanguard has over 100. Too many choices. You get to pick any one of the following two: 500 Index Fund or Total Stock Market Index. Flip a coin if you want, either will do.

You can go through the Vanguard screens to learn more about different IRA options. They have some good material on risk, investment objective, time horizons and costs. But, you can skip that stuff and just get started. A couple of years from now, maybe you will want to investigate other options.

Step 3: Application (1-2 hours depending on how fast your write or type)

Fill out and application either on line or the hardcopy they will send you.

Step 4: Contribution choice (2 minutes)

Select either "here is my big check" or "take a little each month from my checking account" as the method for how you will make your contribution. Either will work. Don't spend a lot of time thinking about this, you can change your mind later.N

Step 5: Transmitt the package (2 minutes to walk to mail box, 10 seconds to press a key)

I guess that counts as a step.

Step 6: Monitor (10 minutes)

Read the stuff Vanguard sends you to make sure they have your SSN, name, contribution and address correct. Read the occasional statements they will send and marvel how easy it was to get started.

Dean, it takes longer to get two new pairs of shoes than to open an IRA account. I takes longer to find a Christmas gift for your mother than to open an IRA account. Get going!

If you want to read more material on this message board about the basics, look to the "Extremely basic question from a beginner" which includes some other references.

Maybe I should say something about WHY bother opening a Roth. It is a great tax shelter for long term investing, quite flexible, and you can build a nest egg of a million dollars if you start early and stick with the plan. (waiting three years to get going is not part of starting early) and you will be a lot less concerned about SSN.

You just spent 5 minutes reading this response. You need to spend about 100 more minutes to complete the job. Get going!

PS: It probably takes something closer to 4 hours, but I did not want to discourage you from getting the job done.

[dh003i]

John's advice is a good primer to get you jump-started.

However, after you do that, you should ask yourself why you've been pushing off dealing with important financial matters, and give yourself an honest answer. Then, you should work to resolve it.

If you don't resolve that issue, then you will continue pushing off important financial matters, like when the time comes (next year) to contribute more money to your Roth, or your yearly analysis of your investments.

After you've figured all that out, you may want to re-examine your choice for your RothIRA index-fund or funds. Here is a listing of low-expense ratio funds, sorted by expense ratio. Note: The Fidelity Fidelity fund is not an index fund.