where to open a Roth IRA

[Guest ucat4]

I was wondering if anyone would know the best place to open a Roth IRA. I mean, I guess it would be easy to go to a bank or even easier to find a place online and I'm sure any bank or broker would love to take my money for a Roth IRA. I have a couple of specific questions:

1. Is it safe online? Or is it better to go somewhere where I can physically walk in the door?

2. Will I dump thousands into this fund and one day, 20 years from now, wake up and the company and my $ are gone? Is there any safeguard against this? Is one company more reputable than the next.

Any advice and/or tips would be greatly appreciated.

Tanks in advance.

[Guest calluke]

If you look down in the message board, there is already a post that should answer your question. I just opened my first Roth account this past week. It is a target-date retirement fund through Vanguard. I chose them because of their extremely low fees, reputation, and lower risk factor since they invest with index funds. The target-date funds are great because based on when you plan to retire, they choose how to diversify your funds and it changes automatically as you get closer to retirement. From the research I've done, I haven't heard any bad pub about them. And with a Roth, you can take out whatever money you've put in whenever you want, no fees, no taxes - which gives me peace of mind!

Good luck!

[John G]

Responding on a few points:

Safety: There are many "risks" or concerns - ranging from bad advice, poor performing investments and fraud. You seem to be more focused on fraud - and from my experience, that is relatively rare.

While bad people and crappy companies can be found face to face (like Enron or Worldcom) and on the internet, the level of outright fraud is pretty low. You will probably have more comfort going with fiancial companies that have been around for many decades. Some of the big names in mutual funds include: Vanguard, T Rowe Price, Putnam, Fidelity, Janus, Invesco, etc. The long established discount brokerage houses include: Schwab, Fidelity, Brown and Company, Scottrade, Etrade, Ameritrade, etc. Stay away from small shops, folks promising unrealistic returns, and anything that is hard to understand.

Most of the brokerages, banks and mutual funds have various levels of insurance against mistakes and fraudulent actions of individuals. Best way to address this issue is to ask your prospective custodians. Note that your capital is not "insured" at mutual funds or brokerages against lost of principal or poor performing investments. Some accounts (but not all) at banks are insured against loss of principal - we are talking only about modest size savings or CDs, and they are not great long term investments.

I think you would feel more comfortable if you understood more about the various potential custodians and the types of products they offer. You also need to understand that your role includes checking deposits, periodic review of performance, and reading your monthly/quarterly statements.