How Do I get started?

[Guest kmh129]

Hello, I am 21 years old, and I want to start putting money into a Roth IRA. However, I have no clue as to how to open one. I don't know if I am suppose to go to a bank or an investment company. If I go through a place like Scott Trade do they charge a fee? Please offer me advise. Thank you.

[papogi]

kmh129, this is a good and valid question, but I think responders have stayed away from it because it is very basic, and is asked rather often. Again, it's a valid question for you, and you deserve some good responses and information. I would suggest using the search feature on the boards, and you will come up with lots of good stuff to digest.

With that said, I will briefly tell you that you can open a Roth at a bank or investment company, mutual fund, etc. My personal preference is to contact a no-load (no up front or back end sales charges) mutual fund family/company such as Vanguard, Fidelity or T Rowe Price and use some of their on line services to arrive at your investment time horizon (Roth IRA for a 21 year old should be a decades long time horizon) and risk tolerance, and they will be able to direct you to some possible choices. Stay diversified. Don't drop all your money into a fund that invests too narrowly (i.e., no "sector" funds).

Places like Scott Trade are usually a pretty good idea, as well. They act as a go between, but the investments they offer will ultimately be the same ones that you can contact directly. That is, if you have chosen no load funds. The good thing about Scott (and others), is that they can provide you with a summary statement of all investments, rather than getting one from each of the fund families you use. If you end up opening just one Roth investment at this point, however, then this "compilation" advantage is moot. As for your fee question, yes, some of these go between companies will charge a fee. Go to their websites to see what, if any, fees might apply when moving monies into the fund you might be interested in.

Just some quick answers to the points you raised. Search the forum, and you'll come up with plenty of reading...

[Guest monicadepp]

Opening a Roth IRA or IRA in general is the same as opening a normal trading account with any broker, in as much as a broker offers it.

Try www.eregal.com, they have a good roth ira account option.

Monica

[John G]

You are looking for two things when you get started: (1) a custodian, and (2) an investment.

Custodian choice: you have thousands of choices including banks, thrifts, mutual funds, brokerages, etc. They vary in terms of "branches", customer service, internet support, annual fees (and ways to waive the fees like electing monthly contributions or using email for statements/confirmations) and most important of all what kinds of investments are supported. The right choice for you requires you to contact a few custodians and think about what you value most. Ask each custodian for materials aimed at the beginner... some of these are excellant.

Investment choice: at your age, and with anyone just getting started, mutual funds are the most likely initial investment. Why? Because you get portfolio diversification and there are thousands (like 8,000!) choices of funds. Beginners need just one good broadbased fund - such as well established actively managed fund or the computer list driven "index" fund. Ask each custodian to recommend three choices for you first investment. You are basically looking for NO LOAD funds, which means mutual funds that have no front or back end commissions.

Here is how to find out more ....... these topics have been covered often at this web site.

Use the search engine and any of the following keywords: index, mutual fund, beginner, started, custodian, etc.

Post again if you have more questions.