What are good companies to get Roth IRA's from?

[Guest Griff Whiting]

Help!!

My dad wants me to start up a Roth IRA, and I don't know where the best place is to do it! What are good companies to go through and are there advantages/disadvantages to any of these companies?

Thanks so much ...

[John G]

You have a couple broad catagories of custodians: banks, mutual funds and brokerages.

Banks - you have choices in your city, tend toward very conservative investments like CDs (which are generally insured against loss), some offer mutual funds and other investments

Mutual funds - about 8,000 different kinds, often clustered in fund "families" which ussually allow you switch funds easily within the group, come in LOAD (initial or later commissions to buy) or NOLOAD (no commissions) and both kinds have various annual expenses.

Brokerages - firms like Schwab, Fidelity, Etrade, etc. offer IRA accounts that allow you to buy a variety of mutual funds or stocks. This option becomes more useful when you assets grow beyond $20,000 as there are practical limits such as being diversified or owning reasonable size blocks of stocks with smaller ammounts.

You need to educate yourself on your options. Try reading the March issue of Consumer Reports. Other sources like Kiplinger and Money cover the IRA topic. You can find all of these at public libraries.

You can find virtually all brokerages and mutual funds on the WWW.

There is no one best way to start a Roth. You need to balance issues of how much time you want to dedicate, convenience, annual fees (max of $20/yr, some are zero, and many go to zero after your assets grow), and types of investments. Roths are a very attractive tax shelter, so thank your dad for encouraging you to get an early start.

If you qualify for a 1999 contribution, you must act by April 17 so get started. You can always do a direct transfer from one custodian to another if you do not like your initial choice. Good luck.

[This message has been edited by John G (edited 04-05-2000).]