Selecting a "Broker/Bank" to help open a ROTH IRA.

[Guest syncmasterp]

hi all,

I am a graduate student in my final year of school looking to place the max amount possible in a ROTH IRA.

What I do not know are the criteria I should consider when selecting a "broker/bank" to help me set the IRA up. Are there differing service, setup, or account fees I need to consider, and what "broker/banks" generally offer the most competitive rates? Is there a website or information source you might have found helpful?

Thank you for any assistance you can offer and have a great day.

[John G]

You forward thinking is wise.

You have hundreds or even thousands of choices. There are three main catagories or custodians: (1) banks, (2) mutual funds or fund families, and (3) stock brokerages. They vary in terms of what they offer, the convenience, www presence, flexibility and fees. Many brokerages such as ETrade have no annual fees, lots of fund choices and are pretty flexible. Folks in the 20s are ussually comfortable with the internet method of tracking their investments, so you may want to contact Ameritrade, Schwab, etc.

Because you have a maximum of $2000 to deploy, I would recommend that you start with a broad based mutual fund, because you get lots of diversification compared to owning just a few shares of one or two companies. All types of custodians may offer mutual fund selections.

There are over 8,000 mutual funds... and you only need to pick one. No load funds are very attractive because they have no initial commission or exit commissions.

You may want to scan the March 2000 issue of Consumer Reports that suggests some very good funds, provides a good overview of retirement planning, and provides 800 phone numbers. Each brokerage and mutual fund is likely to have a web site, but I don't know of any web site that boils it down for beginners.

You should probably get a subscription to either Kiplinger Financial, Money, or Worth magazines which will help you learn the basics.

I would also suggest that you call a couple of brokerages or a couple of mutual funds and tell them you are just getting started. Lots of these firms have material directed towards beginners and some of it is very good.

Good luck.