Roth IRA Question

[thunderbat30]

I am sure there are some financial gurus who can give me some help to answer a question that I have.

 

Is there any difference than opening up a Roth through a bank or a company such as Franklin Templeton, WEA Trust, etc? It seems that a Roth at a bank is more of a long term CD, while through an investment company rates of return fluxuate. Am I right? Is one better than the other? Not looking to use the money for awhile just want to invest the money and avoid fees for investing.

 

I have great retirement through work and two 403b's, but no Roth. Amount to invest is around $2,000. I am planning on maximizing my Roth contribution for next year's taxes but it doesn't need to be with the money I have now. Thanks for any help.

[pretendastronaut]

I can't profess to be your best source on this, but this should be a helpful link to get you started;

 

www.iwillteachyoutoberich...t-accounts

[whizkid]

Is one of your 403bs a Roth? Does your employers offer one? They became available in 2006 along with Roth 401ks. Usually the same investment options as the non-roth but you pay taxes now and not when you retire. There is a maximum amount you can contribute each year to retirement accounts so you need to not exceed that.

[twobrewers]

Bank Roths are really just tax sheltered CDs. They are very safe - obviously, but since you are saving for RETIREMENT, they are likely way to safe.

 

If you really wanted to go that way, you would be better off investing in a tax free municipal bond or something so you would have better access to your cash instead of using a retirement vehicle for such matters.

 

My recommendation is to use Vanguard. They are the low cost providers of Mutual Funds. (And also a non-profit organization) They are very easy to work with - and the cheapest providers of Mutual Funds and Roth IRAs you can pretty much find.

 

There are only two things you can truly control when investing - your cost and your taxes. The Roth IRA will control your taxes. Vanguard controls your costs.

 

Since you are apparently(?) not the most experienced investor, I would recommend using their all in one retirement mutual funds. (Instead of you picking and choose what mutal funds to invest in - you can purchase Vanguard Retirement 2025. That fund has a good mix of aggressive stock, with international stocks and bonds as well to plan for someone who is looking to retire in 2025)

 

I also HIGHLY recommend using their automatic investment feature. You set up with them to have a set amount withdrawn from your account on a regular basis. It makes investing and savings for retirement a no brainers. (And VERY effective)

 

Sorry for answering this a few days past your original post, I must have missed it the first time. Feel free to ask any other questions. I would be happy to help.

[Katuluu]

The first questions that need to be asked is how old are you and at what age do you plan to retire? If you don't need this money for several years or decades you should be investing fairly aggressively, as you can assume greater risk.

[twobrewers]

Well that is the point of the Vanguard Target Retirement Funds...

 

You choose what year you are expecting to retire - and they give you the appropriate amount of risk.

 

(and many many mutual fund companies now offer these)

[Boy Jeenius]

I just stuck mine in Vanguard index 500 and rode the waves. It's coming pretty good about now.