IRAs for 20-somethings?

[kateshort]

FWIW, many IRA plans have lower startup/initial investment costs. For example, I have a Roth IRA mutual fund with T. Rowe Price. I requested a prospectus (fund description and history) from the company, and it had a form for me and my bank to fill out that would allow transfers from my checking account to my IRA. (You'd need to fill one out for each fund you end up investing in.) But I could set it up with a $100/month automatic withdrawal from my checking account. Otherwise, I'd need to deposit $1000 into the IRA right off the bat to open the account.

Since you're young, you can afford to invest in "riskier" stock mutual fund accounts, as opposed to mutual fund bond accounts (those are more stable, but can still lose money, of course).

Either way, it's good to invest something every month. That way you aren't trying to time the market, and the ups and downs of the share prices kind of even out a little more.

Just some stuff to think about.

[Glitter650]

My college money was in mutual funds, the left over was put into a ROTH IRA when I graduated. When I met with the AG edwards people they never mentioned about having to have a certain amount to open a traditional IRA, just about the difference about when you pay the taxes on the money in the account, and the penalties for taking money out of it early.

[kateshort]

It is my understanding that there are minimum requirements to open IRA accounts at most investment institutions, just as most banks have minimum opening balances or monthly average balances for their interest-bearing accounts (CDs, savings, checking with interest, etc.).

The more important point is that many investment organizations do have plans where someone with an income but not a lot of savings can start investing in an IRA, even if their workplace doesn't offer a 401K plan or other asset-deduction plan.

For example, T. Rowe Price has a fund called Mid-Cap Value. When we invested, we had the option to invest $50 monthly into MCV as an IRA via automatic asset builder-- where they automatically deduct $50 per month from your checking account. Otherwise, you'd need to deposit $1000 to open MCV as an IRA. (If we wanted a non-IRA version of MCV, the minimum initial investment was $2500). So $50/month is probably affordable to most people who are working and are just starting to invest their money in outside accounts.

The above poster may not have been told about minimums by AG Edwards, because it's likely that the leftover college mutual funds that were rolled over into the AG Edwards IRA were *already* more than the minimum requirements to open an IRA account.

[Rudey]

Again, a fund is different from an IRA. An IRA is just an account and a fund is whatever you invest the account money in.

I trade through my broker, Brownco/JPMorgan. Their minimum for regular accounts is 50 but you get a great deal on IRAs because it drops to 3. The reason why I like Brown is because of the fees charged for each trade. I think a plain vanilla trade is $5 but I do limits.

-Rudey

Originally posted by kateshort
It is my understanding that there are minimum requirements to open IRA accounts at most investment institutions, just as most banks have minimum opening balances or monthly average balances for their interest-bearing accounts (CDs, savings, checking with interest, etc.).

The more important point is that many investment organizations do have plans where someone with an income but not a lot of savings can start investing in an IRA, even if their workplace doesn't offer a 401K plan or other asset-deduction plan.

For example, T. Rowe Price has a fund called Mid-Cap Value. When we invested, we had the option to invest $50 monthly into MCV as an IRA via automatic asset builder-- where they automatically deduct $50 per month from your checking account. Otherwise, you'd need to deposit $1000 to open MCV as an IRA. (If we wanted a non-IRA version of MCV, the minimum initial investment was $2500). So $50/month is probably affordable to most people who are working and are just starting to invest their money in outside accounts.

The above poster may not have been told about minimums by AG Edwards, because it's likely that the leftover college mutual funds that were rolled over into the AG Edwards IRA were *already* more than the minimum requirements to open an IRA account.

[WCUgirl]

*bump*

My firm is terminating their retirement savings account, and I'll need somewhere to roll over my earnings. I am a member of a bank and a credit union, and they both offer IRAs. Obviously, the credit union would have better rates, but I'm wondering if I should look elsewhere other than a bank? Do I need to get a financial advisor to do this for me?

[Rudey]

Originally posted by AXiD670
*bump*

My firm is terminating their retirement savings account, and I'll need somewhere to roll over my earnings. I am a member of a bank and a credit union, and they both offer IRAs. Obviously, the credit union would have better rates, but I'm wondering if I should look elsewhere other than a bank? Do I need to get a financial advisor to do this for me?

Better rates for what?

An IRA is just an account. You shouldn't be charged to open one up. Everything you do from there is the same that you would do with any broker - basically the fee you pay to buy or sell a stock/bond/option/whatever. There are a lot of websites comparing broker fees - I recommend Brownco.com.

-Rudey

[WCUgirl]

Originally posted by Rudey
Better rates for what?

An IRA is just an account. You shouldn't be charged to open one up. Everything you do from there is the same that you would do with any broker - basically the fee you pay to buy or sell a stock/bond/option/whatever. There are a lot of websites comparing broker fees - I recommend Brownco.com.

-Rudey

Okay, I confused myself. When I went to my credit union's website to look at information on how I would open up an IRA, etc., they had this chart of interest rates for all their accounts. Under IRAs, they have interest rates listed. (pretty much, it looks exactly like when you go to the bank to open up a checking account and you compare the interest rates b/w the different types of accounts). Apparently that's for their IRA certificates, which wasn't immediately clear to me. That's why I was asking about the rates (interest rates).

I guess I'm asking if it's better to open up an IRA through a bank or through an investment firm, such as some of the ones listed in this thread. Or does it even matter? Since brokers make $$$ off the trades you make in your account, do banks do the same? Do you even have the power to make trades if you go through a bank, or do banks automatically do it for you?

Am I making any sense? Sorry if this is making me sound like a complete idiot.

My next question is this: as I understand it, once I've rolled over my account, if I make any contributions to this new IRA account, that can no longer be combined with any IRAs in the future, is that correct?

[Optimist Prime]

I have a Roth IRA with Legg Mason investment firm.

[chicagoagd]

If your company offers a retirement plan, you may want to contact your benefits coordinator to see if your plan allows IRA money to roll into the plan. The IRS/DOL recently revised regulations that allow IRA money to flow into the 401k as rollover money - however each retirement plan has the option of not adopting this new allowance. This may be a better option as you won't be hit with as many fees as you would under the IRA.

Regarding the Vanguard Target Maturity 2045 fund, this fund is perfect for the investor who doesn't want to try to pick a diversified portfolio. It is actively managed and over time, the fund will become more conservative until the "maturity date". It assumes you'll retire in 2045, so the mix is initially very aggressive, so don't be squeamish about fluctuations. Keep in mind though that this fund was only started in 2003, so the track record is short.

Just as a note: I work with company retirement plans for a living....

[SmartBlondeGPhB]

Your bank/credit union may have a financial advising arm to it (my credit union does) and they would be the best ones to talk to. A bunch of people on the internet, aren't.

Basically, you want a rollover IRA and then you want to pick the funds that you put the money into. Hundreds of companies offer them. Fidelity is great on educational materials if you want to check out their websites and learn some of the basics. www.fidelity.com.