No Fee IRA

What is an IRA?

IRA stands for individual retirement account. It can come in the form of a traditional IRA, Roth IRA (the two most common), education IRA, SEP IRA, or Simple IRA. I prefer the Roth IRA and most people should invest in a Roth IRA if they are not close to retirement and have put enough money into their 401k to get the full company match.

How do I find a no fee IRA?

You can go to just about any mutual fund company or stockbroker and open up in IRA account -- such as Vanguard, Fidelity, Scottrade, etc. Many investment companies will charge you no fees on an IRA, so there's no real reason to pay for one unless you already have an investment company really like.

Be careful to fulfill their requirements. Many companies require you to fulfill certain requirements for your IRA to not have any fees. For example, I use Vanguard and I must sign up for paperless statements or having at least $10,000 in my account to not have any fees.

Which investment company should I choose for my no fee IRA?

I have a Roth IRA with Vanguard and I, along with many others, would recommend them strongly. Not only can you get no fees charged on an IRA, but they have rock-bottom expense ratios. Their website is simple and easy and I have no complaints about their customer service. No, I don't get paid to send you to them.

I think it is unwise to use a stockbroker for your Roth IRA because putting your retirement investments into individual stocks is not prudent. You also have to pay broker a commission for each IRA purchase you make -- a mutual fund company usually does not charge a purchase fee. You may even be tempted to get too creative with your retirement money and invest in overly risky items. However, if you insist on using a stockbroker, check out exchange-traded funds.

What investments should I put in my IRA?

A retirement account should have a good balance of broad stock and bond index funds. Again, I recommend Vanguard for this task. They are low cost and easy to deal with. What should the balance be? A simple and easy approach is to have your percentage in bonds be equal to your age. This is a bit conservative, so some people do their age minus 10. However, this is your retirement money, so being conservative is OK.

A nice easy hands-off solution that doesn't require any balancing by you is target retirement funds. I highly recommend this approach to most investors. It is just so easy and time-efficient to use a target retirement fund. Not only that, but you will also outperform in the long-run most people.

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