Ready To Open Your Roth Ira But Do Not Know How And Where? Here Are Some Helpful Ideas

Kim is a typical example of a worker who does not give much thought to retirement options until it is almost too late

. She is a 38-year old professional who has contributed a fraction of her salary to her 401k over the years but other than that, she has not really made any provisions to save for her retirement. Like many others, Kim spends her money living her life now - travels, cosmetics, clothes, and generally just enjoying pleasant time.

This changed; however, when in one of the work seminars she attended she was jolted by a wake-up call in the presentation made by an analyst who walked each one present through a precise depiction of their retirement days. Kim was horrified at the idea that all this time, she had the wrong notion that she was all set up for retirement only to find out how far from the truth it is. It is a sad fact that a good number of people are in the same boat as Kim. Living in misguided complacency that retirement is still a long way away; and there is no need to hurry and think about it now.

The analyst could not have made the presentation at a more opportune time and luckily for Kim, it made her realize the urgency of looking at her alternatives. After the enlightening seminar, Kim came to the conclusion that her best option is a Roth IRA. She decided to put up the maximum contribution to her 401k until her retirement and simultaneously start her contribution to a Roth IRA account at $5,000 per year based on her income before taxes. With the clarifications made in the presentation, she was able to grasp that she will have to pay taxes for the money she will contribute to her Roth IRA but no taxes will be imposed on any withdrawals.

The next question is: Where should she open her account and which one offers the best IRA Roth rates?

Again, Kim's quandary is similar to that of numerous others who are virtually clueless on what route to take and how to begin with the process. Bear in mind that IRA Roth is an investment medium, not the investment itself. There are three choices available, when opening a Roth account: your bank, a mutual fund, or a brokerage house; the latter of which is commonly and preferably done online by many.

If you already have a bank account, it is very likely that you have already been offered the opportunity to open a Roth IRA account; however, there may be a disadvantage to this since banks do not specialize in investments plus they frequently charge enormous service fees.

The safest and most cost effective venue to open your IRA Roth account is a mutual fund. Vanguard Funds is one of the most highly regarded mutual funds where you can safely stash your money without having to give it the once-over every so often, secured in the knowledge that your money is well-invested. If you want to minimize the temptation to 'actively trade' your retirement account, mutual fund is an excellent strategy.

Finally, a discount brokerage house is another good place to open your account. Among the well-known ones are Schwab Online, e-Trade, and many others. Discount brokerages are very convenient as they will almost always allow you to open a Roth account with unlimited investment possibilities. You have to be perfectly aware, though, that this type of Roth abounds with so much temptation to actively trade and you run the risk of getting tempted to take chances and jeopardize your retirement money.

As you can see, of the three possible venues where you can open a Roth IRA, mutual fund is still the best alternative. Kim made the wise move and opened her account with a mutual fund, putting 40% in aggressive funds and the remainder in safe growth funds. And she did not even have to check the daily fund movements; absolutely the most excellent scheme by far.

by: Dallas Hart

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