How do i open my Roth Ira?

Question

Its a new year! I just turned 18 and i want to open my roth ira what do i do?

Answer 1

First, you must be working.

Second step, contact a financial company or you can do it online.

Third step, make sure read the prospectus (a small booklet that goes into lots of details of the mutual fund.) A good fund to pick is the one that has low expense ratio, low turnover, and a good past pperformance. Even though past performance doesn't guarantee future results, it gives a good indication on how well the portfolio manager has managed the assets.

Forth step, you need to pick mutual funds to fund your Roth IRA. (I would strongly advise getting aggressive growth funds. I recommend adding Legg Mason Partners Aggressive Growth Fund Class A shares. They use to be called Smith Barney, but Citigroup sold all its asset management to Legg Mason.)

Fifth step, if you are planning to add more than one mutual fund to your Roth IRA, make sure you stay within the same fund family. What I mean is don't mix your IRA with so many different named companies. For example, if you pick Legg Mason Partners fund, then pick mutual funds from Legg Mason Partners. Why? As your investments grow over time and the total value of all your mutual funds (including your future children and your spouse) in the same fund family reaches a certain limit (which is usually around $25,000), you get sales charge discount. That means, instead of paying a 5% sales charge, you will be paying 4.5%.

Sixth step (optional): You want to invest systematically. That means, you pick a day of the month (day 1-28) and you invest the same amount every month. This can be done by doing an automatic bank draft with your checking account. The minimum to invest systematically is $25/month or $50/month (depending on what mutual fund you pick). The reason I like to invest systematically is because on some months, price per share of a mutual fund maybe low, so I can buy more shares of that fund. On other funds, price per share maybe high, so I buy fewer shares of the mutual fund. This will lower the cost per share.

If you don't invest systematically, then there's a minimum initial deposit you need to make, which is usually between $250 to $500. You always want to put more than the minimum because if the value of your mutual fund falls below the minimum, you will get a letter saying that you have within 60 days to meet the fund's minimum investment requirement. If the value of your mutual fund doesn't meet this minimum by that deadline, the mutual fund will return all your assets from that mutual fund and you will pay taxes on it.

For more information about IRAs and mutual funds, go here:
http://obe231.blogspot.com

Answer 2

Good for you. Opening a Roth at the age of 18 is very smart. If you can put 10% of your monthly income into the Roth, the account will grow quickly for you. Compare a few options. Find out the annual fees that different companies are charging to open the account. Also, look at long-term performance of your investments (10 years). If the investment has not been around 10 years, find an investment that has been around 10 years.

Also find out if the IRA charges a fee if you decide to move the account somewhere else due to poor performance.

Good Luck!

Answer 3

Holy cow you are my hero. The fact that you even know what a Roth IRA is at the age of 18 is impressive, let alone having the foresight to invest in it.

Just about any financial institution can open one for you. Etrade has them as well as the other places mentioned.

Answer 4

you can go online to a company like troweprice, vanguard, or fidelity and open it, connect it to your checking account and you can start with just 50 bucks a month minimum, or 1k for the roth ira if you dont do the automatic payments

or you can call them and have them set it up, starting at 18 is a great move, i regret not doing it, keep adding to it and you will have no worries for retirement, unlike those of use who waited until 30

Answer 5

It is great that you are starting so early with saving for retirement. The places mentioned in the other answer are good suggestions.

You probably want to start with a broad market index fund, such as one that tracks the S&P 500.

Answer 6

Good for you! It's great a that age you're thinking about saving rather than expending. You can do it with any financial institution or call me :)

Answer 7

don't forget...you have to have earned income, i.e., you must have a job, to qualify with the irs. good luck!