I want to start an IRA?

Question

Can someone who has done it, advise me on a good firm and what it takes to start the most basic of IRA's.

My Husband And I have no retirement and I just need a good starting point and I'm told for my station in life an IRA is the way to go.

Our gross income is 93,000 a year.

Answer 1

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Answer 2

You should plan to max out your contributions to an IRA on that salary. If you are under 50, that would be $4,500 for the year per person.

The type of IRA will depend mostly on your age. If you are 30 or under, a ROTH IRA would be best - this is a fund where you pay tax on the money you invest, but then you don't pay taxes on the money you take out of the fund. Over a long period of saving, this can give you a lot more money.

The other type is a traditional IRA. With that you don't pay money on the contributions you make or the profits you make, but you do pay tax on the money as you take it out of the fund. The theory is that you may be in a lower tax bracket when you retire, so that the total amount of tax you end up paying is lower.

Either way, START TODAY!

You can sign up for a Vanguard account online - go to http://www.vanguard.com. You will fill out the forms online, then print them out, sign them, and send them to Vanguard for processing.

You will need some money to get started - $3000 is usually sufficient. If you don't have that yet, save in a high interest saving account until you do (Try the Orange account at ING.com for a good rate of return).

The first fund I'd recommend is the Total Stock Market Index fund. You want to only use index funds that have no front or back end loads (that means no charges to set up or buy into the fund) and that have a low management fee (less than 0.3%). Some funds charge you startup fees, and a management of 1 or 2% - those can quickly eat up your profits.

Vanguard have very good people to help you get started - you can call their 800 number to speak to someone about the process.

Also, when you have the account set up, they have a nice feature that will automatically transfer the right amount from your bank each month to make sure you max out your IRA contributions for a year - saves you a lot of arithmetic, and also makes sure you save every month.

Vanguard is the company I use - I'm not otherwise associated with them. I've been very pleased with their support, and the performance of their funds.

If you want to look at other similar companies, see Fidelity http://www.fidelity.com or T Rowe Price.

One word of caution concerning an earlier answer. Vanguard and others do offer funds aimed at a particular year of retirement; but this is a fairly new concept, and those funds do not have a long track record of success. I would avoid them for the moment. Start with 100% in the total stock market index fund, then after a year start to diversify. You will need to add a small amount of bond funds, small and mid cap, and international to round out your holdings - but you don't need to get into that right now! Start with one fund and work up over time.

Answer 3

there's a great argument for the two attitude. on the only hand you defer or perhaps get rid of taxes based on the IRA. on the different hand you may o.k. want use of that funds sometime interior the closer destiny. yet another argument in desire of an none widespread IRA is that capital beneficial factors outdoors of it are taxed at a decrease cost. The sensible element in my strategies is to split the adaptation. make investments some outdoors of an IRA and a few interior an IRA. you may desire to contemplate a Roth IRA as a results of fact there's a great purchase of data that the destiny tax cost could be extensively greater. even so, the government could fool us all and replace the earnings tax with a sales tax. if so a huge-unfold IRA could be better. one element with regard to the destiny. it quite is an entire unknown aside from one element. all of us land up ineffective interior the tip.

Answer 4

I have just set up a Roth IRA with Vanguard,or you can open a traditional IRA too. It is easy since you can pick your retirement year and they will automatically pick the best mix of stocks and bonds for your age. It will gradually get more conservative as you near retirement, so you really don;t have to do anything. I just contribute a set monthly amount.This company also has some of the lowest fees, something like .2% I believe you need a minimum $3,000 to get started.

Answer 5

If either of you have a 401(k) option at work, that'd be even better than an IRA, as you can contribute more - if there's an employer match, there's really no question.

If not, a traditional, tax-defered IRA is probably a good bet, as it reduces your taxable income, now, when you're trying to raise kids, pay your mortgage, and so forth. The pre-tax IRA contributions are 'cheaper' net of taxes, than the after-tax Roth contributions would be.

Answer 6

I have several IRA's, both Roth and traditional. I would advise that you (and that means each of you) open a Roth IRA. Your contributions are not tax-deferred, but the gain is all tax-FREE!

There are thousands of mutual funds in the US. Look at Vanguard, T Rowe Price, Fidelity, Dodge & Cox, Charles Schwab, among many others.

As to which funds to choose, that depends mainly on your tolerance for risk, and your time horizon. The various funds' websites can help you with that, and they have investment counselors available by phone or online.

Answer 7

It's like a Thousand Dollars to start and you can add and add while also receiving interest. As for a good firm. I would say one that you will trust your whole life.