Current Events > Best place to open a Roth IRA?

(+) Yeah! (+)

Got my emergency fund saved and all debt paid off woop woop!

Everyone's gonna say Vanguard.

sabin017 posted...

Everyone's gonna say Vanguard.

Yep, this

Mine is through Fidelity

One of my accounts went from $12000 to $15000 in he past 8 months, its called GroupIRA

The joke is that you can choose between Vanguard, Fidelity, or Schwab depending on whether your favorite color is red, green, or blue. Because it doesn't really matter much as long as you choose one of the big names and go for a low cost index fund.

If you want to analyze it a little more there are a few considerations. First of all, Vanguard is by far the most ethical of the three. Vanguard and its founder Jack Bogle are responsible for the existence of low cost index funds. And Bogle's books on investing are some of the most straightforward noob-friendly literature on investing. Vanguard as a company has a super weird deliberate ownership structure where the fund owners own the company. And therefore the company is necessarily incentivized to give you the best possible product in the funds. The downside of Vanguard is that their web UI is horrible. Their mobile UI is ok.

Schwab probably has the best UI. And they have a cool checking account you can set up while you're at it. The checking account's debit card has no fees on international transactions which is neat. They offer their own index funds which rival Vanguard's, and you can also purchase most Vanguard funds at Schwab if you wanted too.

Fidelity's UI is fine. They have a popular index fund called FZROX, which is a total stock market fund with zero fees. Vanguard and Schwab's are generally like 0.10% give or take a few hundredths of a percent. So Fidelity's is better in that sense. It's a loss leader product intended to get you into their ecosystem. But Bogleheads will point out that the difference in fees between 0.10% and 0.00% fees are in the single or double digits for most people. So it is a little bit negligible. But neat. Fidelity is also one of the only big names in the HSA space, if you have an HSA and want your investments in one place.

So anyway the answer is still sort of "pick whichever of the big three" because it's only small minutia differentiating them. If you pick a different brokerage out of the big three you might be veering into high fee territory though. Especially if it's like Edward Jones or whatever.

I have mine with Wealthfront and theyve done amazingly with it.

I just transferred out of vanguard's 0.3% managed service. I liked it but I want everything in Fidelity now and then maybe get into proper wealth management. tiers.

My main complaint was too much investment in international funds.

Bump so the topic doesn't purge before I have time to read all the super helpful info you guys have given me! Thanks!

i really need to educate myself on how to start investing.

solosnake posted...

i really need to educate myself on how to start investing.

A Roth IRA is the first thing you need to do. The important thing you need to know about it without getting technical at all, is that if you invest the $7,000 in one every year for 30 years, you're guaranteed to have over $1 million at the end of those 30 years. Probably more than $2 million. You don't have to pay taxes or fees to draw money out of them, either. That's why they're quickly replacing 401ks as the default retirement account.

But there is a $7,000 yearly limit that you are allowed to invest in them (federally regulated). After you hit that $7,000 mark each year, if you have more money to invest, you can start looking at ETFs and index funds or invividual stocks.

Fidelity
Vanguard
Robin Hood

IIRC Robinhood actually matches a certain amount with IRAs but I'm pretty iffy about getting into longterm investing with them

Vanguard is what I use cause I've had it forever and they're great

Mine's just through US Bank and it's been doing well.

God_of_6strings posted...

A Roth IRA is the first thing you need to do. The important thing you need to know about it without getting technical at all, is that if you invest the $7,000 in one every year for 30 years, you're guaranteed to have over $1 million at the end of those 30 years. Probably more than $2 million. You don't have to pay taxes or fees to draw money out of them, either. That's why they're quickly replacing 401ks as the default retirement account.

But there is a $7,000 yearly limit that you are allowed to invest in them (federally regulated). After you hit that $7,000 mark each year, if you have more money to invest, you can start looking at ETFs and index funds or invividual stocks.

wouldnt 7k a year for 30 years come out to like $210k?

solosnake posted...

wouldnt 7k a year for 30 years come out to like $210k?

Compound interest increases the value beyond just multiplying 7k by 30.

God_of_6strings posted...

A Roth IRA is the first thing you need to do. The important thing you need to know about it without getting technical at all, is that if you invest the $7,000 in one every year for 30 years, you're guaranteed to have over $1 million at the end of those 30 years. Probably more than $2 million. You don't have to pay taxes or fees to draw money out of them, either. That's why they're quickly replacing 401ks as the default retirement account.

But there is a $7,000 yearly limit that you are allowed to invest in them (federally regulated). After you hit that $7,000 mark each year, if you have more money to invest, you can start looking at ETFs and index funds or invividual stocks.

Well, to be absolutely clear, Roth IRA describes the type of the account. You do still need to buy an investment in your Roth IRA. It's not just like "invested in a Roth" when you put the money in. You would buy an index fund or stock or whatever you like IN the Roth IRA.

By default when you throw the money in it'll probably be placed in a generic money market fund, which won't return much. Just making that clear because some people do make that mistake and think they're investing for retirement when all they did was dump money into the Roth IRA account. Then, because they didn't actually invest it, they lost out on years of gains.

I think Im gonna try to open my own Roth IRA in the next month or so. If youre capped at $7k a year i better start asap

tag

God_of_6strings posted...

A Roth IRA is the first thing you need to do. The important thing you need to know about it without getting technical at all, is that if you invest the $7,000 in one every year for 30 years, you're guaranteed to have over $1 million at the end of those 30 years. Probably more than $2 million. You don't have to pay taxes or fees to draw money out of them, either. That's why they're quickly replacing 401ks as the default retirement account.

But there is a $7,000 yearly limit that you are allowed to invest in them (federally regulated). After you hit that $7,000 mark each year, if you have more money to invest, you can start looking at ETFs and index funds or invividual stocks.

Just to clarify a point, generally for a Roth you need to keep the money in there for 5 years before you can withdraw it without fees.

Kuuko hit the nail on the head. Excellent write up. Speaking of Jack Bogle, r/bogleheads is probably the best subreddit for financial advice.

I personally use vanguard, but it doesn't really matter. Vanguard definitely does have a shitty UI and that alone is why I've been thinking about switching to Fidelity. But I probably won't switch.

PraetorXyn posted...

I have mine with Wealthfront and theyve done amazingly with it.

Wealthfront has the best checking account I've seen. It's a combination of a HYSA and checking account. You get a debit card and can have no limit direct deposit and withdraws, but all at a 5% APY. Most checking accounts have like a 0.01% APY. I think either Schwab or Fidelity has something similar though, idk.

Fidelity app > Vanguard

xTreefiddy350x posted...

Kuuko hit the nail on the head. Excellent write up. Speaking of Jack Bogle, r/bogleheads is probably the best subreddit for financial advice.

I personally use vanguard, but it doesn't really matter. Vanguard definitely does have a shitty UI and that alone is why I've been thinking about switching to Fidelity. But I probably won't switch.

Wealthfront has the best checking account I've seen. It's a combination of a HYSA and checking account. You get a debit card and can have no limit direct deposit and withdraws, but all at a 5% APY. Most checking accounts have like a 0.01% APY. I think either Schwab or Fidelity has something similar though, idk.

Huh, I didnt know they had a checking account. Their Cash account is also great for savings, as its about 5% return with no strings.