Hello everyone. I really need help in trying to choose a wise investment for a Roth IRA. I cut and pasted this advice from Suze Orman's website below.

Per some good advice on this site I want to open a Roth IRA with Vanguard. But when I looked at their site and then called them I discovered that I have to choose the investments.

I made a mistake last year of opening a Roth IRA with Chase Bank. Mistake because I now realize that they took a 4 percent fee and am telling me that for any new money I have to pay this again! I am going to talk with them today about it. I will either leave it alone and no longer contribute to it or see about rolling it over unless they charge me an arm and a leg. I read on this site that I can have the IRA at more than one place if I understood it correctly.

I am a 49 single female starting my life over and I know that it's late in the game, but I want to at least do something now about my future retirement. I can contribute the maximum each year to the Roth, but I have NO IDEA how to choose the investments. I am not a high risk taker and I like what I read on Suze Orman's site which I copied and pasted below, but again have NO CLUE on how to choose investments with Vanguard or anyone for that matter. Is anyone willing to hold my hand and guide me with this? I will be so so grateful to you!

Thank you!!!!!
Lorimarie

Quote from Suze Orman: (Please tell me what you think about this)
When you set up a Roth IRA account you must choose a specific investment for that Roth. It can be any combination of stocks, or funds. My advice is to keep it simple and simply opt for a no load index fund. With an index fund you get a broad investment in hundreds, if not thousands, of stocks. That's a great one-stop way to get stock diversification. Or you can use an Exchange Traded Fund, which works just like an index fund but offers you a bit more flexibility. Just remember that you don't want to be making too many periodic investments with an ETF because you will need to pay a brokerage commission with each purchase. (No load funds don't charge a commission.)

I set up a Roth IRA with Vanguard in 2012 and just chose one of their Target Retirement Funds. You pick one based on your age and they take care of the rest. Once you open your account, it's easy to set up a draft from your bank account if you want to contribute a set amount each month.

Good luck!

The problem with Suze Orman's advice in this case is that she's telling you just to buy an index fund, which means you'd be 100% invested in the stock market. At any age, but especially now that you're getting close to 50, you'd be better off with something more balanced than that: a mix of stocks and bonds will reduce your risk while still providing a better return than you can get from more conservative investments.

I think the suggestion of a Vanguard targeted retirement fund is a good one, especially if you don't have time or interest in educating yourself about investments. The targeted fund includes a mix of equity and bond funds, with the proportion of bond funds increasing as you get older.

It might be worth taking a look at Helaine Olen's new book, "Pound Foolish: Exposing the Dark Side of the Personal Finance Industry" (http://www.us.penguingroup.com/nf/Book/ ... 91,00.html), which takes Suze Orman and a lot of other financial gurus to task for providing bad advice.

I totally agree. Unless you really want to be fancy or have the time to learn more about different funds and investment types, I would stick with a target retirement fund. Like fiddlefaddle, my Roth IRA is a Vanguard target retirement fund. You can use this link, and Vanguard will suggest the appropriate one for you.
https://personal.vanguard.com/us/funds/ ... rementList

Hey Loriemarie, I’m sorry to hear about that Chase Bank situation. I have a similar story about the company that’s managing my traditional IRA. They’re also charging a 4% fee and they tried to explain it by telling me that it’s the funds that we are investing in that are responsible. However, that is not true. They are the ones that are adding the 4% fee.

I really recommend E*trade for setting up and managing your Roth IRA or traditional IRA. What I’ve really liked about E*trade is not only the different options that you have to choose from as far as what to invest in, but also the low (or sometimes non-existent) fees. You can set the mutual fund screener to find funds by Vanguard which fit your desires. As an example, I just set the screener to Vanguard > Balanced > Conservative Allocation and found 3 results … each of which carries only a transaction fee of $19.99. E*trade is great because you can invest in just about any index fund, mutual fund, ETF, whatever you want to put your money into. Also I don’t believe there’s any fee to set up an IRA, in fact they may even offer cash back incentives for starting an account with them. Most importantly, if you are not happy with the performance of the Vanguard funds than you can easily switch without having to set up a new Roth.

There’s also several other online solutions similar to e-trade. Here’s a link where I have reviewed several of them (http://www.investingiq.net/financial-re ... platforms/). But generally, these different online services are going to give you more flexibility and going to be a less expensive option for you than going through some of the retail options that you mentioned in your question.

I hope this helps and good luck with your investing.

^ why pay $19.99 to etrade for each transaction to buy Vanguard funds when you can get them directly from Vanguard at no cost?

I opened my first etrade account in 1995 I think. I loved etrade for years and had a great deal of money with them. A couple of years ago I moved all of my money away from them. While I agree they used to be very good they are now horrible to deal with and they charge all sorts of extra fees that they are not upfront about.

I agree with BP. Why pay $19.99 transaction fee when the same transaction is free with Vanguard?

I used to have an ETrade account years ago, which I was happy with for awhile, but then they suddenly (without any notice that I can recall) started charging a fee (I think $40 per quarter) if you didn't meet a minimum balance. I was early in college at the time, and had basically been using the account for tentative entry into investing, so I didn't meet that new minimum at the time. Now, of course I'd exceed that minimum, but back then I thought that fee was crazy, so I moved rather than deposit more funds.

On the other hand, paying a $19.99 fee for ETrade to buy your Vanguard fund makes no sense, as others have pointed out, Vanguard executes without any fee whatsoever. Vanguard

Good question about why opt for the $20 fee. They may have changed things since I had an account with Vanguard, but in the past you could not invest in any funds other than Vanguard. While there are certain Vanguard funds that I really like at the moment, I have seen plenty of cases of funds taking a major downturn when a new fund manager takes over. For this reason I personally prefer to have the freedom of choosing from any fund (or individual stock) on the market.

The $19.99 one-time load fee is not a major deterrent to me, especially considering that many other 5-star funds have no fees whatsoever. I'm not an e*trade promoter - I think that all of the online brokerages have very similar deals. My feeling is that considering that an IRA or Roth is a long-term account, there is a very good chance that at some point you may want to move your investment to something other than a Vanguard fund ... and if that's the case I would gladly pay a $19.99 load fee to avoid the hassle of an IRA rollover down the road.

Just my personal opinion. Anyone that has a Vanguard account, please let me know if Vanguard has changed their policy on investing in non-Vanguard funds or equities, and if so if there are any fees for doing so.

https://personal.vanguard.com/us/whatwe ... s/flagship

BTW, I'm not an adherent of the "Great Man" methodology of investing. I prefer index funds, with an asset allocation appropriate for my risk tolerance.