To my investors on this forum

[bmwxdrive]

I have a question about an IRA Roth I want to open. I am 20 years of age and I work as an intern as well as a full time college student. I was wondering if it matters which provider I open an IRA Roth account with (eg. www.fidelity.com , www.scottrade.com , etc.....).

I was also thinking of investing in a Vanguard® 500 Index Fund.

I am not sure which one to invest in because I do not have enough money for both. I also pay for my college and need to save money on the side for that. I am not sure if I should invest a retirement account or a short-term five year plan with Vanguard. I was leaning toward an IRA Roth account. Any advice would be greatly appreciated.

[thebluedog]

Originally Posted by bmwxdrive

I have a question about an IRA Roth I want to open. I am 20 years of age and I work as an intern as well as a full time college student. I was wondering if it matters which provider I open an IRA Roth account with (eg. www.fidelity.com , www.scottrade.com , etc.....).

I was also thinking of investing in a Vanguard® 500 Index Fund.

I am not sure which one to invest in because I do not have enough money for both. I also pay for my college and need to save money on the side for that. I am not sure if I should invest a retirement account or a short-term five year plan with Vanguard. I was leaning toward an IRA Roth account. Any advice would be greatly appreciated.

I would highly recommend contributing to a Roth IRA. I personally have maxed my Roth IRA since they became available in 1998(?).There are not necessarily any tangible benefits of using one broker over the other. However, if you want to invest in the Vanguard 500 index fund, you may want to use Vanguard b/c if you purchase the Vanguard fund through Fidelity, for example, you will be charged a transaction fee b/c it's not in their network of non-transaction fee funds. I personally use Fidelity but Vanguard is also a very good choice.
You said that you can't afford both...I'm a bit confused. Do you mean you can't afford a Roth IRA and to invest in the Vanguard fund?
The Roth IRA is simply a investment tool. You can use it to invest in stocks, mutual funds, bonds, etc. So, you can use it to invest in the Vanguard fund. If you need money for college, I would invest that money in a money market fund. My Fidelity MM is currenty paying 5%. You may also want to invest in a short term CD.

bd

[motordavid]

A Roth IRA is an excellent long term savings plan that differs
from a regular IRA in that no part of your "contibution" is tax deductible,
but withdrawls, after age 59.5, will be "tax free".

But you can't touch a nickel in it, without substantial penalties & taxes for another
39 years under current regs. And, I wouldn't bet on withdrawls being "tax free, nearly
4 decades from now, but that's another topic.

A Roth can be "opened" in any fiduciary vehicle, eg Fidelity, your bank,
etc., et al. One may contribute up to $4Gs into a Roth, per 2006,
and one may only contribute up to what one earned. If someone earned
$3Gs, they could not exceed $3Gs in Roth funding.

The feature of a Roth is regular annual contributions and compounding.
If you have the disposable income, at your age it's a no brainer; but you
must "forget about" that dough for decades.

Reading between the lines, I don't know what an "intern" pays so the
Roth Contribution rules may make any significant deposit, on your part, moot.

If you are looking for a place to park some dough for the next few, in
lieu of and, before getting into the workplace, I'd rec'd any no load
fund(s), through the cheapest fiduciary you can find, and pick off a
couple of Index Funds, ala the kind your mentioned. If it's dough you
may need at "any time & quickly" in the near term future, toss your cash into a
CD or MM fund. Those are available everywhere: brokers, on line, banks, etc.

Hope this helps, as your post describing your situ, was a bit sketchy.
GL,mD

[bmwxdrive]

First of all thank you guys for your replies. Sorry if my post was a little confusing but what I meant was invest a short term account (Vanguard) or just open a retirement account (IRA Roth) right now.

[motordavid]

Still a lil' vague on your situ, but interpolating,
I suspect youth is firmly on your side, age and
potential career-wise.

If you have a few thou, toss it in a short term
acct., imo. If it's expendable and short term
as in 6 mths to 2 years, I'd throw half in an
index fund and 1/2 in a 6 month or 1 yr or,
2 yr CD.

When you graduate and get cooking in a career,
you will have plenty of time to hook up with your
company 401k, or ind. IRA.

When ya'll knocking down 200Gs+ in your new
career, come back and ask again. In the meantime,
park it prudently and accessibly, imo.

All of the above is simply an opin; I hold no credentials
for investing advice, other than true life, as in I bailed
at 53. Your mileage may vary...
GL,mD

[E61Silver]

Originally Posted by motordavid

A Roth IRA is an excellent long term savings plan that differs
from a regular IRA in that no part of your "contibution" is tax deductible,
but withdrawls, after age 59.5, will be "tax free".

But you can't touch a nickel in it, without substantial penalties & taxes for another
39 years under current regs. And, I wouldn't bet on withdrawls being "tax free, nearly
4 decades from now, but that's another topic.

A Roth can be "opened" in any fiduciary vehicle, eg Fidelity, your bank,
etc., et al. One may contribute up to $4Gs into a Roth, per 2006,
and one may only contribute up to what one earned. If someone earned
$3Gs, they could not exceed $3Gs in Roth funding.


The feature of a Roth is regular annual contributions and compounding.
If you have the disposable income, at your age it's a no brainer; but you
must "forget about" that dough for decades.

Reading between the lines, I don't know what an "intern" pays so the
Roth Contribution rules may make any significant deposit, on your part, moot.

If you are looking for a place to park some dough for the next few, in
lieu of and, before getting into the workplace, I'd rec'd any no load
fund(s), through the cheapest fiduciary you can find, and pick off a
couple of Index Funds, ala the kind your mentioned. If it's dough you
may need at "any time & quickly" in the near term future, toss your cash into a
CD or MM fund. Those are available everywhere: brokers, on line, banks, etc.

Hope this helps, as your post describing your situ, was a bit sketchy.
GL,mD

I agree, my guess is that you are in a low tax bracket and the tax savings assiocated with a IRA will be low.

My guess is that down the road you will need a large sludge of cash for a down payment on your first house or apartment. Therefore you are better off but the money in a tradition taxable investment. A low load index fund is a good choice. You should also have saw ready cash for unforeseen emergencies. I would suggest a Barrings money market fund for at least $5,000 or 10% of your savings, (which ever is higher).