How should I set up my retirement fund?

Question

I am self-employed, but want to make sure I put money away for retirement. Should I set up a 410K, a Roth IRA or what? I'm 26, but trying to get started on this, although I don't know what the first step should be. I could consult a broker, but don't want to pay unnecessary costs if I can do it on my own.

Answer 1

Consult a good CFP (Certified Financial Planner) or three.  One that works with a tax accountant and a tax attorney.  Ask them which plan would work best for you and your business and why.  If they can't explain the "why" to your satisfaction (and also the "why not" for the alternatives) then move on to someone else.  Whichever way turns out to be best for your retirement plan with your business, open a Roth IRA personally.  It never hurts to put away extra for your retirement.  I have never heard anyone complain that they have too much money in retirement.

Answer 2

I like Roth IRA's.  Check out www.clarkhoward.com

It has alot of information about investing on that site, as well as other information.  

Answer 3

if you are going to do a roth try somewhere that doesnt charge anything above 1% fee. Vangaurd is great. They a large set of funds to choose from that charge less than 1% in total fees.

Example:

you want to invest the full 5000 dollars.  

1% fee is 50 dollars for the year. So you are really investing 4950

2% fee is 100

and so on.

Some brokerage houses and certain funds, even at quality companies, charge over 2.5%.

I will admit, when I first started investing in my Roth IRA, my broker was making over 5%.  I have not contributed another dime to him or that fund. RIDICULUOS. I was putting away 120 a month. He was pocketing 6.