Question:

What kind of IRA should I open?

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So, I'm 20 years old, and want to start an IRA. However, I know nothing about the different types, rates of returns, fees, and the way it all works. So, taking into account everything, what is my best choice for an IRA, and what is their APR?

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  1. You actually are asking 2 different questions here:

    1.  What type of IRA should I open? (I agree with other answerers who suggest the ROTH IRA--this over the years will most likely be better for you.)

    2.  What type of investment should I use for my IRA? This is much more complicated.  First, you can open up an IRA in many different types of investments.  You can go to a bank and open up a CD that is an IRA.

    I think most advisors would agree that at your age, you are better off putting your money into some mutual funds which should grow much more than CD rates.  If you know nothing about investing, it wouldn't hurt to learn.  Investopedia.com is an excellent source for learning the basics of investing.

    You can also go to various mutual fund websites which have a large amount of educational material available.  Vanguard funds have low costs and their site will give you a lot of information.  If you want to invest and THEN learn, I suggest a "Target Retirement" fund at Vanguard.  You plug in your age, and they automatically adjust the asset mix as you get older.

    I hope this helps and good luck!  Please get started ASAP, because you will be the one to reap the benefits in 40-50 years or so!


  2. Open a Roth if you really don't need the tax deduction and at your age you probably don't.  Plus at your age you have another 40 years or so to accrue tax-free interest.  At 20 a Roth is the way to go.

  3. Your choices are bewildering.  Go to www.vanguard.com and research their funds.  They have a guide which will help you make the choice.  It's probably more important that you start and be faithful than which fund you choose.  

  4. Open a Roth IRA directly with a no-load mutual fund company like T. Rowe Price or Vanguard.

  5. Roth IRA saves you the tax and is clearly the best at your age. It will have tax deducted when you retire, but you will not need as much money then. Especially if you are careful to marry a rich girl.

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