I’m sure some of you are motivated to do avoid some of the financial mistakes shared yesterday. A good way to start is by funding yourself an tax-advantaged IRA. Fidelity has come out with a pretty decent product for this – their SimpleStart IRA. You just need to commit to contributing $200 a month ($2,400 a year) to the IRA, and you can avoid the $2,500 initial minimum investments of many of their funds. Also, as you are not paying any trade commissions and there are no annual maintenance fees, more of your money is going towards your investments.
Fidelity’s Freedom Funds, which are automatically rebalanced based on your planned retirement timeframe, are a good simple option I would recommend for those without strong opinions otherwise. This is just one option I’m throwing out there. Either way, get started!
Added: I’ve done a more thorough comparison of ‘IRA Options For Those Starting Out‘, including brokers that require a committment of only $50 per month.
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Fidelity’s funds have been lagging behind their peers… They have higher expense ratios and lower performances, too…
Really? I’ve heard good things about Fidelity. I’m signing up for the Roth SimpleStart. I’m fresh out of college and just started working (i’m 23). Any suggestions on Investment Objective? Conservative? Agressive? Balanced? Growthh?
Fidelity Freedom Funds take the guess work out of balancing a retirement portfolio link
I don’t think Freedom Funds are all they are cracked up to be. The concept has potential, but when I opened my IRA and checked out the Freedom 2040 fund, I was dumbfounded by the number of different funds it invests in.
My initial impression matches Morningstar’s view, which is that the 20 (not sure of actual number) or so funds is awfully excessive, especially given that a mutual fund is already, by its very nature, diversified. Also, some of the funds that are part of the Freedom Funds don’t have very good returns, and since the Freedom Funds are so new, it’s hard to have any idea about their long-term success (past performance not predicting future performance notwithstanding).
I chose to invest my Simple Start IRA funds in Fidelity’s Balanced Fund, which has a 10 year return of 11% and has been pretty solid even when the market has been nutty (2003, for example).
If I were not already a Fidelity customer, I might have chosen a Vanguard fund, but I believe you need $5000 to avoid fees with them. The fee, I think, is only $10 a year while your balance is under $5000, so if you have that, or will have it soon, this might not be a bad place to put your money even if you are just starting out. Keep in mind though that your index fund will change in value, so the $5000 you invest to avoid the fee may decrease to $4950 or whatever and incur a fee (I assume this is how it works, but I may be wrong).
lol. you sound like a fidelity rep
I looked at the blurb; are there really no commissions/fees? Including for stock
investments? (The information on the link
says you can invest in individual stocks also.)
I just opened the Fidelity account and it was smooth sailing all the way around.
$200 deposits a month and super low expense fees. SimpleStart IRA is just a name it’s the same product. Once you put an initial investment in, you call them up and buy a fund (no requirement for $2500). Then you can add the automatic investments every month.
Reps are super quick to answer and very helpful.
I’m very happy with Fidelity so far.