Is it bad to open an IRA through your bank.. | TigerDroppings.com

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WG_Dawg
Georgia Fan
Atlanta
Member since Jun 2004
43388 posts

Is it bad to open an IRA through your bank..



as opposed to a firm like Vanguard? Full disclosure, I am a TOTAL novice when it comes to this type of thing. I meant to open a Roth IRA a few months ago but got tied up with work and other stuff, but am planning on going ahead with that now. I've been looking around at some places (Vanguard seems to be the best place for beginners), but I don't think I have a brick and mortar one anywhere close and would have to do everything online.

Being as that I'm a complete beginner, I'd like the peace of mind of sitting down and talking with someone. I saw that my bank (WF) offers Roth IRAs. Would there be any major difference between going through the bank rather than one of those big 3 investment companies?







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Teddy Ruxpin
LSU Fan
New Orleans, LA
Member since Oct 2006
20029 posts
 Online 

re: Is it bad to open an IRA through your bank..


I'm guessing Wells Fargo is WF.

They say you can have 100 commission free trades if you link with their PMA package. 100 free trades for someone like you would be effectively free, so that all sounds good until you see what the PMA Package entails:


PMA Package Monthly Service Fee

The PMA Package is free of the $30 monthly service fee for each month that one of the requirements in statement-ending balances is met:

$25,000 or more in qualifying linked bank deposit accounts (checking, savings, time accounts (CDs), FDIC-insured IRAs)
OR
$50,000 or more in any combination of qualifying linked banking, brokerage (available through Wells Fargo Advisors, LLC) and credit balances (including 10% of mortgage balances, certain mortgages not eligible).

Seems like a pain in the arse for a non-Baller. If you know you are going with Vanguard ETFs/Funds, you can't do any better than going with Vanguard. Its easy to set up. If think you will invest in other options, from what I've read there are tons better options than WF.



This post was edited on 2/13 at 9:35 am


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WG_Dawg
Georgia Fan
Atlanta
Member since Jun 2004
43388 posts

re: Is it bad to open an IRA through your bank..


Man that's disappointing, thanks for the heads up. I checked out Vanguard's website and they have a way to set up a Roth online, I just kinda wanted the benefit of talking to a person since I honestly still don't really know exactly what I'm doing.

I have an IRA through work but I want to start a personal one as well and it seems Roth is the way to go. But as far as how they work and making investments and trades and moving stuff around and all that I don't really have a clue.






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hiltacular
Georgia Tech Fan
FILA
Member since Jan 2011
9261 posts

re: Is it bad to open an IRA through your bank..


It really doesn't get any easier than an ETF through Vanguard.

Sign up, pick fund, dump money, live life. I cant remember the fees vanguard charges but it's pretty minimal. Give me a sec and I'll look into it.




This post was edited on 2/13 at 9:39 am


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WG_Dawg
Georgia Fan
Atlanta
Member since Jun 2004
43388 posts

re: Is it bad to open an IRA through your bank..


quote:

Sign up, pick fund, dump money, live life.


I love that it's convenient, but what if I have no knowledge of what type of fund to pick? Will they outline a few for me, I pick one, then forget it? Or is it something that I have to check on reguarly, move things around, pick new funds, etc?






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hiltacular
Georgia Tech Fan
FILA
Member since Jan 2011
9261 posts

re: Is it bad to open an IRA through your bank..


quote:

I love that it's convenient, but what if I have no knowledge of what type of fund to pick? Will they outline a few for me, I pick one, then forget it? Or is it something that I have to check on reguarly, move things around, pick new funds, etc?



If you want to pick one and forget about it, a target retirement fund is the way to go. I believe they require you to put a minimum of $1000 into any fund so at the least, you could throw $1000 into a 2050 retirement fund, get an idea for how it works and what they invest in, research other funds in the mean time, and come back in a year and either dump more money into the 2050 fund or buy another fund that you have researched.

I would invest $1000 into a retirement fund, get a better feel for how investing works altogether, and then go speak to a financial adviser in a year. I don't think going through WF will help you anymore than throwing $1000 into a retirement fund.





This post was edited on 2/13 at 9:52 am


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WG_Dawg
Georgia Fan
Atlanta
Member since Jun 2004
43388 posts

re: Is it bad to open an IRA through your bank..


That sounds like a little better idea than stepping to big leagues now. I did see on the vanguard site they have a 'target date fund', maybe I'll just do that instead.





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Dan
LSU Fan
Houston
Member since Dec 2006
2196 posts

re: Is it bad to open an IRA through your bank..


I'll second the Vanguard Target fund as a good choice for a novice. very low fee/ expenses for the 2050 fund at less than 0.2%. No monthly account fees either.

It automatically readjusts itself as you move toward your retirement. it starts you out at approx 10% bond allocation.






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CoolHand
USA Fan
Member since Dec 2011
1482 posts

re: Is it bad to open an IRA through your bank..


quote:

, I just kinda wanted the benefit of talking to a person since I honestly still don't really know exactly what I'm doing.


The problem with asking someone is they aren't going to look out for you more than you will. There are limitless philosophies on investing. How do you know you can trust theirs? I highly recommend you spend time understanding what you are investing (and why) in instead of relying on someone else to make that call.

quote:

But as far as how they work and making investments and trades and moving stuff around and all that I don't really have a clue.


The actual mechanics of doing this is not complicated and I believe can be easily self taught. The hard part is knowing what to invest in.






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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
30530 posts

re: Is it bad to open an IRA through your bank..


"Target date" and "target retirement" funds are basically the same thing. Usually they are a mix of the firm's US stock and bond index funds. As you get closer to the target date the mix shifts more toward bonds.

This isn't perfect (there's a lot going on in the world besides just US stocks and bonds) but IMO it is pretty reasonable for those who have no idea what to do.






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WG_Dawg
Georgia Fan
Atlanta
Member since Jun 2004
43388 posts

re: Is it bad to open an IRA through your bank..


quote:

IMO it is pretty reasonable for those who have no idea what to do.


Sounds good, that's what I'll do.

What makes a Roth IRA markedly better than a Target date fund?






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The Seaward
LSU Fan
Baton Rouge
Member since Jan 2006
5910 posts

re: Is it bad to open an IRA through your bank..


Vanguard's 2050 fund allocates 27% to Vanguard's Total International Stock Index, which itself is composed as a mix of Europe, Pacific, and emerging markets.





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Siderophore
LSU Fan
Member since Nov 2010
3335 posts

re: Is it bad to open an IRA through your bank..


quote:

What makes a Roth IRA markedly better than a Target date fund?


A Roth IRA isn't an investment.

It is a tax shield for investments.

You can open a Target Date Fund both within and without a Roth.

The one within the Roth won't incur taxes on earning.

It's possible your bank defaults to adding those protections on essentially a savings account.



This post was edited on 2/13 at 10:59 am


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Catman88
LSU Fan
Baton Rouge, LA
Member since Dec 2004
40324 posts

re: Is it bad to open an IRA through your bank..


quote:

Is it bad to open an IRA through your bank


My wife opened her Traditional IRA through her bank. Her APY has been .45% (take notice of the period there) through Neighbors FCU. Our checking account gets 3% on the first 10k then at least .46% after that.

LINK

So yea going through local banks can be horrific with their returns.



This post was edited on 2/13 at 10:55 am


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MaesterMullen
Mississippi St. Fan
flowood,ms
Member since Jul 2012
1653 posts

re: Is it bad to open an IRA through your bank..


I think all banks have IRA's, but they are congruent with CD Rates. Which are pathetic. I think most people that do these IRA's are older folks who are already retired and move it to their local bank for easier access. The returns are horrible.

Of course most banks also have investment divisions who can get you a much better return than you would get in a branch.






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AUtigerNOLA
Auburn Fan
New Orleans, LA
Member since Apr 2011
10806 posts

re: Is it bad to open an IRA through your bank..


quote:

I think all banks have IRA's, but they are congruent with CD Rates. Which are pathetic.


This. Also, in the wealth management divisions in banks, they usually have clients with high net worth already.


What up WG: My advice would be to look at opening up a Fidelity Roth IRA. Its very easy and I believe they use morningstar ratings for each fund you choose. Try to pick the ones that have a good RR(rate of return) over a long period of time(At least 10 years). Try to see how these funds perform in particularly weak market times(recessions) and how they bounce back.


LINK



This post was edited on 2/13 at 4:29 pm


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