I opened a Roth IRA and deposited money, now what do I do?

I have had some of my friends ask me this question! Really its hard to explain all through one text, so here I am going to talk about the basics to building a retirement portfolio. There are a myriad of posts on this over the internet, so I will link a few at the end of this post on our blog!

First off, after opening a Roth IRA through TD Ameritrade, Vanguard, Charles Schwab etc, you can choose to deposit $1 or all $6,000. I think you can even open an account and contribute later if you wanted, so even if you’re not ready to max out a retirement account, that shouldn’t keep you from opening one and starting the process. (I originally opened an account through Vanguard and didn’t like the platform, so I switched to TD Ameritrade and contributed the rest of the year’s contribution there. Messy, but you live and you learn.)

Once you open an account, the next step is deciding if you want your portfolio to be comprised of!

  1. There are Target Based Funds – where you pick your retirement date and use this as your sole investment vehicle for retirement
  2. Individual Stocks – often differentiated by “growth” or “dividend”
  3. Index Funds (ETFs)  – passively managed and track an index, such as the S&P 500, the fee is lower since it is not being actively managed. Average expense ratio ~0.09%
  4. Mutual Funds – actively managed, higher investment fees but the goal is to beat the indexes (which is hard to do). Average expense ratio ~0.82%. Over time will cost you more in fees, but hypothetically if they were able to consistently beat the market, then it might be worth it. Often has a required minimum contribution.
  5. Bonds – like an IOU – you loan money to an entity and they pay a fixed interest rate to you for loaning the money. There are different types of bond with varying interest rates, but the “safest” is generally governmental bonds. Of note, you can also buy bond ETFs.

Each of these categories has a TON of different subpoints that I could talk about. I was thinking about talking more about index funds and how to build your portfolio, then talking about stocks, and then finally posting about bonds. I could also have a post on what I would not recommend doing – but let me know what you’re interested in!

What resources did you use to learn about building a retirement portfolio?

From 28 Funds to 3: Simplifying to a Three Fund Portfolio
How to Start Saving for Retirement

https://www.moneyunder30.com/23-things-beginners-absolutely-must-know-about-saving-for-retirement