I have been very happy with Fidelity for almost a decade. My criteria was different though, I wanted to have a local branch as seeing a face and a physical location are important to my sense of security. The level of service has been excellent, and their web site is pretty easy to use. My current rep suggested a few years ago to use them for CDs and money market savings. With inflation CD rates have been historically high and the risk on these is zero, which is good for some situations. Their credit card is excellent and the points can be directed to roll right into the money market. Maybe better earners out there but this is just too easy. And speaking of easy the FXAIX index fund has been very good to the account balance.
tester (Forum Supporter) said:
In reply to captainawesome :
IRA is like a jacket around your investment. It is an individual retirement arrangement, an IRS designation for how the money in the account is treated. You put in before tax money to get a tax deduction today. If you don't itemize, this is not a good deal because you get no benefit. When you pull the money out, it will be taxed. Also, it has required minimum distributions starting in your 70s so GOV gets their tax money. You can buy any mutual fund, exchange traded fund, individual stock or bonds inside an IRA.
The Roth IRA, uses after tax money. You miss out on the tax deduction today, but the money in the account is tax free forever. Almost no one itemizes so this is far and away the best way to go under current tax code.
I would not suggest a non-tax advantaged account until you have maxed out the Roth IRA and 401K.
If possible, I would get sell off any any single stocks, including company stock and buy mutual funds or ETFs.
Just a small comment: You get to deduct IRA (and pretax 401K) contributions independently of whether you itemize other tax deductions or not. IRA deductions come right off the top.
The key to deciding which one to chose is if you think your post-retirement tax rate will be higher or lower than your tax rate while employed *and* (most importantly IMHO) that you do not pay tax on any of the ROTH IRA *gains*, while with a regular IRA you pay tax on all the money (including investment gains). Look up compound interest over 20 or 30 years (depending when you think you will retire) and not paying tax on gains is incredible important.
STM317
PowerDork
12/1/24 6:27 p.m.
Once Roth IRA contributions have been in the account for 5 years, they can be pulled without penalty which offers some nice flexibility as well.
It's not the visual guide you asked for, but this is one of the better books I've read for summarizing all this stuff:
https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore-dp-1118921283/dp/1118921283/ref=dp_ob_title_bk
Note you can also get most of the info for free on the website: https://www.bogleheads.org/wiki/Getting_started
The rest of the good advice has already been posted: max out your 401k and Roth IRA, put it in index funds, and leave it alone. Congrats on getting started!
Did not read the whole thing, but keep in mind that in some cases if your employer has you in a profit sharing plan you might not be able to fund a ROTH IRA.
Profit sharing plans are usually tilted towards your employer benefit and a way to lower his tax burden. So yes, do your own thing on the side and take the profit sharing plan as an extra.
