The contribution limit to a Roth IRA in 2008 was $5000. I set up automatic deposits from my paycheck so than X dollars went to Vanguard, and in Vanguard I set it up to divide that single deposit into Y% to the Roth IRA and Z% to my money market fund. I started my job in February, not January, so my math had to take that into account, too — divide things by 11, not 12.
Despite these factors, I ended up with $4998.36 in my Roth IRA account at the end of 2008. That means I was only off by $1.64, and that was only because I couldn't use enough precision in the Vanguard percentages! I so win.
So I bought myself $1.64 worth of shares to round out the 2008 tax year to the complete $5000 limit. I am pleased with my spreadsheet math. :) Oh, and having saved that money is pleasing, too, of course. ;)
2 comments:
So, I'm wanting to set up my Roth IRA and I'm trying to figure out where to set it up. What made you choose Vanguard over other places?
I went with Vanguard based on my dad's recommendation and their low expense ratio (0.18%) compared to others. Googling suggests that Fidelity may also have low expense ratios for some of their funds.
The only major downside with Vanguard -- at least that I've run into -- is that their accounts generally require a $3000 minimum to open the account. So I just saved that up in my checking account to open initially; there's no minimum on deposits after that first $3000 has been met.
But don't let finding that "perfect" place to invest stop you from investing now. It's better to invest suboptimally than to not invest at all. :) The "target date" retirement mutual funds are simple to set up and relatively safe to forget about; it's what I'm currently using.
I'm trying very hard to ignore the current market performance -- I keep telling myself "long time horizon," repeatedly, until immune from this year's dismal returns. :P
Other useful links: Where to Hold Your Roth IRA
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