Skip to main content
Personal Finance & Money

Return to Question

Tweeted twitter.com/#!/StackFinance/status/550010334581653504
edited tags
Link
Chris W. Rea
Chris W. Rea
  • 31.8k
  • 17
  • 103
  • 190
added 111 characters in body
Source Link
John Chrysostom
John Chrysostom
  • 297
  • 2
  • 8

I have a couple of IRAs (one roth, one traditional), at a local credit union for state employees where I live. I'm fairly young, so the money has simply been in interest-bearing accounts to date. However, I've gotten to the point where I have enough money built up in there that I can move it over to an investment account instead of a simple interest-bearing account.

If I stick with the credit union and turn my IRAs into investment accounts, they essentially repackage mutual fund products from Fidelity. So, I'd be investing in mutual funds, and they seem to have a pretty reasonable selection of portfolio options so I'm fine with that.

My question is this: The credit union can charge .25% per year of the total amount invested as an administrative fee. In addition, Fidelity can charge an additional .25% on top of that, for a total of .5%. Given expected rates of return of, say, 7%, that's like losing 7 or 8% of my interestinvestment earnings to admin fees. Is that reasonable? Are there cheaper options out there that I'd be missing out on?

UPDATE: To be clear, the .5% administration fees are the ONLY fees I would be paying - no load fees, etc.

I have a couple of IRAs (one roth, one traditional), at a local credit union for state employees where I live. I'm fairly young, so the money has simply been in interest-bearing accounts to date. However, I've gotten to the point where I have enough money built up in there that I can move it over to an investment account instead of a simple interest-bearing account.

If I stick with the credit union and turn my IRAs into investment accounts, they essentially repackage mutual fund products from Fidelity. So, I'd be investing in mutual funds, and they seem to have a pretty reasonable selection of portfolio options so I'm fine with that.

My question is this: The credit union can charge .25% per year of the total amount invested as an administrative fee. In addition, Fidelity can charge an additional .25% on top of that, for a total of .5%. Given expected rates of return of, say, 7%, that's like losing 7 or 8% of my interest earnings to admin fees. Is that reasonable? Are there cheaper options out there that I'd be missing out on?

I have a couple of IRAs (one roth, one traditional), at a local credit union for state employees where I live. I'm fairly young, so the money has simply been in interest-bearing accounts to date. However, I've gotten to the point where I have enough money built up in there that I can move it over to an investment account instead of a simple interest-bearing account.

If I stick with the credit union and turn my IRAs into investment accounts, they essentially repackage mutual fund products from Fidelity. So, I'd be investing in mutual funds, and they seem to have a pretty reasonable selection of portfolio options so I'm fine with that.

My question is this: The credit union can charge .25% per year of the total amount invested as an administrative fee. In addition, Fidelity can charge an additional .25% on top of that, for a total of .5%. Given expected rates of return of, say, 7%, that's like losing 7 or 8% of my investment earnings to admin fees. Is that reasonable? Are there cheaper options out there that I'd be missing out on?

UPDATE: To be clear, the .5% administration fees are the ONLY fees I would be paying - no load fees, etc.

Source Link
John Chrysostom
John Chrysostom
  • 297
  • 2
  • 8

What are reasonable administrative fees for an IRA?

I have a couple of IRAs (one roth, one traditional), at a local credit union for state employees where I live. I'm fairly young, so the money has simply been in interest-bearing accounts to date. However, I've gotten to the point where I have enough money built up in there that I can move it over to an investment account instead of a simple interest-bearing account.

If I stick with the credit union and turn my IRAs into investment accounts, they essentially repackage mutual fund products from Fidelity. So, I'd be investing in mutual funds, and they seem to have a pretty reasonable selection of portfolio options so I'm fine with that.

My question is this: The credit union can charge .25% per year of the total amount invested as an administrative fee. In addition, Fidelity can charge an additional .25% on top of that, for a total of .5%. Given expected rates of return of, say, 7%, that's like losing 7 or 8% of my interest earnings to admin fees. Is that reasonable? Are there cheaper options out there that I'd be missing out on?