I recently opened a Roth IRA at Td Ameritrade. I'm making regular deposits but haven't chosen a fund. I don't want to pay a fee, or cost to trade what are my options? It's overwhelming looking at mutual funds, I saw some no fee ones but the minimums were more than I have in my acoount. Do I save up and then invest?

Thanks in advance I'm new to investing.

Note: I'm a young 45 that was self employed for a long time and need to get serious about saving for retirement. I will also be able to have a matching work 401k in a couple months, but will also use a Roth and fund it at 5500/yr.

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    What are your goals? How old are you? What is your risk profile? How much money are we talking about here? These are important factors. – Pete B. May 11 '16 at 13:47
  • Goals are retirement in mid 70's and I will fund the max 5500 as well as start a 401k in a couple months when eligible. – user42102 May 11 '16 at 14:35

Your broker, Ameritrade, offers a variety of Exchange Traded Funds (ETFs) that you can buy and sell with zero commission. An ETF is like a mutual fund, but you buy and sell shares the same way you buy and sell shares of stocks. From your point of view, the relevance of this is that you can buy and sell as many or as few shares as you like, even down to a single share. Note that to get the commission-free trades on the available ETFs you have to sign up for it in your account profile. Be sure to do that before you enter any buy orders.

You'll want to start by looking at the Ameritrade's list of commission-free ETFs. Notice that they are divided into different categories: stocks, bonds, international, and commodities. Which categories you pick from will depend on your personal investing goals, time horizon, risk tolerance, and so on. There are lots of questions and answers on this site that talk about asset allocation. You should read them, as it is the most important decision you will make with your portfolio.

The other thing you want to be aware of is the expense ratio for each fund. These expenses reduce the fund's return (they are included in the calculation of the net asset value of the shares), so lower is definitely better. Personally, I wouldn't even consider paying more than about 0.10% (commonly read "10 basis points" or "10 bp") for a broad-based domestic stock fund. For a sectoral fund you might put up with as much as 20 bp in expenses. Bond funds tend to be a little more expensive, so maybe allow as much as 25 bp, and likewise for international funds. I've never invested in commodity funds, so I'll let someone else opine on appropriate expense ratios for those.

Once you've decided what funds you want (and have signed up for commission-free trades), all you have to do is enter the trade orders. The website where you manage your account has tutorials on how to do that. After that you should be all set.

Good luck with your investing!

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Failing some answers to my comment, I am going to make some assumptions:

  1. You are pretty young, say under 30.
  2. We are talking about <= 5500 (ROTH limit)
  3. You are willing to take some risks

Based upon a quick review of this article I'd probably be in the Russell 2000 Value Index Fund (IWN). Quite simply it gives you broad market exposure so you can be diversified by purchasing one fund.

One of the key success factors is starting, not if you pick the best fund at the onset. I can recall, 20 years ago being amazed (and it was quite a feat) at someone who was able to invest $400 per month. These days that won't get you to the ROTH maximum and smart 20 somethings are doing just that.

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Since you're 20-30 years out of retirement, you should be 90% to 100% in stocks, and in one or two broad stock market funds likely.

I'm not sure about the minimums at TD Ameritrade, but at Vanguard even $3k will get you into the basic funds.

One option is the Targeted Retirement Year funds, which automatically rebalance as you get closer to retirement. They're a bit higher expense usually than a basic stock market fund, but they're often not too bad. (Look for expenses under 0.5% annually, and preferably much lower - I pay 0.05% on mine for example.)

Otherwise, I'd just put everything into something simple - an S&P500 tracker for example (SPY or VOO are two examples) that has very low management fees. Then when your 401(k) gets up and running, that may have fewer options and thus you may end up in something more conservative - don't feel like you have to balance each account separately when they're just starting, think of them as one whole balancing act for the first year or two. Once they're each over $10k or so, then you can balance them individually (which you do want to do, to allow you to get better returns).

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