In today’s Ask Me Anything, there is a question about how to open an investment account and start saving money.
AMA: I want to be able to throw money at an investment account, and do better than I would in a savings account. I don’t want to pay a bunch of fees. Is this reasonable? How do I choose an option? Do I need to go through a brokerage firm?
I am 22 and graduating in May 2015. I think I understand what I should do to save for retirement, and that I need an emergency fund in a savings account. But I’m not sure what to do with any money I can save beyond that. From reading blogs and articles, it sounds like that’s where you can invest in stocks, ETFs, mutual funds, money markets, etc. I want something that I don’t have to actively manage. Not really sure what to start researching. Thanks for doing what you guys do.
Here are a few options for you to choose from for investment and/or retirement accounts:
- Easy Solution: Open an account at Vanguard and select investments that suit your risk tolerance and future goals. If you would rather have one fund that is diversified for your retirement in the future, select 2055 Target Fund VFFVX and allocate 100% of your money to it. Another option is to open an account at Charles Schwab with a new service called Schwab Intelligent Portfolios coming in Q1 2015. The Schwab Intelligent Portfolios offer automated trading and rebalancing and will not have advisory fees, commissions, or account service fees.
- Even Easier Solution: You may prefer opening an account with one of the online advisors listed below. They have a fast, 5 minute account setup that includes your personal goal assessment, risk tolerance survey, tailored asset allocation, and they do all trading and rebalancing.
Both solutions above provide a low fee solution for you to open an investment/retirement account. I would open a few tabs in a web browser or download their mobile apps and see which one you prefer. You have the right mindset and its great to see you thinking about saving money before you graduate college.