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Questioner: Nikki

Question: I want to open a Roth IRA to save for retirement. I want to know: 1) Where should I open the Roth IRA account? I don't have $ to go to a financial planner and I only have a small amount of money to get it started (about $100). I called Wells Fargo bank and they only had an interest rate of 1.1%.   Is that all I can expect?

Answer: Nikki, thanks for your question. Hopefully I can give you a little help with my answer.

First a Roth IRA is not an investment. A Roth IRA is nothing more than language in the tax code which allows an investor to put money into a vehicle post tax, for that money to grow tax deferred, and for the money to be able to be withdrawn tax-free at a future date (after 59 1/2). That's it.

Once you open a Roth IRA you are able then to invest in a number of different things i.e. stocks, bonds, real estate, commodities, CD's, etc. I would assume that Wells Fargo is investing that money into some sort of CD.

I would recommend that you contact Vanguard and speak with one of their advisors on the phone to get more information on your investment options. In addition, pick up a few books or magazines and educate yourself a little about the different investments before going forward.

Even though you are starting with a little money does not mean you can't put more money into the investment monthly. However, just start a little at a time and let the magic of capitalism and compound interest work. You should be fine.

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