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Comment by louprado | Hacker News Reader

I recognize my question has little to do with the OP. But I can't get past this investment dilemma. Let's say I have $100k in two different accounts. Assume both accounts only hold one stock, an index tracker, that grows annually at 6%.

Example 1) A retail E-Trade account

Example 2) A Roth-IRA account.

With the first account, I paid commission upfront when I purchased and again when I sold.

In scenario 2, I probably paid commissions AND I pay 1% fees on assets annually.

30 years later account 1 will have ~$575K and account 2 will have ~$432K. So even if you consider tax advantages you are better off with the retail E-Trade account.

If I don't need an advisor AND I do want the tax advantages of a ROTH IRA, what do I do ? Right now I am paying 1% annual fees to a guy who I met once 10 years ago who was just lucky enough to fax in my paperwork. Thanks in advance.

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One of us is confused. A Roth is a tax-advantaged container; you should be able to get such an account at E-trade. Most places do have a fee for retirement accounts, but it is often waived for small investors and for Vanguard I think it is a relatively nominal fixed annual fee.

It's possible to have a 1% annual fee on an asset in either account, such as a mutual fund. That's ridiculously high, though. The point of index funds is to reduce those.

If I am interpreting you right, your two examples boil down to:

1. An E-trade IRA, containing something like SPDRs: $10 commission to buy and sell, plus 0.18% (last time I looked) annual fee to the folks who issue the SPDRs.

2. A Vanguard IRA containing a Vanguard index fund: no commission to buy or sell, possible fixed annual custodial fee, and 0.2% annual fee from the index fund.

Or, you can have either in a non-retirement account, in which case you pay income tax on dividends and capital gains. Or you can put a Vanguard index fund in an E-trade account; I'm not sure about commissions then.

In any case,

TL;DR: if someone tries to sell you something with a 1% annual fee, scream loudly in their ears and use the distraction to run away.

You can open an IRA at Vanguard that would certainly be much cheaper than whatever you're paying that guy: https://investor.vanguard.com/ira/iras

You need to move your Roth-IRA to a different custodian. You are getting ripped off. Vanguard will charge you zero to be custodian.

You get a Roth IRA without ridiculous fees. For example, Vanguard (as mentioned in the article) has some.

The market has exploded with no-load mutual funds and ETFs with minimal fees. Vanguard now competes in that space with Schwab, Fidelity, iShares and others.

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