401(k) vs. Roth
It really shouldn’t be one vs. the other, which is what this Q & A addresses.
I have both and I just love the flexibility of the Roth. I run it through Scottrade and I’m very happy with my options there. Eventually I want to move it to Vanguard, but I need to have more money in the account to be exempt of paying certain fees. I’m also a big believer in index funds (which is Vanguard’s specialty) but I do own one stock (Berkshire Hathaway) and Scottrade allows me to own both in one account with no problem.
If I switched to Vanguard I would have to have a special account that allows for both the index funds and stocks, and since that costs extra I’m waiting on it.
But right now I’m paying .5% in expense ratios for my index funds, and that’s high compared to the .2% (ish) that vanguard charges for the very same product.
As for the 401(k) account, the cheapest index fund (a standard S&P 500 index) costs .7%. And that’s the cheapest one!
I’ve crunched the numbers and right now it pays off for me to stay with Scottrade and pay the slightly higher expense ratios instead of the flat, monthly fee that Vanguard charges.
If you want to know why ETFs in your retirement account are a scam, click here.
