How to Set Up an IRA

There are numerous different ways for individuals to save for retirement, but few have the potential for long term growth than an Individual Retirement Account (IRA). As the name implies, IRA's are individual retirement accounts that are maintained by any type of financial institution, but are set up and managed completely by the individual investor. An IRA can legaly contain any various types of investments; stocks, bonds, mutual funds, or even real estate.

IRA's can be set up at a traditional or online brokerage firm (E-Trade, TD Ameritrade), Mutual Fund Company (Oakmark, Vanguard, Fidelity), Banking Institution (Bank of America, Wachovia) or a diversified insurance/financial company (AIG, Mass Mutual). The IRA accounts can be set up by in person, by telephone, or online. Make sure to do your research to find out all pertinent information before you open your account. The best place to research is on the web, as company websites are increasingly comprehensive and often you can set up your IRA account online in just a few minutes.

When doing research on where to set up your IRA account, it is wise to compare all fees and charges that a company may charge you for maintaining the account. Periodic maintenance fees, initial account set up charges, and annual fees based on the dollar value of assets held are all common charges assessed to IRA accounts. Keep a keen eye on account fees and focus on keeping maintenance charges to a minimum as they will slowly erode the rate of return on your investment. If you do end up paying fees, most companies will have an option that you can pay these fees from funds that are outside of your IRA account.

When setting up your IRA account, you will be required to fund it with an initial contribution, usually a minimum of $500 or $1,000. Many financial institutions will also have the option to set up periodic (most often monthly) electronic transfers into your IRA account from another account of yours. This is often the optimal course of action for investors who want to set up an IRA, but don't have enough funds available for a large initial deposit, since many companies will allow you to set your IRA with as little as a $50 or $100 provided you sign up for their electronic monthly transfer service.

Periodically funding your IRA is an awesome way toward ensuring that you will have enough money for your retirement. IRA's have the potential to create tremendous tax-free returns over long periods of time, so get started sooner rather than later, do a bit of research on the front end, and begin saving for your retirement.