I’ve spent the last few hours trying to decide what to do with our retirement and education savings accounts.  As it stands, my wife and I have our Roth IRAs with one brokerage, my daughter’s ESA is with a second brokerage, and my SEP-IRA is with a third.  I’d love to move them all to one brokerage, Vanguard perhaps, but I don’t know if it’s worth the hassle – and the fees – associated with moving them.

I’ve also spent some time thinking about our asset allocation.  Right now, we’re invested in a hodgepodge of index-based mutual funds and exchange-traded funds (ETFs).  I need to reread Nickel’s post about managing asset allocation across multiple brokerages.

I really haven’t decided what I’m going to do, but I wanted to get my thoughts out of my head and onto the screen.  I also need to open two more ESAs, one for my son and one for our newborn, but, I’m not going to do that until I have decided whether to consolidate with one brokerage or not.

Decisions, decisions.  If you have any suggestions, I’d love to hear from you.  Simply leave a comment and let me know what you would do in a similar situation.  Would you move all of your accounts to one brokerage?  How do you track your investments, especially if they are with different brokerages?

Side Notes – I hope you like the new logo at the top of the site.  It was designed by Pete from over at Bible Money Matters and Blog Logos.  I think he did an awesome job, and I really dig the bold black and red design.  Also, I’ve added a new dedicated search page to the site.  Hopefully, it will make the site a bit more user-friendly.

This post is part of the Money Blog Network monthly project – Finances at Graduation

Dear High School Graduate:

I’ll keep this short and sweet. One day, you’ll probably want to retire. But, in order to do so, you are going to need money – and lots of it. Do yourself a huge favor. Open up a Roth IRA and do your very best to fully-fund it. Need some motivation?

Here’s a chart depicting what could happen if you invested just $5000 at the age of 18 – left it alone – and withdrew it at the age of 72.

As you can see, rate of return is a big deal. I encourage you to read one of my favorite books – The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Book Big Profits) – It will help you understand the stock market and rates of return.

Please note, the calculations above are based on a single $5000 contribution, made at the age of 18.

Imagine if you made $5000 contributions, each year, until the age 72 -

Wow. Even at a conservative return of 9%, your ending balance would be over 6 million dollars. Pretty cool. And, if you get ‘lucky’ – you’ll have more than 31 million dollars with which to play!

There are several ways to open a Roth IRA. Visit your local bank and ask them about opening a Roth IRA – or do it yourself, online, at sites like TradeKing or Vanguard.

I realize $5000 is a lot of money – especially when you are 18. But, look at the potential rewards!

One final note – Money inside of a Roth IRA grows tax free! That’s right. Pay taxes now, while your tax rate is relatively low, and watch your contributions grow and grow and grow. Then, when you are ready to retire, you can withdraw money from your Roth IRA – and you will not have to pay taxes on those withdrawals.

Your debt free friend,

NCN

This article is part of the MBN Group Writing Project on finances at graduation. Be sure to check out the other contributions to this project:

Consumerism Commentary – Financial Tips for College Graduates
Free Money Finance – Money Advice for Graduates
Get Rich Slowly – Personal Finance Made Easy
Mighty Bargain Hunter – Graduates, You Might be Shocked
No Credit Needed – A Fully Funded Roth at Age 18
Wise Bread – My Best Advice for New Graduates
Five Cent Nickel – Four Tips For Recent Graduates