How to pick a Roth IRA

Ramit Sethi

Which of these lines is a lie?

  • Many of you have written to me telling me how you spent 150 man-hours studying the differences in Roth IRA accounts.
  • “I don’t want to become a financial expert. I just want my money to go where it needs to go and work for me so I can get on with my life.”

If you guessed the first one, you are correct. Almost nobody cares about the details. They just want to know what accounts are the best…from someone they trust.

To make that possible, I took on the onerous role of applying my extremely obsessive research style to figuring out the best accounts you should use. For the 0.00001% of you who care about the minute differences in accounts, I explain them. But for most people, I just share the accounts I use…because you know if I chose them, I spent many hours of my valuable youth researching them for you.

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This way, I can do the work and you can benefit from my type-A fanaticism.

And I want to get ultra-specific with my recommendations. Which would you prefer?

  • Other “financial experts”: You should find an account that’s reliable and trustworthy!
  • Me: Here is the exact account I use, and why. GTFO fake experts

If you want to know which retirement account I use, I recorded a quick video to share my recommendations.


And if you want to know how to create an automatic money system that you’ll spend less than 1 hour per month on — including automatic bill pay, investing, savings, and best of all, guilt-free spending — you can pick up a copy of my book on Amazon.

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  1. Brianna

    Thanks Ramit. The final kick in the pants I needed. I’m finally signed up! Vanguard’s online registration was about as easy as it gets.

  2. Paul


    Great vid and good, succinct advice.

    I’ve been with Vanguard for my Roth since 2004 and have been extremely happy. For my money, it’s all about their S&P Index fund. 0.17% expense ratio! You can’t beat that! And then after I hit a certain amount (25K maybe?) they upgraded the shares and took the expense ratio down to .05%!! No other fees, super easy web interface, and great service when I call them on the phone. Hands down the best.

    Keep the good advice coming. Cheers, Paul

  3. Jennie

    I love my Vanguard Target Retirement Fund. Once I saved up the $1000 initial investment by setting aside 10% of my paycheck it was really easy to set up. After reading your book, I also have it set up to automatically pull a specified amount from my checking account each week (because I’m paid weekly) so that I’ll max it out over the course of the year. I think it took a grand total of 10 minutes to set everything up and its been working flawlessly for me.

  4. Kevin

    Hey Ramit-

    Vanguard is the Gold Standard for anyone opening an investment account who wants to follow their philosophy of low costs, broad sector-wide and asset class diversification and buy and hold.


    But. WHAT ABOUT HEALTH SAVINGS ACCOUNTS? They are all run by companies that I’ve never heard of and seem scammy, have crazy fees compared to Vanguard and other Custodians, and have so much paperwork required to deposit and then invest the proceeds that I’ve been putting it off for years even though I understand my optimal strategy. WTH?!?!

    Yeah, I know has Vanguard funds. Look at that website! $130 annual fees ($45 annual, $1.75 monthly fee, max $16/Q on $20k in assets) + the Vanguard costs. We wouldn’t accept this on any other account.

    Any suggestions on the best HSA Custodian?

    • Ramit Sethi

      In my experience, they are all terrible. Open to anyone else’s feedback but I haven’t found a good one yet.

    • Megan

      I have a Wells Fargo HSA that was through my employer instead of traditional health insurance, so they were paying the fees and depositing a set amount in every month. I didn’t have any problems while my employer was paying the fees, but they stopped offering that option this year, so now I’m stuck with all the fees slowly eating away the funds my employer had given me.

      Now I’m not really sure what to do with it, because I haven’t found a low fee option to transfer it to, and taking the money out is a tax liability.

    • Steve

      I don’t have much to offer, either. My company/health insurer goes through Bank of America. Basically, the only decent options are two Small and Mid-Cap index funds. And the expense ratio is still 2-3x what you’d see in a traditional Vanguard fund. But it’s better than the alternatives, which are mostly 1-2% expense active funds.

    • Alex Rinehart

      Is the 3rd layer of tax protection that HSA’s offer worth it despite the fees?

      tax-free when you put it in, tax free when you grow interest, and tax-free when you take it out for a qualified expense….

  5. Steve

    Excellent advice. I use Vanguard for everything wherever possible – their funds are simple, cheap, and they provide great service. So, basically, everything you said.

    On a broader level, I’m a strong believer in your financial philosophy combined with the Bogleheads ( approach and YNAB. Both preach a similar approach. Automate, index funds, low fees. You really can’t beat Vanguard for enabling all of these things!

    Great video.

  6. Susie

    Hej Ramit,

    An idea for your “Ask Ramit” video:
    We all know about your love affair with luxury hotels, as evidenced in your contests to win free nights at a luxury destination anywhere in the world.

    But for a lot of your readers it seems irrelevant to win this prize if the cost of getting there is prohibitive.

    What’s your advice for making international travel affordable? Does the Starwood American Express card that you recommend feature the best deals for plane tickets, or is that points system more focused on redeeming toward accommodations?


    • Ramit Sethi

      I don’t know. I don’t do affordable international travel. Try my brother, Maneesh Sethi, and Chris Guillebeau.

    • Maneesh Sethi

      Check out this article, where I talk about how to get free plane tickets

      it’s based on the starwoods + other cards

  7. Kacie

    Agree with Kevin. What is up with the high fee HSA custodians? It is a huge mess to navigate.

  8. Timothy Moser

    Wow, my mind is blown. Ramit Sethi just made a post about personal finances!…? I don’t know how long it’s been since this has happened. But anyway, great to hear this advice. I personally use T. Rowe Price because it allowed me to start for just $50/month in college (before I would have been able to invest $1000-$2000 at once).

    • Ramit Sethi

      I know. It’s been a few years. I was feeling nostalgic.

  9. Ben

    Thanks for the article. I had just been looking into Roth IRAs. I was going to pick Scottrade. Is there a reason you go for the larger older companies instead of the internet companies such as Scottrade or Etrade?

    You briefly mentioned you’re choosing “trusted investment companies” in your book, but didn’t go into more detail.


    • Steve

      One major reason I didn’t use Scottrade – they don’t offer auto-investment for free, at least as far as I can tell. There are some fee-free ETFs and such, but Vanguard’s auto-investment is far superior. Scottrade’s great for standard old stock trades, though.

  10. Wayne

    My employer has my HSA through

    Pleased; fairly decent investment options; my only fee is a 2.50/month fee.

    Much better than the JPMorgan/Chase one they used to have us with.

  11. Will

    Thank you for the advice about roth ira.
    I just had a son, and I am interested in saving for his future.
    Do you have similar advice for college or children savings?

  12. Paul

    Hey Ramit,

    Thanks for the great article. My employer doesnt match my 403b funds. Should I still contribute to it or contribute towards a Roth IRA?

  13. Bill

    Perfect Insight Ramit, personally i’d visit any financial instituition to get more details on how to open investment account.

  14. Mike

    Hey Ramit, First time, Long time!

    I recently left a job and got a new one. Unfortunately, my new job is a contract to hire so I have no 401k.

    Do you still recommend these same firms for a regular roll-over IRA?

  15. Andrew C.

    Hi Ramit,

    I’ve read your book and I know you recommended Schwab. Do you still recommend them?

  16. Matt C

    I’m a bit confused by this.

    The fees you mention (expense ratios) those are associated with the funds inside your Roth IRA & really have nothing to do with the Roth IRA itself.

    I have a Roth with TD Ameritrade, and the only fees I’m aware of is when I make trades.

  17. Tortoise Banker

    Thanks Ramit. I first came across your site from automate your finances post. I’m really glad you support Vanguard too. I use total stock market, total international, and total bond index funds to invest, and so far I really like it.

  18. Andrew G

    Hey Ramit,

    Interesting situation here:
    I am 25 and will complete medical school in 1 year with around $130K in student loans, the average rate of interest is around 6% on the loans.
    I have a Wells Fargo checking account, and an online high-yield savings account ($4000 sitting in it 1.25%). I am considering opening a Roth IRA to be prepared for when I start making $50k as a medical resident (Most residency programs offer 403(b) but do not offer a match.
    My predicament is that my father is a financial advisor at Wells Fargo. He wants me to open a Roth IRA with him as my financial advisor. He says because I’m family, theres no commission fees or other fees. Traditionally you say to open an account at places like Vanguard, and to avoid places like Wells Fargo. What is your opinion in this situation?
    Also, am I stupid for having any money in my savings account? Should I refund my loan with the $4k or some of it?

  19. Brooke

    Hi Ramit,

    On average, do funds with 10% in bonds do better over their lifetime compared to 0% in bonds?

    I was thinking, since I am very young and have a strong social and familial support network, I do not need the 10% in bonds just to safeguard against disaster or as a psychological comfort. I am only concerned with maximizing the size of my account by the time I retire.

    With that goal in mind, my intuition says to put 100% of my roth IRA into stocks in order to capture the full 8% average gain of the market over my lifetime (or at least my younger years). Does this make financial sense? Do funds with 100% of their value in stocks perform better than stocks with 90% of their value in stocks over the life of the fund?

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