I like the idea of investing in a fund that is managed based on the amount of time that I have left to retire. I'm not a hands on investor. I've tried purchasing individual stocks and haven't done that well with them. I'm really looking for somewhere to park this money and feel comfortable with it.
One of my biggest concerns are the fees that I will be paying. I've read a lot about how the fees can really eat into the earnings.
Scottrade - I eliminated this one pretty quickly. After about 30 - 45 minutes on their website I couldn't find the information I wanted on the type of fund I was looking for.
Charles Schwaab - Eliminated also. I like that they have the Roboadvisor plans but I couldn't find a good explanation of how they get paid. For their Schwaab Intelligent Portfolios, there are $0 maintenance fees or commissions and just a vague statement about how they get paid. I couldn't find any expense ratios or any way to know what it would cost me.
My final 3 Choices:Betterment - RoboAdvisor. I really like how easy this website is to review and the straightforward fee structure. Basically my fees are .25% of the average annual balance. I like that this uses algorithms to determine my investments, to keep them balanced and to identify ways to reduce my tax liability. I could see using Betterment for other financial savings goals besides just a place to park my 401k and IRA savings.
Fees: Assuming I have an annual average of $30,000 in this account, my fees for the year would be $75.
Vanguard - Again, website was easy to navigate. I found the Vanguard Retirement 2045 Fund would most likely be my choice to invest in if I was to choose Vanguard. The expense ratio for the fund is only .16% and there is an annual $20 fee but I would most likely be able to get that waved easily by agreeing to electronic delivery of information.
Fees: Assuming I have an annual average of $30,000 in this account, my fees for the year would be $48. Even if I had to pay the $20 annual fee, my fees would only be $68 for the year.
Fidelity - Website is very easy to navigate. I am looking at the Fidelity Freedom Fund 2045. The fees are .77%, so higher than my other 2 choices. But there are $0 maintenance fees or commission.
Fees: Assuming I have an annual average of $30,000 in this account, my fees for the year would be $231
It's easy to see how the fees associated with an account or a particular fund can easily eat into my savings.
My next focus will be to research more on these 3 companies and the Funds I plan to choose to see what their historical performance has been like. Fidelity has a lot higher fees, but if the fund is better managed and outperforms the other 2 accounts it may be worth it. I also need to evaluate my current IRA through my local bank to determine the fees and return that I have been getting through them.
I'll be back later to report on my findings.