How to Invest in and Open an IRA Mutual Fund Account

Investing in your own individual retirement account should be started as early in life as possible in order to give compound interest the most time possible to work in your favor. You will need to choose which type of IRA you want to open, as well as the trustee who will handle your money. Once you determine how much you wish to invest, it is just a matter of completing the paperwork and getting started.

Step 1

Decide if you want to open a Roth or traditional IRA. A traditional IRA allows you to take a tax deduction for eligible contributions, giving you an immediate tax break. You pay the taxes on the funds in a traditional IRA when you withdraw them, in addition to a 10 percent penalty if you are younger than age 59 1/2. A Roth IRA gives no immediate tax benefit, but withdrawals at retirement age are tax free.

Step 2

Determine the trustee you wish to use for your IRA account. Most mutual fund companies offer IRA trustee services and will handle your IRA account. You can also choose a brokerage firm with a local office to open your account and avoid the need to conduct business through the mail or online.

Step 3

Contact the institution of your choice and let it know that you wish to set up an IRA account. It will handle the paperwork to get the account started and collect your initial investment. If the account requires periodic automatic contributions, provide the trustee with the account information needed for the transfers. Choose the mutual funds where you wish to invest your funds.

Items you will need

  • Funds to invest in an IRA


  • Start an IRA account at a bank using a savings account until the balance grows sufficiently to let you invest in a mutual fund or other investment with a higher minimum. You can do a trustee-to-trustee transfer when you wish to move the investment. You may be able to start with no minimum investment as long as you commit to regular investments each month.


  • Compare the expenses of different IRA accounts carefully. Some mutual funds historically have higher fees. Mutual fund fees are usually shown as a percentage of the investment, and the average is listed in the fund prospectus. Index funds tend to have lower expenses.

About the Author

Craig Woodman began writing professionally in 2007. Woodman's articles have been published in "Professional Distributor" magazine and in various online publications. He has written extensively on automotive issues, business, personal finance and recreational vehicles. Woodman is pursuing a Bachelor of Science in finance through online education.

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