Reviewed by
Congrats on completing your rollover! You’re done with the hard part. Now, let’s make sure your IRA is set up to achieve your retirement goals.
To help get you started, we’ve made a to-do list for your new IRA and answered a few common questions.
Ease your financial planning with automated solutions. Discover the right robo-advisor setup through Capitalize.
Learn More
Excellent
Updated on February 16, 2023
Learn about our Editorial Process
Congrats on completing your rollover! You’re done with the hard part. Now, let’s make sure your IRA is set up to achieve your retirement goals.
To help get you started, we’ve made a to-do list for your new IRA and answered a few common questions.
When you opened your IRA, you likely took a test to gauge your risk tolerance. This is a short set of questions asking you about your investing behaviors when the market declines, or in other situations. Do you agree with the results? This determines your asset allocation — i.e. for aggressive growth, balance, or cash preservation. As a rule of thumb, the further you are from retirement, the more growth-oriented your IRA portfolio should be. Periodically revisit your portfolio allocation to make sure it is still in line with your age and retirement goals.
Mutual funds and ETFs will have an expense ratio that indicates how much you’ll pay in fees to invest in the asset — the higher the expense ratio, the more you pay in fees. You’ll want to make sure the fees in your portfolio are not too high. As a rule of thumb, a mutual fund charging more than 1% would be considered on the higher end. ETFs should have lower expense ratios (Fidelity’s popular SPY has an expense ratio of 0.09%). The good news is most providers are now using low-fee funds, but it’s still a good idea to take a look.
Remember, you can keep contributing to your IRA each year. Try to avoid waiting for the end of the year to contribute – the earlier you contribute, the more time your assets have to grow. Just make sure you review the IRA contribution rules to stay within IRS guidelines.
Finished with those tasks? If so, sit back and let your automated IRA handle the rest. It’s still a good idea to periodically review your account to make sure everything is in order.
Q: I transferred funds into my new IRA – is my money automatically invested?
A: Not necessarily. An IRA is an account, not an investment. If you have an automated account, the investments will be made for you. However, you will likely need to take a risk tolerance questionnaire first so your IRA knows how to allocate your assets. This depends on the specific robo-advisor, so make sure you double-check to make sure your funds have been invested.
Q: What is asset allocation? What do I need to know?
A: First, asset allocation is just how your funds are split across different investment types. There is no single right allocation strategy – the details will depend on your personal circumstances and risk tolerance. Since you chose an automated IRA, allocation decisions will be made for you. However, it’s still important to understand the basics of allocation strategy so you can confirm that your account is in line with your goals:
If you’re interested in learning more, check out our curated selection of retirement resources to help you through the retirement planning process.
