When you sign up for a Roth IRA, you put in an initial contribution and specify how you want your money invested. As Jess mentioned, there’s a fairly high initial investment for a Vanguard account, which makes it difficult if you’re just getting started. You can get around this by opening your Roth IRA at a discount broker, which have lower minimum initial investments. The link Jess posted mentions a few of these. However, you’ll notice that these accounts have more potential fees.

I originally opened my Roth IRA with Scottrade, because the minimum initial investment was lower. At the time, Scottrade didn’t charge a fee to buy/sell Vanguard funds, so it was great. It now costs $17 per transaction for Vanguard funds at Scottrade, so I would no longer recommend it. In fact, I’ve transferred my Roth IRA to Vanguard now that my balance is high enough. Since I’m investing all of my money in Vanguard funds, this makes sense because I can reallocate my money among their funds without any fees.

As far as Vanguard being too conservative, I don’t entirely agree. T. Rowe Price funds do invest a higher percentage in stocks, but this article comparing T. Rowe Price vs. Vanguard shows how easy it is to get a similar asset allocation using Vanguard funds. Vanguard funds also have a lower expense ratio than T. Rowe Price funds, which can have a significant impact on your earnings in the long the run. However, T. Rowe Price has a lower minimum initial investment.

As you can see, I could easily write an entire post about this (and I might in the future). Everyone has their own personal investment strategies, so my suggestion would be to do more research. You’ll inevitably read about different investment strategies and find one that fits your goals. For me, it turned out to be Vanguard funds.

Also, from what I hear, many people consider Vanguard to be more of a “conservative” place to open up investment accounts – like someplace your parents might go to. Consider looking into T. Rowe Price as well.

I got most of this information from this post – http://www.getrichslowly.org/blog/2007/06/07/how-to-start-a-roth-ira-and-where-to-do-it/
Also check out The Simple Dollar (thesimpledollar.com) for other good articles, if you’re interested.

I was also reading that Vanguard is a great place to get a Roth IRA. Do you just sign up with them and do you get to decide how your money is invested (ie an index fund in your case)?