What is a reasonable rate of return and fee structure for a Roth IRA?
The Nerdwallet Roth IRA calculator has as its initial, default value a 6% rate of return. It also, as far as I can tell, doesn't provide a way to include fees in the calculation.
I am wondering if the 6% rate of return for a Roth IRA is realistic? How about the assumption of no fees? I assume every Roth IRA has fees (please let me know if I'm wrong!) and depending on the fee structure it may not be accurate to account for fees simply by decreasing the rate of return.
Also, do any of the answers to my questions above change for traditional IRA's? For instance, do Roth and traditional IRA's have different expected rates of return (other than the difference in pay out from the differing tax structures)?
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A Roth IRA is just an account wrapper. Inside a Roth IRA you can have a plain 0.1% savings account, or a brokerage account, or an annuity or whatever. There's no rate of return for a Roth IRA.
That particular calculator seems to assume you'll be wrapping a brokerage account in a Roth IRA and investing in the stock market. Over a long period 6% is probably a reasonable rate of return considering the S&P 500 has returned about 7% over the last decade.
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