Question: 
I am a stay-at-home mom, and my husband provides our only income. I have no retirement savings, but I managed to save more than $2,000 in pennies last year. I would like to start some type of retirement plan but I’m not sure how to do this.

Answer:
First, I have a question for you: How do you manage to save $2,000 a year "in pennies?" Maybe you should write a book or conduct a workshop on the topic of thrift!

In any case, you are in luck if you want a self-service retirement plan. It's called an IRA and you can contribute $2,000 a year into it, even if you don't have any income of your own, as long as your husband's earned income is at least $4,000.

If you qualify to contribute to a Roth IRA, that's the one to choose. The beauty of the Roth IRA is that as long as you leave the money there for at least five years and until you are 59.5 years old, you'll never pay income tax on any income or gains in this account. What you earn inside a Roth IRA is not just tax-deferred, it's tax-free.

With either a Roth or a traditional IRA, if you have more than $2,000 saved up, you can open an account with up to $4,000 if you do so between January 1 and April 15. The first $2,000 will be designated as your contribution for the year 2000 and the rest will be your contribution for 2001.

The way to get started is to choose a no-load mutual fund, call its toll-free number and request literature and an IRA application. Fill out a bit of paperwork and return it with your check and you'll be all set.

There are thousands of mutual funds that would love to have your IRA business, but I recommend you choose a no-load index fund for low expenses and wide diversification. The best such funds are at Vanguard, and I suggest you choose the Total Stock Market Index Fund.

This fund buys most publicly traded stocks, so you get a tremendous amount of diversification. And its expenses are very low, 0.20 percent per year. That means on a $2,000 account, you get professional investment management for $4 a year. That is an incredible bargain, and I suspect it will appeal to your apparent penchant for pinching pennies.