Vanguard is a highly-respected financial institution that caters to long-term retail investors. Unlike many nationally-advertised brokerages, the company is cooperatively owned by its fund-holders. It's not listed on a major stock exchange and doesn't encourage institutional investors to buy its products. It's known for giving sound financial advice and managing funds well through periods of market turmoil. In short, it's a superior institution that appears to be well-positioned for the future.

Like nearly all of its competitors, Vanguard permits its clients to set up tax-sheltered retirement accounts using its network of brokers. It offers both traditional IRAs and Roth IRAs. Many retirement investors prefer to invest in Roth IRAs because the IRS taxes contributions made into these accounts during the year in which they were made. On the other hand, funds held in traditional IRAs are taxed during the year in which they're withdrawn. Since the funds are liable to have grown in the intervening years, traditional IRAs typically carry high final tax burdens.

If you've recently opened a Vanguard Roth IRA and wish to begin populating it with investments, you'll have dozens of the institution's proprietary mutual funds from which to choose. Unlike some other mutual fund issuers, Vanguard doesn't require its clients to make minimum initial investments of $10,000 or more. Most of its funds require $5,000 or less to start. A few may require less than $2,500. Vanguard even waives its standard fund-maintenance fee of $10 per month on individual mutual funds that contain more than $5,000 on a continual basis. Once your IRA has been open for a few years, this should be easy to achieve.

When you're ready to populate your IRA with specific mutual funds, you'll want to assess your investment goals and your time horizon. If you're investing for retirement, chances are good that your time horizon is quite long. As such, you'll want to invest in a mixture of conservative and aggressive funds that contain diverse asset groups.

To ensure that you don't miss out on the broader market's upswings, invest in at least one total index fund. This fund should be structured to perform similarly to the Dow Jones Industrial Average or the S&P 500. You should also own several sector funds that concentrate on particular industries or regions of the world. Popular targets of sector funds include energy companies, agricultural concerns, mining companies and multinational conglomerates.