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The Cheapest Way of Retiring

Tickers in this article: AMTD ETFC SCHB SCHX
NEW YORK (TheStreet) -- In my previous two-part article (click here for Part 1, or Part 2), I detailed the importance of saving over the long term. While everyone's scenario is different, I assumed we had a 30-year-old single investor, saving for 30 years in a Roth IRA. You can read about the amazing results from the beginning.

But contrary to its purpose, saving can actually be rather expensive. Between management fees, commissions and taxes, the amount of lost savings can be overwhelming. Luckily, we eliminated the main management fees by choosing a self-managed retirement account. Furthermore, we used a Roth retirement account, which allows for tax-free withdrawals starting at age 59-1/2.

Management fees on ETFs and mutual funds are much cheaper than those associated with investment specialists. The only way to avoid management fees in ETFs and mutual funds is to simply not invest in them.

However, that would leave you with the bold task of selecting individual stocks and bonds. This task is extremely difficult, as Wall Street's smartest gunslingers continually try (and often times fail) to simply beat the S&P 500. While there will be no management fees associated with individual stocks, there are commissions that need to be paid for each purchase and each sale.

There are now many online brokerages that offer commission-free investing for select mutual funds and ETFs. Not to be construed as recommendations, but there's E-Trade ; TD Ameritrade ; Charles Schwab ; Interactive Broker and Fidelity -- to name a few. If you are into lists, even more can be found here and here.

Also, each firm has a different list of what can be purchased or sold, free of charge. Using a Roth IRA, there may be no minimum investment required to start, though this varies from firm to firm. Of course, the catch is that you typically have to hold the ETFs for 30 days or more, while holding mutual funds for up to 90 days or more.

If we're focused on the long term, though -- which we are, just to be clear -- then these holding periods should play no role in the decision-making process. So the question quickly becomes: Management fees on funds or commission rates on stocks?

While using an approach such as automatic investing, which can be as cheap as $1 per transaction (for purchases only), it's hard to fight the incredibly low fees on some ETFs and mutual funds these days.