Quote:
Originally Posted by kv968
Here's an instance where the minimums of the funds may come to hurt you. In order for you to get just 10% of your portfolio to be in REIT's, you'll have to have a portfolio worth $30k since the minimum for that fund via Vanguard is $3000. Although I think Vanguard is great, this is where I like T Rowe better because of your ability to get in under the minimums with their asset builder program and get a head start.
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Person should consider minimum fees when constructing portfolio. Getting 10k, 30k 100k really happens over a short period of time. 3-5 years for 30k in the example above.
Retirement funds (like 2045) provide "instant diversification", no need to cherry pick other funds.
If person wants to build portfolio on their own, cherry picking each fund and asset class, take some simple steps:
1) T Rowe Price waived account fees for IRA balances above $5000. An account is considered one mutual fund. If assets are above 30k, fees on all accounts are waived.
Year 1- send 5k to fund A (IRA max)
Year 2 send 5k to fund B (IRA max)
Year 3 send 5k to fund C (IRA max)
Year 4 send 5k to fund D
after year 4, most investors would be diversified. They may not have proper asset allocation (as equal amounts in 4 funds is not necessarily what investor might want). After year 4, investor would have at least 20k (we hope), so the next 5k added could align allocation, and by year 6 could add the smaller REIT type positions without incurring any fees.
T Rowe assesses these fees in August.
Vanguard and Fidelity will play by different rules. Inquire about account maitainance fees prior to investing.