Roth IRA question

[K-Dubb]

I am setting up a Roth IRA with Vangaurd. I noticed that there is not one fund that has less than a 3K minimum. I did not realise that there were minimums like this ( i was looking at the 500 Index). Are these minimums per year, or just the one time for starting?


Thanks!

[meaghanchan]

The minimums are just the one-time minimum for starting. The higher minimums help Vanguard keep their costs down (since they are actually losing money on accounts less than about $7000). There is one fund with a lower minimum- the Star fund, which is a balanced fund, has a $1000 minimum.

[K-Dubb]

Hmm, i must have missed that one. Thanks!

[usnavy_233]

If the minimum investment price is a big issue for you, you many want to look into some of T. Rowe Price's mutual funds. $1000 min for an IRA and some of their funds have done pretty well for themselves. BTW, I'm not affliated with them in any way. I'm doing some research at the moment on other ROTH choices for myself. I came across T. Rowe Price's funds and have found a couple that I like so I thought I'd share. Just food for thought. I'm not sure exactly what you're looking for, but here are a couple examples.

PRWCX (Capital Appreciation) 12.4% 10YR return
TRRDX (2040 Target Fund) 17% 4YR return
PREIX (Equity Index 500) 9.7% 10YR return

[Wealthizfreedom]

You may want to check if the fund waives the min investment if you sign up for automatic investing, some will allow you to invest as little as $25 per month per fund if it is set up systematically.

[Ima saver]

Vanguard's Star is a very good fund. I am in that myself. Yes, the minimum is only $1000 and that is a first time minimum.

[kv968]

Originally Posted by usnavy_233

PRWCX (Capital Appreciation) 12.4% 10YR return
TRRDX (2040 Target Fund) 17% 4YR return
PREIX (Equity Index 500) 9.7% 10YR return

I have my Roth with T Rowe Price and I'm very pleased with their funds and service. One thing I'd like to mention though usnavy since you're looking at these funds, which are all good IMO, keep in mind that there's substantial overlap in their holdings. It would be best to pick one as a core fund and build off of that. Of course if you're using the 2040 Target Fund as your core holding most, if not all, of that diversification is done already.

[sweeps]

T. Rowe Price has been getting good press recently because of their very good performance and relatively low fees. I'm a Vanguardian, but TRP would be a good 2nd choice.

[Coleroo]

I signed up for T Rowe Price back in late Aug. 2006. I have a Retirement 2045 fund in my ROTH IRA and I have been VERY please with how my first fund has done! (T Rowe also has a very easy to use interface). I didnt have the minimum investment amount either ($1000) so I signed up for their automatic investment program - for a minimum of $50 automatic investment each month on the 3rd. I just raised to $75 last month.

I think the automatic investment program is a great way to force yourself to save and get started in investing. Some people may not have the will power to save that first $1000 minimum in a (very) accessible savings account. First thing you start thinking is "gee, i could use this money to buy that new vacuum and stove i need" (uh oh) or "gee I could cash this out and get the cute little HD TV at best buy!" (big uh oh!). So for those who having a hard time saving up that first initial investment (no matter how small) the automatic investment program offers a terrific alternative - especially since its more thrilling to see the fund grow over time than it would be to cash it out!!!

[usnavy_233]

Originally Posted by kv968

I have my Roth with T Rowe Price and I'm very pleased with their funds and service. One thing I'd like to mention though usnavy since you're looking at these funds, which are all good IMO, keep in mind that there's substantial overlap in their holdings. It would be best to pick one as a core fund and build off of that. Of course if you're using the 2040 Target Fund as your core holding most, if not all, of that diversification is done already.

Yes, these do overlap a fair amount. But, I have other funds as well and I just mentioned these few to give examples of TRP's performance, costs, etc. I don't own all three of these and I have other companies as well. It's a good point to make though. DIVERSIFY DIVERSIFY DIVERSIFY!