Investing in Roth IRA

[indycobra]

Im new to this forum and this is my first post. Im really new to all of this investing stuff so bare with me. Recent life changes (baby on the way) and discovering Dave Ramsey has made me re-evaluate my financial position/goals.

I have been contributing to my 401k since I was 22 (im now 36) but I would like to do more. I started a Roth IRA with Scottrade and have been thinking about investing money there as well. Im a little confused about the transaction fees for investing in mutual funds. I called a local Scottrade broker and they told me every time I want to contribute money into a mutual fund there is a $17 fee. So if im wanting to invest weekly into my roth do I just let the money sit in my scottrade account untill I get a sizeable amount before I acually buy in on a mutual fund? I cant see investing $50-$100 a week and paying a $17 fee each time, that would add up fast.

Another question is will it cost me more to go though Scottrade than it would to buy directly from say Vanguard?

Thanks for any help.

[sweeps]

It's better to invest in funds directly through the company, if possible. For example if you want Vanguard funds, open a Roth IRA with Vanguard. If you sign up for e-statements, you will pay no fees, transaction or otherwise.

[disneysteve]

Welcome to you. I second what sweeps said. Don't invest in mutual funds through a broker. Go straight to the source. To buy shares in a Vanguard fund, for example, through Scottrade will cost you $17. To do it directly through Vanguard will cost you nothing.

Scottrade account is fine if you want to purchase individual stocks, but for mutual fund shares, stick with dealing direct.

[sweeps]

Yup. Another option if you're really stock on using a broker, is to invest in ETFs. Vanguard offers several ETFs, some of which mirror their funds. That would only cost you a $7 commission through Scottrade.

[Broken Arrow]

Welcome indycobra.

I like Scottrade, but only for trading individual stocks in a Roth IRA. If it was taxable account and/or investing in mutual funds, I might have made a different choice.

If you are interested in Vanguard index funds, I say just go straight to Vanguard and buy it from there.

Oh, and congrats on the baby!

[indycobra]

WOW! thanks for all the quick responses. Im glad to hear that there is a way around all of those fees by going directly to the source.

Since I have already opened up a Roth with Scottrade can I still open up another at Vanguard? I seem to remember reading that I can have as many roths that I want as long as I stay under the limit. Vanguard seems to be pretty popular on this site and thats enough to convince me to try them out.

Thanks again and I love the site.

[Broken Arrow]

Originally Posted by indycobra

I seem to remember reading that I can have as many roths that I want as long as I stay under the limit. Vanguard seems to be pretty popular on this site and thats enough to convince me to try them out.

Yeah, I have a slightly amusing anecdote about that too. When I started up with Scottrade, I accidentally created 3 different Roth IRA accounts! Why? Part of it was because I mis-spelled my own last name, and the other part is I accidentally double-clicked on account creation or something like that.

I felt like such an idiot. It only took a quick phone call for the customer service rep to delete my other two erroneous accounts. On the bright side, they mailed me extra booklets in case I lose the first two....

Oh, but the point is that you are correct: You can have as many accounts as you want, but Uncle Sam will only shelter 5k total each year.

Now Vanguard... that's a whole 'nother topic right there. Yes, I will say that it's popular, but you have to want to invest in index funds to begin with. For actively managed funds, you'll want to look elsewhere.

[disneysteve]

Originally Posted by Broken Arrow

Now Vanguard... that's a whole 'nother topic right there. Yes, I will say that it's popular, but you have to want to invest in index funds to begin with. For actively managed funds, you'll want to look elsewhere.

That isn't entirely true. Vanguard has some good actively managed funds also. I've posted before about their Health Care fund. It has a great track record for the past couple of decades.

[indycobra]

Let me see if I have this right.

When you say "managed funds" are you referring to a mutual fund in which someone is actually picking the stocks based on research? And an index fund is where the stocks within the fund remain the same only a computer decides where and when to invest in the included stocks.

Does this sound right?

[disneysteve]

Yep. That's pretty much it.

[jIM_Ohio]

invest directly. I like T Rowe Price- lower minimums than Vanguard and excellent fund selection.

[Broken Arrow]

Originally Posted by disneysteve

That isn't entirely true. Vanguard has some good actively managed funds also. I've posted before about their Health Care fund. It has a great track record for the past couple of decades.

Thanks for the correction.