Vanguard IRA

[kimiko]

I read that the IRA account has it's on annual fee as well as transaction fee. The mutual funds bought through that account each also has its own fees. Some of these fee are waived depending on the balance. I'm still a bit confuse about it. If you have a Vanguard IRA could you shed some light please?

[sweeps]

Re: Vanguard IRA

There is an annual $10 fee for each fund with a balance below $5,000, although that fee is waived if your total Vanguard balance is at least $50,000.

Unfortunately if you're first opening a Roth or traditional IRA which has a cap of $4,000, you can't really avoid the $10 fee. However, if you wait to make both your 2006 and 2007 IRA contributions between January 1, 2006 and April 15, 2007, you can contribute up to $8,000. That will allow you to avoid the fee.

There are expenses associated with every mutual fund, not just Vanguard's. But Vanguard's expense costs are among the lowest (if not THE lowest) of all funds out there.

[kimiko]

Re: Vanguard IRA

I was planning on putting about $3,000 (the most I can afford to put away for the long run) in the IRA, spreads among several funds, and slowly build on it with a monthly $100 deposit. I thought I read their policy on it wrong or something, but at this rate, I'll incure too many fees for the return to be worthwhile. Guess I should save a bit more and narrow my choices before I open the account. Thanks for the help.

[sweeps]

Re: Vanguard IRA

Why not put your $3,000 (+$100/month) in a lifecycle fund (for example, Vanguard Target Retirement 2045), so you incur only one $10 fee. As you build up your balance, you can spread out between multiple funds. A lifecycle fund gives you superb diversification -- if you're only going to have one fund, this is it.

[scfr]

Re: Vanguard IRA

Why not put your $3,000 (+$100/month) in a lifecycle fund (for example, Vanguard Target Retirement 2045), so you incur only one $10 fee. As you build up your balance, you can spread out between multiple funds. A lifecycle fund gives you superb diversification -- if you're only going to have one fund, this is it.

Excellent advice. And good job for thinking about the fees before you invest!

[kimiko]

Re: Vanguard IRA

I went to do some comparision shopping and it is indeed superb

Thanks for the advice.

[PRICEPLUS]

Re: Vanguard IRA

Sweepsplayer, you've done it again!

[disneysteve]

Re: Vanguard IRA

A point about target retirement funds: They aren't all the same. The ones offered by different fund companies with the same target year can have significantly different asset allocations, so look around.

Also, there is no rule saying you have to pick the fund close to your anticipated retirement age. If you want to be more aggressive, pick a later year. If you want to be more conservative, pick an earlier year.

[wyett3]

Re: Vanguard IRA

Throwing more stuff onto the table..., you may want to consider a self-directed IRA, traditional or Roth. Mine is with Sterling Trust (http://www.sterling-trust.com). Sterling Trust’s Basic IRA provides a flat annual custodial fee of $55 and permits you to hold any number or combination of publicly offered or publicly traded investments - even a brokerage (clearing firm) account for stocks & bonds. The Precious Metals IRA requires a storage fee. You can pay the fees out of pocket so they don't reduce your retirement earnings.

American Church Trust (http://www.churchtrust.com) is another; although they'll hit you with transaction fees.