Roth IRA vs a Taxable brokerage acount

[MKKShah]

Yup.

Just to try and change your mind against trading stocks one more time: Unless you want to do day trading, which is a job in itself and doesn't work out 99% of the time, even your stocks are going to "buy and hold" for a while and go up and down. Chasing the market is a dangerous thing because you're always behind it -- unless you're psychic.

Your comment about being a "good time to invest in stocks" still makes me thing that you might not really know what you're going to be getting yourself into. But I'll stop commenting on this point and keep my own investing predilections to myself. Good luck!

Bucky,
Just to clarify. I did not say that now is a good time to invest. or otherwise. I was just saying:

Whether or not right now is a good time to invest in stocks remains to be seen.

I am not proposing day trading either. I do not have time for that. I also think it's not for me. However, buying and holding stocks for a reasonable period of time is not the same as day trading.

Mutual Fund managers have a lot of constraints within which they invest. Sometimes it may be beneficial to invest in stocks on your own, as long as you have done your homework. Yes the risk is there, but there is also the reward.

And I also think, there are good times to get into the market, and bad times to get in. We may or may not be able to figure out, but one needs to at least consider this before investing.

Since I don't know much about investing, or evaluating stocks at the moment, I will be sticking to MFs like you suggested. But once I can figure out how to value a stock, I will be getting into them as when I find worthwhile companies to invest in.

[MKKShah]

It seems to me that the average person has a similar mindset. Stocks look appealing when they have had a great run and are at record high prices. That's when people buy in. When the market is depressed and prices are off 30 or 40 or 60% from their highs, people look and say, "I'm not going anywhere near that until things turn around." The problem, of course, is that by the time things turn around, you've missed the recovery. You end up buying high and selling low, just the opposite of what you are supposed to do.

Disneysteve, once again to clarify, I am not saying that now is a good time to invest in stocks. I was just wondering if it was or not. I agree with your above comments about the behavior of the average investor. I think it is human psychology. And that is what fuels the booms and bubbles. But someone's left holding the bag in the end. Mostly the very same people who then exit at the bottom like you said.

[kv968]

I think Vanguard is an excellent choice for MFs. If you decide later that you want to buy individual stocks, open an account with a discount online broker. Don't trade through Vanguard's brokerage service.

Have you used their brokerage Steve? Why would you suggest not using them?

I was thinking about opening a separate Roth with them so I could use their no-commission ETF's and maybe trade a stock or two here and there. Their rates for accounts under $50k are $7/trade for the first 25 trades/yr. Granted if I was going to do some serious trading I'd use a different broker but that would be good enough for what I plan on doing. Is there something else I should look out for?

[disneysteve]

Have you used their brokerage Steve? Why would you suggest not using them?

Their rates for accounts under $50k are $7/trade for the first 25 trades/yr.

My apologies. I didn't realize their rate was that low. I think it used to be higher. I retract my earlier comment.

[humandraydel]

Is it right to conclude that a Roth IRA will be generally disadvantageous for my purposes?

No offense, but your simplified example is not sufficiently detailed (or realistic) to glean the advantage or disadvantage of a Roth. I will agree that if all you are going to do is leave money in for 3 years, then it is not beneficial but I don't think that is realistic.

[kv968]

My apologies. I didn't realize their rate was that low. I think it used to be higher. I retract my earlier comment.

No problem, I think their rate was substantially higher not that long ago. I was just wondering if you had used them and found them to be lacking with maybe their execution or something like that instead.

[disneysteve]

No problem, I think their rate was substantially higher not that long ago. I was just wondering if you had used them and found them to be lacking with maybe their execution or something like that instead.

Nope. I have plenty invested with them in funds but have never used their brokerage service. My comment was based strictly on my incorrect perception of their transaction costs. I'm very glad to hear I'm wrong about that. In fact, I'm going to have to look into that. A few years ago, I opened a SEP-IRA and did it with Scottrade because I wanted a low cost place to dabble with some stocks. Now that I know that Vanguard charges the same $7/trade that Scottrade does, I may consider moving that account to Vanguard. It would be easier to have everything in one place assuming their interface is good.

[kv968]

Nope. I have plenty invested with them in funds but have never used their brokerage service. My comment was based strictly on my incorrect perception of their transaction costs. I'm very glad to hear I'm wrong about that. In fact, I'm going to have to look into that. A few years ago, I opened a SEP-IRA and did it with Scottrade because I wanted a low cost place to dabble with some stocks. Now that I know that Vanguard charges the same $7/trade that Scottrade does, I may consider moving that account to Vanguard. It would be easier to have everything in one place assuming their interface is good.

I was thinking about opening a Roth with Scottrade too but I like the ability to pay the same with Vanguard (at least up to 25 trades/yr) AND have access to their commission-free ETF's which are WAY better than Scottrade's. I'll keep an eye on the other post you started about their brokerage to see what others think.

[disneysteve]

I was thinking about opening a Roth with Scottrade too but I like the ability to pay the same with Vanguard (at least up to 25 trades/yr) AND have access to their commission-free ETF's which are WAY better than Scottrade's. I'll keep an eye on the other post you started about their brokerage to see what others think.

I don't make 25 trades/year, but even if I did, I have enough enough invested with Vanguard (over 50K) that it wouldn't matter because that $7/trade fee isn't limited for Voyager accounts. I'm nowhere near the 500K threshold for the $2/trade fee though.

[kv968]

I don't make 25 trades/year, but even if I did, I have enough enough invested with Vanguard (over 50K) that it wouldn't matter because that $7/trade fee isn't limited for Voyager accounts. I'm nowhere near the 500K threshold for the $2/trade fee though.

I won't have 50k for the unlimited $7 trades, but 25 trades/yr would be enough to cover what I'd plan on doing. Keep plugging away and you'll be at that $500k threshold.

[jpg7n16]

I won't have 50k for the unlimited $7 trades, but 25 trades/yr would be enough to cover what I'd plan on doing. Keep plugging away and you'll be at that $500k threshold.

Just FYI if you're under the $50k:

From: https://personal.vanguard.com/us/wha...eescommissions

2) A $20 account service fee is charged annually. The fee is waived for Voyager, Voyager Select, and Flagship clients.

[kv968]

Thanks JPG. I wonder if they'd wave like that like they do on their accounts if you signed up for the paperless route? If not, I guess I'll have to find $50k somewhere

Although it still might be worth it in order to be able to trade their ETF's for free.