Roth

[wikiwiki]

I have $200 started in an Etrade account - how does that work, do you generally build that up as cash until it's $1000 (if that's the min IRA investment) and then buy into a fund? I am new to this...

(I also have retirement $ saved in Australia from when I worked there - but it is under a fund there and untouchable until retirement.)

[kv968]

It depends on what you want to invest in. If you want mutual funds, I'd strongly suggest using only "no load, no transaction fee" (NTF) funds. The problem with that is most of those funds are somewhat high on the expense ratio side and most have a $2500 minimum. Etrade does offer a wide variety of T. Rowe Price funds that are NTF and have a minimum of $1000 if it's in an IRA account so you might want to look into them.

If you want to trade stocks in the account then it's up to you. You could start trading right now with the $200, but the commissions alone would eat up about 10% of your investment at $9.99/trade ($9.99*2 (in and out)/$200 = 9.99%).

[wikiwiki]

I prefer the mutual funds at the moment - easier to manage for me. So would I just keep depositing $ into it Etrade until I reach the $1000 or $2500 minimum? Or is there a money market account I can put it into so I can earn a little interest while I'm building up to the min?
Or is it better to put it in my ING account until it's reached the min amount and then move it into the mutual fund?

[dczech09]

I would avoid stocks and stick with mutual funds. The reason why is because the commissions you have to pay on stocks are typically regressive costs.

Regardless if you make a $100 trade or a $1,000 trade, the commission will likely be the same. If the commission is $7 per trade, then that is 7% of $100 trade and 0.7% of $1,000 trade.

[kv968]

I prefer the mutual funds at the moment - easier to manage for me. So would I just keep depositing $ into it Etrade until I reach the $1000 or $2500 minimum? Or is there a money market account I can put it into so I can earn a little interest while I'm building up to the min?
Or is it better to put it in my ING account until it's reached the min amount and then move it into the mutual fund?

You'd be better off keeping your money in an ING account until you have enough for the minimum since the rate you'll get at Etrade or a MM fund will most likely be below what you can get at ING.

If you're only interested in mutual funds, you might just want to invest the money directly with the mutual fund family itself. So instead of having an account at Etrade, you could open an accout directly with T. Rowe Price, Vanguard, Fidelity, etc... Although Vanguard and Fidelity generally have higher minimums than T. Rowe except for their target date funds where the minimums are $1000. However a target date fund wouldn't be a bad fund to put your money in since you'll be instantly diversified with a small amount.

[kv968]

I would avoid stocks and stick with mutual funds. The reason why is because the commissions you have to pay on stocks are typically regressive costs.

Regardless if you make a $100 trade or a $1,000 trade, the commission will likely be the same. If the commission is $7 per trade, then that is 7% of $100 trade and 0.7% of $1,000 trade.

The more you have to invest, the more sense it makes if you want to go the stock route. The only thing you have to remember too is it may be $7/trade but it's not just a one-way trade since you have to get out at some point. So that 7% of $100 or 0.7% of $1000 is actually 14% and 1.4% respectively.

[sandrark]

Most brokerages waive the minimum entry amount IF you set it up for auto-deposit. I know this to be true for both Fidelity and Schwab.

As a result, we have accounts at...Fidelity and Schwab.

Sandi

[wikiwiki]

So I have set up an Etrade account years ago - is it better to have the 401k with an actual brokerage (ie Vanguard? DH is with them for work) Does that make it cheaper/easier to invest in their funds? Can you invest in another brokerage's funds if you're with Vanguard? (Sorry...very new to this!)