Looking for Company to Open Roth IRA with (Not Vanguard)

[Relmiw]

Like2Plan, no specific dollar threshold, it just seems dangerous to me. Vanguard does give some perks for accounts over 10k. If there's a threshold beyond that then I'm unaware of it.

Thanks for staying focused Monkeymama.

I think Fidelity is the way to go here. I'm scared off by Etrade's fees whereas Fidelity seems to have the least fees combined with "no transaction fee" funds which I'd like to supplement my Vanguard investments with.

Thanks for your help everybody

[willuc8]

I prefer simplicity, thats just me

[MatthewC]

I recommend Scottrade.

Hi Relmiw,

Firstly, on where to put your account - I have always had a good experiences when dealing with Scottrade. And it isn't just me, but many others have as well. They have won quite a few "customer satisfaction" awards.

Next, I know what a lot of people will recommend to you is diversifying your money for retirement across various asset classes (example : stocks AND bonds AND cash/cash equivalents). I don't. Stocks are the best way to go. Those other two are great as a cushion for when you need time for the market to recover and are spending the money (ie *when you are retired*), but should not be considered until that time approaches.

Now, I would like to show my line of thought here, simply because following it is highly likely to lead you to the same or similar conclusions that I have drawn. Firstly, I started my thought process by reading "What Works on Wall Street" (Fourth Edition) by James P. O'Shaughnessy. You can pick this up over at Amazon.

At less than $30, this is the best education I have found (by far) on how to create good portfolios. If I were to compare most other books on stocks to this book, it would be like comparing a 1st to 3rd grade level to a college level in school. Here's the difference : The book backs up what it says with more than four decades worth of data. This book is primarily fact-based, in comparison to many other books on stocks which are opinion-based.

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The first 60 pages of the book makes the case for taking your emotions out of investing as well as laying some ground rules to follow. The next 240 pages show that value investing works and even that accounting ratios can be used (though with results that are not quite as good as using value investing methods).

Pages 301-340 show that multi-factor models offer superior results. These multiple factor models take multiple factors that are each successful in themselves and combine them together. To use an analogy, this is like an athlete becoming better by combining speed, power, technique, and endurance. Now, you might get superior results compared to the average person if they excelled in just one of those areas (depending on the activity), but we all know the superstars are those that have more than just one of those traits.

The next 18 pages shows various things about the notable strategies previously covered, including comparing how risk, the compound rate of return, the standard deviation (how strongly the swings are with the strategies)of these strategies. But this book doesn't stop there. Both here and before, it shows what would happen if you had gone in the totally opposite direction (for instance, buying stocks that are considered expensive when looked at through the value investing perspective).

Continuing on, the book takes a look at a few growth investing factors, finding only one type among them that seems to add real value for investing purposes.

Chapters 22 and 23 I find to be mere distractions. You can read them if you want. They cover how various strategies performed in certain stock groups when ranked by market capitalization. Personally, I find this section more of a distraction than something that was really needed in the book.

Chapter 24, Sector Analysis, is the most important part of the book. It breaks stocks down into sectors and shows what works in each sector (as well as showing what happens when you go against the strategies). I favor this section because I favor a customized stock strategy that takes into account how the different sectors perform (and thus I prefer custom stock formulas for each sector rather than the single catch-all formulas that the author favors and applies across all sectors outside of this chapter).

Pages 547-592 continue on the author's path to combining value and growth strategies to create a superior portfolio strategy. This results of this strategy shows up on page 584, while the strategy itself is shown on pages 582-583. On page 584 it shows that the worst 10-year result (presumably not calculating in the costs associated with trading) was a 10.16% compound rate of return. -- Wait a minute! A 10.16% compound rate of return? Can you say "wow"? This is the worst result of 433 results, all of which beat the cumulative result of the group of stocks that these portfolios pulled stocks from to create. This strategy, from January 1964 to December 2009 had a 21.19% compounding rate of return!

Pages 593 to 646 cover ranking the strategies (which ranks hundreds of strategies) and this is followed by Chapter 29, which really isn't worth reading (or mentioning).

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Looking at the above, the strategy favored by the author has a much stronger return than you would expect from bonds or cash.

Now, I have my own strategy that has the foundation starting from the statistics in that book. It isn't the same as that strategy (Because, frankly, I have found some things that I could improve upon while data crunching. Also, I don't have access to the same amazing database the author had, which means that some things I wish I could have used, I couldn't.