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Subject:  Re: On the road to retirement riches :-) Date:  3/6/2004  11:12 AM
Author:  SuaSponteMark Number:  39718 of 87983

I'm starting out with 1k and hopefully putting $500/transaction up to the 3k max for the year.

Well done buddy.

I personally like to keep my "management fees" which I define as trading transaction fees I incur to 1% or less, so on a $10 Scottrade transaction fee to buy (I think they're $10 or so...?) you're at 1% with your initial contribution. I would consider saving another 1k before you buy again.

I'm fortunate that I'm in a position where I can contribute to my IRA in one chunk and do so in the beginning of the year, and thus pay about 0.33% in "management fees." Over time this even attrits, as will your costs, if you don't make a lot of moves in your account. If you disregard the fees required to run the fund, which as we known are fractions of a percent of around 0.2% or so (we can't NOT pay these so I don't worry about them for index funds too much), we end up halving our "management fees" in the second year. You paid $10 for the trade in Year 1 and in Year 2 if you don't touch your VTSMX you incur no additional fees, so your $10 on 1k goes to $5/year, essentially, and the cost to you goes from 1% to 0.5%.

Just another viewpoint on why my accounts don't see much activity other than a once a year or so buy, and maybe getting rid of a position that I feel is not working for me as well as it might any more.


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