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Author: Dylander One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: Re: Using the Foolish 4 Method with an IRA Date: 5/27/1999 3:39 PM
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Follow up:

Ok, so I can use the Foolish 4 in my Roth IRA. Great. Now the next question comes up. Since all the 'gains' earned in a Roth IRA are completely tax free, there are no short term or long term capital gains taxes to worry about. With this in mind, what is the 'optimum' duration to hold a particular 4 stocks. In other words, how often should a new 4 be chosen and the funds reallocated to maximize the rate of return? Has anyone ever done an exhaustive historical analysis using the Foolish 4 method of picking stocks using various holding lengths? Anyone have a computer program that might be able to automate this? With the use of the tax-breaks involved with a Roth IRA, reallocating your stocks in the Foolish 4 becomes a little more complicated I would suppose. Of course, the trade costs would have to be factored into the calculation.

Reason I ask this is I allocate $500/quarter into my Roth IRA. This is due to my rate of income and not due to wanting to spread the funding out over a year. If I'm putting $500 into my Roth IRA every quarter, would it be worth the effort to reallocate at that time, or should I simply put the new funds in my Vanguard S&P 500 Index fund temporarily and only adjust the stock allocations once a year (or longer?). I have several years worth of maximum IRA investments already, so it's not like the trading costs would be a significant percentage of my Roth IRA's value.

Thanks for the advice.

Dylander@aol.com
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