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Author: BookmFool Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76078  
Subject: Re: Why buy and Index Funds for IRA through a di Date: 3/15/2002 7:57 AM
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Hello slherzberg:
In the Fool's advice for setting up an IRA, it is stated that one of the 1st things to be done is to set up an account with a discount broker. Then, it is recommended that a significant portion of the investment be with the Vanguard 500 Index Fund. Why isn't it more practical to buy into the Fund directly from Vanguard? This way, the transaction fee charged by the broker can be avoided.

Very astute observation. I assume you're referring to this:
http://www.fool.com/60second/ira.htm?ref=prmpgid
On several of the message boards I've frequented, we've always thought it best to avoid a middle-man (a broker), when you can buy wholesale (from the fund company). This was done because most brokers would charge a fee per transaction to invest in funds from Vanguard and some other no-load mutual funds. Oh, most brokers have a list of NTF (No transaction fee) funds, where there is no fee to pay per purchase, but it was rare to see a Vanguard fund on one of those lists. But there is at least one discount broker I know of that now has Vanguard on their NTF list; Scottrade. But IIRC, you still have the Vanguard custodial fee to worry about too.

Anyway, you can be fee conscious, and have more than one alternative for now.

HTH

Bookm

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