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I also use ETSPX in my E*Trade IRA account. However, be aware that in the long run the Vanguard fund (VFINX) will be cheaper because the expense ratio is about 0.18% while ETSPX is about 0.32% and they have a 1.0% early redemption fee if you sell your shares before holding them four months.

You also should realize that you can have more than one IRA. I would recommend starting your first IRA at Vanguard and build a base for your requirement savings with VFINX. Later, when you have that base established, buy a few stocks through the Vanguard Brokerage. They will cost a little more than other discount brokers, but you probably won't want to be doing a lot of trading at first, so the costs shouldn't be a problem.

Finally, if you like trading stocks, open a second IRA at a really low cost discount broker and do your trading there. But always keep adding to your VFINX base.


Let me ask you something, Russ. If you have multiple IRAs and you want to keep adding to your Vanguard IRA as well as start trading elsewhere, do you just contribute $1K to Vanguard and $1K to the other at the discount brokerage? I just want to make sure I'm understanding you correctly.

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