No. of Recommendations: 3
I didn't see this explicitly covered in the responses to your questions, but perhaps it was covered. I did not see anyone specifically address Roth IRAs.

You can set up a Roth IRA at most on-line brokers and do exactly what you want for little or no fees. I use Schwab, but there are others.

Since Roths that you build (not rollover) are severely limited on the amount you can contribute each year, the way this makes sense is to have automatic dividend re-investment in place -- so that is your first requirement of a broker. Trading fees, even at $10, will 'eat' you up even if you accumulate cash dividends and then buy something else from time to time (like I prefer). Once the portfolio builds in value, then you are much freer on how you handle dividend re-investment.

PS> It's semantics, but if you accumulate dividends and then buy either something that generated the dividends or something totally new, it is still dividend re-investment. You didn't take the cash and spend it. Like other posters have said, it is the rare case where I find that re-investing a dividend back into the company generating the dividend is the best use of the money. I use the income to diversify and even take 'flyers' on high growth prospects.
Print the post  


Motley Fool Income Investor
Are you a dividend-savvy investor? Check out our Income Investor newsletter.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.