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Author: bluff Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76080  
Subject: Index fund v Index shares for IRA Date: 2/2/2000 8:52 AM
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I'd like to rephrase a question I posted before. Since only $2,000 per year can be contributed to an IRA, doesn't it make more sense to invest directly in an index fund IRA (e.g. VFINX or SINEX) than index shares (e.g. SPYs or QQQs). My reasoning is that the funds do not charge commissions so that the entire contribution is invested, although there may be account maintainance fees. In contrast, purchasing index shares have a commission and (since we can't purchase fractional shares) result in some funds being uninvested.

For example, with QQQs selling for 184 3/16 only 10 wholes shares can be purchased at $1,844.80 plus average OLB commission of $15 = $1,859.80. That leaves $140.20 uninvested.

Does this make sense or am I missing something?

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