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Subject:  Re: Roth IRA acct and safekeeping fees Date:  10/1/2013  6:10 PM
Author:  joelcorley Number:  73381 of 88775


You wrote, Scottrade seems to be a good choice. It would allow me to get my feet wet with a minimum initial investment, with low to no fees involved (correct me if I'm wrong there, please).

Hold on there! I used to have a Scottrade account. I no longer recommend them. Other brokers offer similar pricing with a better mix. Also Scottrade is one of the few brokers that lacks a no-transaction fee ETF offering. Transaction fees are very important when you're making small purchases and all major brokers now offer a line of no transaction fee ETFs.

Also, So. I open a Roth IRA account with Scottrade, investing $500. Looking around I think the Schwab SCHX ETF might just be a decent choice for a long term investment. SCHX tracks the Dow large cap total stock market index, appears to have a low expense ratio, and I'm comfortable with their current major holding....granted, with my limited knowledge that doesn't say much. Some of you may ask why I wouldn't just buy direct from Schwab save the $7 cost of buying the ETF, it's a good question and the only answer I can give is: it allows me to get in at only $500 and over the long run that $7 wouldn't really kill me.

Schwab may not let you open an IRA with only $500; but other brokers will. Try TD Ameritrade. They have no account minimum for an IRA. They also offer 101 no transaction fee ETFs. All of these ETFs have reasonable to ultra low expense ratios and are issued by well-known companies like Vanguard and iShares.

SCHX is very like a basic S&P 500 index fund. If that's your objective, you can open an account with TD Ameritrade and buy IVV with no fees and just your $500. The expense ratio is slightly higher - 0.07% instead of 0.05%. That will cost you 10 cents in performance in the first year and will likely take you 30-40 years before the expense ratio reaches the $7 commission you'll pay at Scottrade.

Finally, Is something like SCHX a decent beginning investment? Am I an idiot to consider getting that through Scottrade instead of just going to Schwab directly?

Yes, SCHX is a decent beginning investment. No, you're not an idiot for considering it. But you haven't considered the cheapest combinations yet...

- Joel
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