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Author: Acroreef Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25214  
Subject: Need suggestions re pretax investments Date: 12/23/2004 8:00 PM
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Dear Folks:

I am a relatively new investor and have just discovered the great folks at Motley Fool. I have a conundrum. I work for a public entity in Michigan and have $600 automatically withdrawn from my check each month (pretax), and placed into a select-few mutual funds, as required by the plan, (Nationwide). I am allowed to invest money over the 10,000 through Harris Direct, into stocks. One of the problems is that each investment transaction costs $20. Is the following strategy sound?: I will keep $10,000 minuimum required in the Nationwide (mutual funds) and invest any accumulating balance in various stocks. I will invest at least $600 at at time, since the fee for this transaction is approx. 3%, ($20 fixed rate). I will keep the $10,000 in the safest funds possible, because if it drops below 10,000, I cannot invest in stocks again until it gets back to the minimum. Finally, I have no choice but to invest in stocks through Harris.

Thank you kind folks in advance for your time and assistance.
Acroreef
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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18271 of 25214
Subject: Re: Need suggestions re pretax investments Date: 12/23/2004 8:49 PM
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Many others will probably disagree but personally I've never been a fan of individual stock purchases in a retirement plan in most cases. If it were me, I would invest all of the retirement plan money into appropriate mutual funds and then if money is available, invest in stocks in a taxable account with a broker of your choosing.

Bob

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Author: MikePSD Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18274 of 25214
Subject: Re: Need suggestions re pretax investments Date: 12/23/2004 11:06 PM
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I agree wit CABob that you should probably keep all the moneies in funds and invest in stocks outside of the 401K. But that said if you feel you really want to invest in the stocks, then it is up to you but those trasaction fees are too high. Instead of investing every pay cycle or month into the stocks wait and do it only 2 or 4 times a year for larger amounts and only pay the fee a few times instead of every pay cycle.


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Author: 3muttsmom Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18286 of 25214
Subject: Re: Need suggestions re pretax investments Date: 12/24/2004 5:51 PM
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I have a question.

Can the OP designate a certain dollar amount, here $600, regardless of the price per share? I thought brokers would only sell you whole shares of stock.

thanks
3MM

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Author: MEG Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18303 of 25214
Subject: Re: Need suggestions re pretax investments Date: 12/28/2004 9:37 AM
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Don't pay such fees in a retirement account.
Stay only with the funds and be sure you are diversified enough to meet your goals.
Usually a company can supply an advisor at no cost to you, to help you
with your plan and investments.
Contact your Human Resource Dept. They'll point you in the right direction.


MEG

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