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Author: jgenduso1 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76111  
Subject: Newbie VFINX question Date: 1/24/2002 5:11 PM
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Hi,

I've been doing a lot of research and have decided to go with VFINX for my retirement contributions this year.

My question is if I have a Roth IRA setup at Datek, can I buy it from that brokerage house? Do I have to go directly to VanGuard?

Thanks for any help,

Joseph
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Author: sellers Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33486 of 76111
Subject: Re: Newbie VFINX question Date: 1/24/2002 5:31 PM
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Joseph - I have my Roth at Scottrade and purchased VFINX through them so I'm sure you can do the same at Datek if the fund is one they have. Sellers

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33487 of 76111
Subject: Re: Newbie VFINX question Date: 1/24/2002 6:39 PM
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All brokers*, including Datek, will charge you a commission on every purchase of a Vanguard fund. Some may offer discounts on commission if you purchase regularly (say, each month).

You'll have to decide if the cost of transfering the money from Datek to Vanguard is worth the money you'd save.

*Scottrade is the only broker I know of that lets you purchase Vanguard funds without a commission.

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Author: BookmFool Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33488 of 76111
Subject: Re: Newbie VFINX question Date: 1/24/2002 6:42 PM
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Hello Joseph:
I've been doing a lot of research and have decided to go with VFINX for my retirement contributions this year.

My question is if I have a Roth IRA setup at Datek, can I buy it from that brokerage house? Do I have to go directly to VanGuard?


Yes, you can buy Vanguard mutual funds through Datek. However, each purchase or sale will cost $9.99, with VFINX being in Datek's No-load category. It's one point to consider, if you're going to be investing mainly in mutual funds, or Vanguard funds, for that matter.

One alternative would be to have 2 Roths; one at Datek-for investing in stocks, and one at Vanguard- for MF investing. You have to compare the options and see if saving the commissions with MF transactions is worth the "bother" of having to deal with more paperwork from two IRA's vs one.

HTH

Bookm


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Author: jgenduso1 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33489 of 76111
Subject: Re: Newbie VFINX question Date: 1/25/2002 12:15 PM
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Thanks for the help!!

My situation is that I am getting a large tax refund this year. If I file early I should get it back by 3/1. So I was going to fund an IRA not sure (Trad or Roth) with $2K for 2001 and 3K for 2002. I wasn't sure about the vanguard $10 "annoyance fee" vs. a Datek $9.99 trade. But If I'm going to fund it in 2003, monthly, then I should consider which one.

Any further direction would be great :)

Joseph

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Author: fugraw Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33490 of 76111
Subject: Re: Newbie VFINX question Date: 1/25/2002 12:36 PM
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Joseph,
I believe even if you go through Datek, and pay the $9.99 trade, you will still have to pay the $10 annually for being under $10,000. I believe they also charge you another $10 annually if you are under $5,000. But you will have this covered.






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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33492 of 76111
Subject: Re: Newbie VFINX question Date: 1/25/2002 12:52 PM
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Careful. If you're invested solely in an index fund, and the market drops, Vanguard will hit you with a two separate fees: $10 IRA custodial fee for having an IRA balance below $5000, and $10 index fund fee (billed $2.50 a quarter) for having an index fund balance below $10,000.

If you invest in a non-index fund (including the LifeStrategy or STAR fund which are mixes of index fund) there is only the "under $5000" fee to worry about.

If you're going to invest monthly, that would tend to push the stakes toward Vanguard, as your fee would only be $20 instead of $120. (plus the expense ratio of whatever you buy)

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33493 of 76111
Subject: Re: Newbie VFINX question Date: 1/25/2002 12:58 PM
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I believe even if you go through Datek, and pay the $9.99 trade, you will still have to pay the $10 annually for being under $10,000.

I don't think so...the index fund fee is charged quarterly and is deducted from the dividends. If somebody only owns eight or less shares of VFINX, and the resulting quarterly dividends are less than $2.50, Vanguard can't suck money out of your account, nor force your redemption (as they can if you hold the shares at Vanguard). I think that for each brokerage, Vanguard aggregates all the accounts held there. Thus if there is a $2.50/quarter fee, it is spread among all the brokerage's clients who own VFINX.

I believe they also charge you another $10 annually if you are under $5,000.

Incorrect. The $10 for being under $5000 is an IRA Custodial Fee, only applicable if Vanguard is the custodian.


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Author: jgenduso1 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33495 of 76111
Subject: Re: Newbie VFINX question Date: 1/25/2002 2:57 PM
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Thanks for the help everyone. But now I am more confused.

My thoughts from what I gathered...

I invest $5K in a Datek IRA (T or R). Datek will charge me $9.99 for the trade to buy X shares of VFINX at $Y.
Datek does not change a custodial, maint. or inactivity fee.
$500 cash minimum to open an IRA.

At Vanguard...
$10 - Custodial fee once a year for Accounts with < $5K
$3K minimum to open an account

From the Vanguard FAQ...
"What is the administrative fee for IRA accounts?

Vanguard charges a $10 annual custodial fee, in addition to fund-specific fees, for each Vanguard fund in your IRA with a balance of less than $5,000.

Custodial fees are waived if your total Vanguard fund balance–including Vanguard Variable Annuity Plan assets, Vanguard Brokerage Services® account, and employer-sponsored retirement plan–is $50,000 or more.

If you expect to owe a fee, you can pay it now, send it after your IRA has been established, or wait to have it deducted automatically from your IRA."

What does that mean?

Help :)

Joseph




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Author: jwn1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33496 of 76111
Subject: Re: Newbie VFINX question Date: 1/25/2002 7:31 PM
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Vanguard charges two types of fees.

1. A yearly custodial fee of $10.00 to manage your IRA account. This is for IRA's only. It is waived for account balances over $5000.00

2. A low balance fee. For most of the index funds it's also $10.00 per year. On taxable accounts it is waived for balances over $10,000.00 I'm not sure whether the limit is lower for IRA's.

I believe this is correct but be sure to check it out yourself and correct me if I'm wrong.

JWN1

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Author: SkyIsLimit Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33616 of 76111
Subject: Re: Newbie VFINX question Date: 2/1/2002 4:59 PM
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Why aren't you investing in SPDR Trust (SPY) as stock rather than VFINX, a Mutual Fund? I suppose the returns from both are indexed to S&P500 and comparable. You can buy SPY directly from Datec and need not pay any Vanguard fees.

Actually I am in the process of doing the same, so I am curious to know your reasoning.


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