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Author: dpoll21 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75772  
Subject: No fee IRAs Date: 12/27/2005 2:23 PM
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I am 24 and I need to start an IRA. I've already decided on a Roth because of the tax free distributions on retirement. Right now I am planning on putting dividend paying stocks in my IRA, so if I purchase these stocks through a discount broker, I am going to be paying commission fees for every transaction, from 10.99 at Ameritrade to 19.95 at Fidelity (for no annual fee IRAs). My plan was to put $300 into the account per month, and use my bonus to get the rest of the contribution limit.

I have the following questions I was hoping to get some advice on:

1) Is there a way to get around these commission fees?

2) Is there a way that I can start a DRIP account with the companies I want to invest in, and just hold the IRA account at a discount broker while paying the annual fee? (usually around $25)

3) Should I just save up my $4000 throughout the year and once I have it put it into the IRA as a one time trade? (Ideally I would like to dollar cost average and buy throughout the year though.)

4) If there is anything else I should consider, please let me know.

Thanks!
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Author: frogfarm Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 49112 of 75772
Subject: Re: No fee IRAs Date: 12/27/2005 2:56 PM
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Check with TD Waterhouse to set up your account. I have an IRA and a Roth IRA, and pay no annual fee on either of them.

My income comes in over just six weeks of the year, so I put my whole contribution in at once. TDW or other posters can better advise you re: options for using dollar cost averaging.

There are mutual funds that charge no fee for adding to them. (They probably require a minimum initial deposit greater than $300, but perhaps not; usually the minimums are lower in an IRA. Be mindful of the fund's expense ratio, as well as no/low fees to buy or sell the fund. AND of course the fund's history, management, sector, and strategy!)


Best Wishes, and congrats on getting an early start on retirement.
Alice of the frogfarm



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Author: foolazis Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 49113 of 75772
Subject: Re: No fee IRAs Date: 12/27/2005 3:04 PM
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1) Is there a way to get around these commission fees?

No. What you can do is accumulate you monthly contributions in your sweep account until you have enough money that the commission will not kill you. I try to keep my commission costs to around 1%, so (for an Ameritrade account) I would accumulate until I had about $1200 before making a purchase. Remeber, the commissions come from within your IRA, so you do need to keep some free cash in there. If you make a purchase with every contribution, the commissions will eat your shorts.

foolazis


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Author: TMFJester Big red star, 1000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 49116 of 75772
Subject: Re: No fee IRAs Date: 12/27/2005 7:09 PM
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1) Is there a way to get around these commission fees?

Check out the discount broker board. Scottrade is $7, Firstrade has commissions at 6.95, and TradeKing (brand new) is 4.95. Otherwise, no, you can't get around the broker's commissions.

2) Is there a way that I can start a DRIP account with the companies I want to invest in, and just hold the IRA account at a discount broker while paying the annual fee? (usually around $25)

I think you can find a broker with no annual fee. I think a lot of them have no annual fee for IRA. Ameritrade, Firstrade, Scottrade - I think they all have no annual fee for IRA.

3) Should I just save up my $4000 throughout the year and once I have it put it into the IRA as a one time trade? (Ideally I would like to dollar cost average and buy throughout the year though.)

Do what you prefer. It's your money.

Ryan

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 49119 of 75772
Subject: Re: No fee IRAs Date: 12/27/2005 10:10 PM
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TD Waterhouse has become less friendly to small investors. The commissions on low balances are the same or higher than Fidelity.

There commercial is sneaky: The alternative to higher priced brokers. Any broker except the highest priced can make that statement.

Debra

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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 49120 of 75772
Subject: Re: No fee IRAs Date: 12/27/2005 10:32 PM
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There commercial is sneaky: The alternative to higher priced brokers. Any broker except the highest priced can make that statement.

To be fair, I think they mean full service brokers that charge 1 to 2% commmission on every trade. They don't claim to be the cheapest of the discount brokers. They do, however, claim to offer better service for the same general range of commission.

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