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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75637  
Subject: Re: Best way to allocate $500/month? Date: 1/10/2001 3:20 PM
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)" I'm wondering about how to invest my Roth IRA contributions. Right now I have an underperforming mutual fund in a Roth IRA at a brokerage house,"

Hey! Nothing the matter with mutual funds. When you have just a few thousand dollars, and while you are getting up to speed on interpreting financial reports so you can pick your own stocks better than the pros, that is the way to start.
Now there are a couple of things. Your mutual funds are underperforming WHAT? Last year was a really bad one for mutual funds, as well as the individual stocks they owned. Give 'em a break!
A brokerage house is NOT where to buy mutual funds. Particularly not proprietary mutual funds. At a brokerage house, particularly a large, full-service brokerage house, they will sell load funds, and may have their own family. These are notoriously poor performers. With that size account, you want to go with Vanguard, possibly T Rowe Price, something of that sort. Fidelity isn't that bad. You want to transfer your Roth to a different custodian, preferably one that won't charge an annual fee, at all.
First Trust is a bank. The fees you quote are way too high. They may let you buy individual stocks, but you are paying two layers of fees--to the custodian and to the broker they select.

)" I'll be getting a raise soon, and would like to invest more than $2000 per year. So assuming that #1 works out, is there any effective way to purchase smaller stocks on a monthly basis? In other words, if I have $340 extra to invest after my Roth IRA contributions, what do you all recommend I do with it?"

Er....mutual funds. Again, NOT load funds and NOT from a wirehouse brokerage. Go look at www.vanguard.com and look around.

"The other option would be to transfer the $340 per month to a money market account and then when I've got some predetermined amount of money, add it to my portfolio, either to the currently held stocks or by purchasing additional stocks."

Right. When you have $10000 think about individual stocks. Start with mutual funds. And think about your emergency fund so you don't have to raid your small investment account if the car needs brakes.
Best wishes, Chris
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