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I'm looking to invest in a REIT mutual fund as the first fund in my Roth IRA. I have tried a few different ones including the Vanguard REIT fund but all of them are reporting min initial purchase of $2500.

Due to my MAGI, I am only able to contribute $1700 to my Roth IRA.

What confuses me is that the Vanguard website claims that the min initial IRA purchase is only $1000. I guess Roth IRA min limits are higher?
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What confuses me is that the Vanguard website claims that the min initial IRA purchase is only $1000. I guess Roth IRA min limits are higher?

I rather doubt that. Are you talking about purchasing it directly from Vanguard, or another broker? If the latter, it's likely that your broker is setting a higher minimum than Vanguard. If you're talking about Vanguard, you may want to give them a call and check. That doesn't sound right to me.

If you can buy stocks at a reasonable price, you might want to consider the ETF version of Vanguard's REIT Index Fund, VNQ. It's expense ratio is 1/2 that of the fund's (which sounds better than it is, since both are so low), and there's no minimum investment at all. (Of course, if you pay $20 for a $1000 purchase, that costs 2.0% right there, so that may not be appropriate for you.)

Ken
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actually i figured out what was wrong due to your tip. I was attempting to buy through fidelity and they have a min limit of $2500. I am rolling that over into a vanguard roth IRA now instead.

Thanks for the tip on the ETF equivalent.
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I am rolling that over into a vanguard roth IRA now instead.

Be sure to compare fees before moving. If you open a brokerage account at Vanguard (as opposed to a mutual fund account), they charge some amount per year (at least $30; it may be more). If you just open a mutual fund account, I don't think there is an annual fee (but check).

The fund itself may also have a low balance fee, but I assume that would be charged wherever you by it. That's usually about $10/yr, I *think*, so it isn't too bad. Just snoop around vanguard.com some before moving.

Oh, and one last thing. The last time I moved an IRA out of Fidelity, they hit me up for an exit fee (something like $40 or $50), so be careful there, too.

Ken
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We just opened our ROTHs with Vanguard.

Different funds have different minimums even within the ROTH IRA.

When I selected the fund we wanted to invest in, it told me what the minimum was for THAT fund, so it's possible that the REIT has higher minimum than other funds.

If you go to the website and start the process (you can cancel at any time) you can see what the minimum for the specific fund you want to buy will be.

3MM
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Ken:

The last time I moved an IRA out of Fidelity, they hit me up for an exit fee (something like $40 or $50), so be careful there, too.

Is this true if you're rolling over a 401k from a previous employer, as well? DH just changed jobs and we're thinking of moving his 401k into an IRA at Vanguard. Haven't decided yet, though, as his new employer also uses Fidelity, so will wait to see what the fund selection is like. May just roll them together at Fidelity.

TIA
3MM
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"Is this true if you're rolling over a 401k from a previous employer, as well? DH just changed jobs and we're thinking of moving his 401k into an IRA at Vanguard. Haven't decided yet, though, as his new employer also uses Fidelity, so will wait to see what the fund selection is like. May just roll them together at Fidelity."

Hi 3MM,

Would you benefit by having a higher total asset amount with Fidelity thus giving you lower commissions? That is if you trade stocks...

Just a thought that requires no answer :-)

Regards, Ken(Matt1344)
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Is this true if you're rolling over a 401k from a previous employer, as well?

3MM, I can't say for sure. I did have a 401K at Fidelity at one time, but I rolled it into my existing IRA at Fidelity. It was that IRA that I later transferred out.

There is a "Brokerage Commission and Fee Schedule" PDF on Fidelity's website. It shows a $50 transfer out fee for IRAs and Keogh accounts (actually, they call it an "Account Close-Out Fee"). There's no mention of it applying to 401(k)s, but I wouldn't say that is the last word. If it concerns you (and I can see how it might), you should try to find out from a Fidelity rep. Good luck with that, since the last time I asked about this for an IRA, the guy didn't know they ever had such a fee, let alone whether or not it was still in effect. :)

By the way, you're right that different Vanguard funds have different minimums. I had checked the Vanguard REIT fund on their website, and confirmed that the minimum for an IRA is $1000 -- but I failed to make that clear in my post.

Ken
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Ken:

Good luck with that, since the last time I asked about this for an IRA, the guy didn't know they ever had such a fee, let alone whether or not it was still in effect. :)

Nice!

So, if there is a fee for the 401k and it applies the same as for the IRAs, would the $50 fee be applied to each of the 4 funds or should I consolidate them first into one fund then move them?

3MM
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So, if there is a fee for the 401k and it applies the same as for the IRAs, would the $50 fee be applied to each of the 4 funds or should I consolidate them first into one fund then move them?

Please don't give Fidelity any ideas! ;-)

It's a single fee charged for closing your account, regardless of how many positions you have in that account. I'm pretty certain I could have bypassed the fee by selling a small amount of one of my positions and transferring everything except the proceeds from that sale. (Since I ended up opening a Fidelity IRA account again, I'm really sorry I wasn't that smart 2 years ago. :-)

Ken
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Oh, and one last thing. The last time I moved an IRA out of Fidelity, they hit me up for an exit fee (something like $40 or $50), so be careful there, too.

Yeah, I called Fidelity Customer service about that and because I hadn't made any trades yet in my Roth IRA, they waived the $50 closing fee. I guess they were glad I wasn't moving the rest of my portfolio somewhere else ;)
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