I've just deposited my $2,000 in my Roth IRA; and I need help. The amount is so small, and when I look at the stock prices of the companies I am interested in (between $80 and $120), the $25 commission I'll pay is a very high percentage when compared with the amount I can purchase. Am I being cheap? Or is there a more effective way to build my portfolio?Thanks in advance.
One way to save money is to set up a discount brokerage account. Ameritrade, Datek, Waterhouse, etc. are anywhere from $8-14.95/trade. Links to these sites can be found on the Fool homepage. Also, it may help to look at the Roth IRA as a long term investment vehicle instead of a short-term one. Right now the $2K doesn't look like it gets you very much but $2k every year for 30 years can sure add up. Hope this helps.
In addition to MichaelSB's great advice, let's look at this:Did you deposit the $2000 for 1999 or 2000? If you put it in for 1999 and you have another $2000 (or any amount under that), you can put that amount in now for 2000. NOW you have $4000 to invest in FF, if that's where you want to be. With a discount broker, your transaction fees will be under 2%!It may look like a little amount now, but compounding is a wonderful thing and before you know it, you'll have more growth in there than the money you deposited.DFF
you may also want to hop over the to Foolish Worshop and Foolish Four message boards to see what they have to say about this question. it has been a while since i have been there myself, but in know they have debated and analyzed and discussed this same question to death. you'll find several answers and opinions there. have fun!-megeranski
I addition to all the sensible responses to your post- you could go with a Roth IRA in an S&P 500 mutual fund, like Vanguard's or Scudder's (the latter doesn't have an annual maint. fee), and not have to pay ANY brokerage fees. Also, a number of companies that have direct purchase programs ALSO offer IRA options. If you know which companies you want to DRIP into, you may want to contact their shareholder relations and ask if they offer IRA option.Suretrade discount brokerage charges $7.95/trade and has no annual maint. fee either. I hope this helps.Eddie
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