I want to start a Roth IRA. The year snuck up on me as I was focusing on paying off CC debt.I see that one can set up a Roth ira directly thru Vanguard. How does it differ if one sets up a Roth IRA thru Vanguard directly, rather than setting up an acct with Waterhouse,putting your money in their money market acct,and then buying lets say vanguard index fund thru waterhouse?It will be my first year with only 2,000.for 99. I could add 2,000.for 2000.after Jan. But would 4,000 be enough to start some foolish 4 stock picks?Can drips be used in roth Ira's?Or should I hold off as I still have approx 18,000@ 6.2%? For the next 2 months I will be doing alot of overtime... to go towards increasing my tax bracket :)and paying off the CC debt.Maybe I'm getting ahead of myself? 18 is still a big #, but better than 66 last year.Time to turn over the tomato beds... thanks
Or should I hold off as I still have approx 18,000@ 6.2%?I'm new here, so take this for what it's worth. I recommend you read the 13 Steps of Fooldom if you haven't. The author very strongly states that reducing credit card debt should be a top priority, but your interest rate doesn't look that bad. If you're certain you will pay off the CC debt next year and if you buy a fund that tracks the market and if the market does well, it will be worth it to get the $2000 into the Roth this year.Can drips be used in roth Ira's?I don't know of any company that offers DRIPs in an IRA, but if they did, your periodic contributions would be limited to the annual contribution limit.How does it differ if one sets up a Roth IRA thru Vanguard directly, rather than setting up an acct with Waterhouse,putting your money in their money market acct,and then buying lets say vanguard index fund thru waterhouse?It is generally cheaper to deal directly with the company that runs the fund, but you might want to look into the fine print of the accounts for fees. I'm not sure either of these is a "free" IRA, but one or the other might be.would 4,000 be enough to start some foolish 4 stock picks?Not really. Each trade would cost you a minimum of $7 or $8 bucks in and the same out. You could appoximately match the S&P 500 with one purchase of SPY which is a stock-like object (spider) traded as a stock on the AMEX that is kinda like an S&P 500 index fund. There's also the QQQ which is similarly based on the NASDAQ100. By taking one of these, you pay for one trade and you get all the diversification you need. You won't beat these indices, but you will approximately match them.4goneFool
If you start a new Roth IRA with Vanguard you will have to pay: low balance IRA fee ($10?) and any fee associated with the mutual fund you are buying ($10 for VFINX) = ~$20/year until your balance is high enough. The number of purchases does not matter. This is important if you don't have $2000 laying around and want to contribute monthly.If you do the same thing through Waterhouse the only fee you will have to pay is their $12 commission for WebBroker trades. So if you make a $2000 lump payment then this would be the better deal, but if you want to make a couple smaller payments, it will cost more.jbw
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