I have $14100 in a regular IRA, and plan to do the following:
Put $2K into each of a Dow rp4
Put $1.5K into each of an S&P rp4
The IRA is with Scottsdale, $7.00 per trade.
Will any quarterly dividends be automatically deposited into the account? And if so should they be immediatly be combined with the odd few dollars left over from the orrigional stock purchase, and used to buy another share of one of the eight? Or will that be a wasted $7.00? Does the cash in this kind of account earn any interest?

Since the account is a tax defered IRA,and capital gains are not an issue, does the year and a day guideline still hold fast or would it be worthwile to reevaluate after say six months. Given that the rp4 stocks are not likely to tank or skyrocket, would more frequent reevaluation and redistribution just be a waste of money at $14.00 an adjustment?
(this damned machine wouldn't let me edit the type'Os out of the title.)

I should think you would want to make your stock purchases in 100 share round lots. Otherwise, in most cases you will pay a 1/8 per share odd lot differential. So I would accumulate funds in the account from dividends and annual contributions until they at least made the round lot minimum. In time your investments become more efficient when you make them in chunks of at least $5K. So as your account grows, increase the size rather than the number of your transactions.

You will have to check with Scottsdale for details of your account. Most accounts are set up so that any uninvested funds are swept into a money market account, where they earn some interest while they wait for your next investment decision.

None of the capital gains rules apply in the case of an IRA account. You do not have to wait a year and a day. There are no additional tax advantages to be gained by waiting.

As a rule, the Foolish stock portfolios are mechanical, and more frequent evaluation does not improve results. But ask that question on the RP4 board to find those with more expertise in that area.

I should think you would want to make your stock purchases in 100 share round lots. Otherwise, in most cases you will pay a 1/8 per share odd lot differential.

pauleckler,

I think you're a little out of date on this. AFAIK, brokers don't charge odd-lot differentials any more.

Cheers,
GW

Hmm, lets say you have an average dividend of 2.5%, that would mean total dividends of $350 for the year.
$7/$350 = 2% (even if you put it all into one stock)
Not worth reinvesting, just let it sit in a MMF.

If you're really concerned about the idle cash, put the two portfolios on a staggered six month rollover. (Hold each 12 months, but start one in January and another in July.) Then you could roll the cash in twice a year. (I know that the January is said to be the best starting month for FF ports, but I've never quite bought the logic.)

cheers,
GW

GW sez: "I think you're a little out of date on this. AFAIK, brokers don't charge odd-lot differentials any more."

GW, you could be right. I have not purchased an oddlot in a long time. So you are saying they now provide this service for free? Do they now supply fractional shares too?

GW, you could be right. I have not purchased an oddlot in a long time. So you are saying they now provide this service for free? Do they now supply fractional shares too?
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It's free. The power of the individual investor huh?
Don't know about fractional shares though. When I purchase I don't buy in fractions. If I'm off by one share of exact it's OK.

Mike

You can get fractional shares in DRIPs, but not through a broker.

Michael

Will any quarterly dividends be automatically deposited into the account? And if so should they be immediatly be combined with the odd few dollars left over from the orrigional stock purchase, and used to buy another share of one of the eight? Or will that be a wasted $7.00? Does the cash in this kind of account earn any interest?

Any left over money or dividend income that is in your account will sweep automatically into a money market fund where you will get higher interest.

It is usually not a good idea to reinvest dividend income because of the commissions. As a rule don't let your commissions be higher than one or two percent. Wait until the next time you are buying a larger block of stock and use that extra money then.

arkayem

"AFAIK, brokers don't charge odd-lot differentials any more.

Does anyone know when that change was made or why?

I do know that some internet brokers sell less than 500 to 1,000 shares for one fee so odd lots aren't an issue.

Was it the discount brokerage or internet brokerages or SEC that did away with the odd lot charges?

BGP