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< Should I use a traditional IRA and take the tax break off my taxes at the end of the year, or go with
a Roth (since I'm hoping to buy a house in the next 5 years) and pay taxes now?>

I'm assuming that you're in the 15% tax bracket. Chances are good that your tax bracket in retirement will not go down below this level, which is what most folks worry about when considering the Roth. I'd say go with the Roth.

I'm with Waterhouse & am lucky enough to have a local office (& I'm a satisfied customer in all respects). If you're worried about accountability of snail mail checks sent to Waterhouse, you might want to look into setting up a electronic fund transfer from your bank to your IRA. You can do this with as little as $100 per quarter, I believe.

<I have about $1000-1500 to work with, and I want to split it between the IRA and some direct investing (to avoid brokerage fees).>

This sum is too little to do both a Fool4 portfolio in the IRA & DRIPs in a taxable account. In fact, it's not enough to invest in just the Fool4 either. As a ballpark figure, you'll need at least $1K minimum per stock to keep trading costs more or less under control. Why don't you consider using an S&P index fund or DRIPs in your IRA for a few years until you've accumulated enough to invest in the Fool4? Either option would mesh well with a periodic investing plan via electronic fund transfer. The only caveat regarding DRIPs is that you must keep excellent records to prove what your cost basis was when you go to sell. Good luck.

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