Hey, I'm an 18 year old college sophomore and new investor who has decided to open up a Roth IRA. I've been aware of the wonderful long-term benefits of this type of account for over a year now; I've just been waiting for the right time. With the Dow taking a nice dip today, I realized that I really want to start investing now. I've already saved the $2,000 from my work-study job and my internship from last summer. I want to invest in the VFINX, which tracks the S&P 500. Initially, my thoughts were to open a brokerage account with Vangard. It's a stable organization with a great reputation. But, as I look at the fees more closely, I see that account maintenance requires a deduction of $2.50 per quarter and annual fund operating expenses are .18%. I plan on making only one purchase of VFINX (the maximum of $2,000) every year for my Roth IRA until I hit $10,000--then, I'll begin to play around a bit more in individual stocks. Should I open a brokerage account with Vanguard? Is there another *reputable* brokerage with cheaper IRA fees? On the Discount Brokerage chart, Ameritrade looks like a good deal for my situation. But I plan on keeping the same brokerage for the next few years (I wont have time to investigate and bounce between firms); therefore, I definitely need someone I can trust. I would really appreciate any help or insight you all could provide! Thanks, Jon
Jon,Some places charge fees to be the custodian of your IRA, and some places will be custodian of your IRA for free. Different places charge different fees for making a trade. You can buy something like VFINX through other brokers rather than buying it straight from Vanguard and having them be the custodian, but no matter where you choose to buy it, it will always have that .18% operating expense. That's basically what it costs to provide the fund to you.Look for a brokerage that provides the services you want for the least expense. Generally, one with more services might charge more trading fees and one with less services might charge less for each trade you make....Just some thoughts.
I think you would be best off staying with Vanguard. The $10 yearly expense will be comparable to what your broker will charge you to buy the fund through them, also, I like dealing straight with the company.
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