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I just opened my first IRA, a Roth, with a discount broker. Here's my question. Even though commissions are low, am I better off putting monthly contributions into a money market and transferring the whole $2000 at once into IRA mutual fund (index), incurring only one commission, or buying shares each month with my contribution? The latter seems like it would have the value of dollar cost averaging, but incur far more in commissions.
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< I just opened my first IRA, a Roth, with a discount broker. Here's my question. Even though commissions are low, am I better off putting monthly contributions into a money market and transferring the whole $2000 at once into IRA mutual fund (index), incurring only one commission, or buying shares each month with my contribution? The latter seems like it would have the value of dollar cost averaging, but incur far more in commissions.>

I do not know about your broker, but both Schwab and Fidelity have huge lists of mutual funds that they offer with no commission at all. They get their money from the management of the mutual funds (or they are funds they run themselves). Probably comes out of the 12(b)(1) fee, or something.
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Radardeb,

<<I just opened my first IRA, a Roth, with a discount broker. Here's my question. Even though commissions are low, am I better off putting monthly contributions into a money market and transferring the whole $2000 at once into IRA mutual fund (index), incurring only one commission, or buying shares each month with my contribution? The latter seems like it would have the value of dollar cost averaging, but incur far more in commissions.>>

If you are being charged a trading fee with every monthly deposit, then IMHO you are better off transferring your IRA to a no-load index fund where you can invest directly with the fund without incurring charges. The Ssga funds family has a 500 index fund that only requires a $250 deposit for an IRA as an example. It compares quite favorably with Vanguard and the index itself. After you have built up the fund to a size that you feel comfortable with, then if you desire to trade on your own, you can move it back to the broker you have selected.

Regards…Pixy
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My broker is Waterhouse. They have extremely low fees: $12 on trades over the internet, $35 on phone trades, and $45 using a broker. However, I just called and asked them how they would treat a monthly transfer from my checking account directly to a mutual fund, and they said each monthly transaction would be a $25 fee. So I guess the answer is that I should have my monthly transfer to into their Money Market (5%) until I get enough to justify the fee, or just fund it once a year.
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<I just called and asked them how they would treat
a monthly transfer from my checking account directly to a mutual fund, and they said each monthly transaction would be a $25 fee. So I guess the answer is that I should have my monthly transfer to into their Money Market (5%) until I get enough to justify the fee, or just fund it once a year.>

You might want to verify whether you can put your monthly contribution into Waterhouse's NTF group of mutual funds. This would be right up your alley, since NTF stands for *No Transaction Fee*! ;-)

BTW, the various funds in a NTF group pay the broker a fee and then you pay the fund by way of yearly expenses, which vary a lot but average around 1%. So there really is no free lunch, but at least it's less painful than $25 a month.

Chris S.
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