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Greetings,
I want to open a Roth IRA with $1,000 in VFINX and $1,000 in XLK index (to see what can happen with techs).
My idea is to contribute $100 per month to VFINX ($1200 p/yr starting in 2000), and if things look good at end of year, $800 more in XLK (or move into QQQ or DIA).
According to message #13488 and 13489 the way to do this (if I understand correctly) is to open up one IRA with Vanguard and contribute per month, and open up another IRA with discount broker for my spider.
The logic is to dollar cost average at no fee with Vanguard, and try other things with broker. I'm hoping that this will be a good way to get started and in the future when it has (hopefully) grown, I can think about moving some into individual stocks.
Is this a wise decision?
Thanks for any responses.
P.S. I believe with the broker I would have to include broker fee as part of IRA contribution, so slightly less than $800 once per year.
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No. of Recommendations: 0
Greetings,
I want to open a Roth IRA with $1,000 in VFINX and $1,000 in XLK index (to see what can happen with techs).
My idea is to contribute $100 per month to VFINX ($1200 p/yr starting in 2000), and if things look good at end of year, $800 more in XLK (or move into QQQ or DIA).
According to message #13488 and 13489 the way to do this (if I understand correctly) is to open up one IRA with Vanguard and contribute per month, and open up another IRA with discount broker for my spider.
The logic is to dollar cost average at no fee with Vanguard, and try other things with broker. I'm hoping that this will be a good way to get started and in the future when it has (hopefully) grown, I can think about moving some into individual stocks.
Is this a wise decision?
Thanks for any responses.


Sounds like a pretty good plan but I don't like 2 different accounts to achieve the plan. Why not just get a discount broker that has no transaction fee mutual funds available and that way all monies are inside one account and can be sliced or diced anyway that suits you? Vanguard does have brokerage services but their commission are on the high side. Waterhouse has a lot of no transaction fee mutual funds available. I use Waterhouse but don't buy mutuals anymore. Good luck.
Bryan
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madmoon,

It will pay to be as aggressive as you can with your ROTH IRA investments since the potential returns are tax-free. I would make an attempt to keep it very simple and invest either in QQQ/TLK or VIGRX, which is the Vanguard Growth index fund (it's a much better growth choice than VFINX - at about the same cost, too).

You are making the right choice to start out with these funds/investment trusts. You don't need to get fancy, just buy (if you can) with the full $2000 at the beginning of each year and hold them. It's important that you HOLD. If you look at QQQ for example, it is very volatile. At the end of day, though, it is up almost 30% since it became available earlier this year.

QQQ was up over 80% last year (well actually the underlying index was, since QQQ was not available until this year). Few people I think could have picked stocks that would have outperformed.

rustedSoul
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Hello there,
Thanks to ilmostro and rustedSoul for your responses. Your absolutely right. I'm going to keep it simple and open up Roth in a brokerage account, then contribute once a year. Now the question is whether to put the $2000 in QQQ or XLK? They both seem kind of close for the most part. I suppose tech is the way to go for the apparent future.
Thanks again, Madmoon
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