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Hello,

Looking for some guidance…

I'm planning on opening a Roth IRA for my wife and myself this tax year with my discount broker ($7.95 a trade). What is the best investment approach for investing the $2000 in each account, i.e. Foolish 4, buy and hold, one stock, etc.? I have until 4/15/2000 to fund the accounts, right?

We are currently contributing what equals to $9000 a year to our 457 retirement plans (Deferred Compensation Plans). Should I focus on maxing-out these plans ($8000 each) or should I go ahead with the Roth's.

Thanks,

Brett
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You should study the boards so you can make your own choices. But while you are learning, here are a few thoughts. Foolish Four is a decent initial strategy. But if you pay $8 to sell, $8 to buy and do four trades per year, your costs are $64 or 3.2% of your investment. Add account maintenance fee, and your costs are on the high side.

It would be better to accumulate a few more assets before undertaking Foolish Four. An index mutual fund is probably the best choice. Or Spyders in a brokerage account. Long term buy and hold could work, but for a small account is higher risk. You have to choose correctly.

You do have until tax day in 2000 to make your 1999 contributions to your IRA accounts. These are individual accounts so both you and your wife may qualify for accounts, both individual accounts. You will probably name each other as beneficiaries on the accounts.

If your 457 plan involves employer matching, you will definitely want to contribute enough to max the match. After that it depends on performance. But usually maxing Roth is second choice, and maxing 457 beyond employer match is third.
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<<If your 457 plan involves employer matching, you will definitely want to contribute enough to max the match. After that it depends on performance. But usually maxing Roth is second choice, and maxing 457 beyond employer match is third. >>

Agree with the matching part, BUT, I'd do the Roth IRA first. When you withdraw that money, it will be tax free and all clear. When you take money out of the other, taxes will be owed. I know, I know, you pay taxes on the Roth before it goes in, BUT, you still come out ahead in the long run. Besides, the Roth has transferablity to others.

JLC
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You should study the boards so you can make your own choices. But while you are learning, here are a few thoughts. Foolish Four is a decent initial strategy. But if you pay $8 to sell, $8 to buy and do four trades per year, your costs are $64 or 3.2% of your investment. Add account maintenance fee, and your costs are on the high side

This is my first post to any of the boards here at the Motley Fool.

If Lindsey would put two of the RP4 in his account and the other 2 of the RP4 in his wife's account, then the brokerage fees on this would be a maximum of 1.6%. (Assuming all 4 are traded).

I really don't know about the management fees. My Roth doesn't have one.

Howard
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Brett - The answer to your question depends a lot on your financial goals & circumstances, but in general you may appreciate the results of Roth/IRA accounts
in addiditon to the deferred comp plans!

Best wishes, PP
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