Hi everyone,IRA newbie here. My husband and I are both planning to open an IRA (2 accounts). This is the first time either one of us has contributed to an IRA.Since we don't qualify for a Roth IRA or deductible traditional IRA, we are going to go with the non-deductible traditional IRA.My questions: (1) Is there any advantage of opening it at one place versus another? We currently have accounts at Solomon Smith Barney, Etrade, and Schwab. Of course, we could always go for a completely separate brokerage firm or bank. I'm just not sure if there is an advantage of one over another.(2) Any recommendations on what to invest in? Should we think differently because this is an IRA account? E.g., since this account is not taxed, my husband is thinks it is ok to aim for mutual funds that generate a lot of taxes since it won't affect us. He thinks that we should go for funds we think will generate the highest return regardless of the load, turnover, dividends, etc. Is this thinking right?Any other suggestions you can give me would be much appreciated.~cg
If you are going to invest in mutual funds, open your IRA with the mutual fund company. If you are going to trade stocks, open it with a discount broker. Smith Barney will charge you an annual fee, as will any of the full-service brokers. Vanguard or Fidelity or T.Rowe Price will not charge an annual fee. I don't know about Schwab. If you have never had an IRA before, you are limited in how much money you can put in this year. You would like a trustee that will not charge an annual fee, particularly not an annual fee that will increase with the value of the account. I would not expect e-trade to charge a fee. Also you might be aware that it is OK to have more than one IRA. If you would like both stocks and mutual funds, you might have one IRA with e-trade and the other with Vanguard. You certainly do not both have to have the same investments, and if your account and your husband's are with different institutions, that will help you to diversify. Best wishes, Chris
I don't know much about the differences between the firms. I opened my Roth when I was ignorant about financial matters. My brother told me to put it into an account at Vanguard and that's what I did. (Yay! Jeremy!) So I never really did any DD, until I came here and found out that it was a pretty good move anyway.You can treat your IRA a little differently. I think that you need to consider the load, since that isn't affected by tax treatment (is it?), but the others are indeed things that you needn't worry about with an IRA. Therefore, if you wish to invest in something that pays a lot of dividends, you would want to make that investment in your IRA. Notice that I put it in that order. You shouldn't invest in it just because you have an IRA, but if you already want to do so you should use your IRA.That said, I would recommend that you might want to check out REITs and maybe international investments for your IRA. I am still doing that DD on the former(yes, I'm slow, get off my back, will ya?), but they are required to pay out most of their gains as dividends and are not highly correlated to the S&P500. International investments also give you some diversity in your portfolio, they can grow pretty well but their turnover can be pretty high.Just my humble $.02,fgwondering why they got rid of the cents key...
<<If you have never had an IRA before, you are limited in how much money you can put in this year. ...Also you might be aware that it is OK to have more than one IRA.>>Just to clarify. You are limited in how much money you can put in each and every year. 'Course, this is the sort of thing that you need to find out about before you open one.The limit for contributions applies to the amount you put into all the IRAs in your name for the year, not to each one separately.I'm sure you'll find this info elsewhere, if you haven't already. I just like to clarify wherever it's found.fg
> wondering why they got rid of the cents key... Turn on "num lock", hold down ALT, while holding it down type 0162 on the numeric keypad, then release ALT.
wondering why they got rid of the cents key... While shopping today, I saw 3 pennies lying fairly far from each other in the parking lot. Wonder why nobody (but I) picked them up....cheers!jtr
¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢Ooh, magic! [Actually, I know that there are a whole lotta these... like making the (tm), right? I'm more just wondering why they won't let us keep the ¢ key, if the $ key gets to stay. But thanks!]fg
Friendlygirl writes:¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢¢Ooh, magic! [Actually, I know that there are a whole lotta these... like making the (tm), right? Yeah, and I wish I could find a listing of tips on how to create them like the one left by jrr7 (i.e., NUM LOCK-Alt-0162 to create "¢"). Sure would come in handy from time to time.Regards..Pixy
Here is a link to the table that lets you write special characters. http://www.bbsinc.com/symbol.htmljust change the number you type in to match the character you want£ - 0163ñ - 0164Shaun
Hi Pixy,I have always used & # 162 (without the spaces between & and #) to get the cents symbol ¢Also, & # 163 is £and, & # 169 is ©etc. etc.Aljo (Alan)
my husband is thinks it is ok to aim for mutual funds that generate a lot of taxes since it won't affect us. He thinks that we should go for funds we think will generate the highest return regardless of the load, turnover, dividends, etc. Is this thinking right?Turnover and dividends, ok, but not load. A load is a commission. You don't want to pay that. You also want to find funds with low "Expense Ratios."Since this in an IRA, why not look into the Jaguar of fund companies and look at Vanguard? You can open a Vanguard IRA directly with the fund company or, if you wanted to own more than one Vanguard fund without the fees they charge at the company itself, you could open an IRA with Scottrade and buy Vanguard funds. (Scottrade is the only brokerage whcih doesn't charge a transaction fee for Vanguard Funds.) A good core fund to look at is VTSMX (Total Stock Market Index). This is a fund that is fine in either a taxable or tax-advantaged account. They also have some very good balanced funds, and small-cap and bond funds, which you would want to hold in a tax-advantaged account for the other reasons your husband cited.What you really need to do is to figure out an Asset Allocation plan for yourself. It's hard for us to make any recommendations without knowing what your investment timeline is, your risk tolerance and such.You might consider reading "Mutual Funds for Dummies" and/or "Personal Finance for Dummies." These two books were invaluable to me in getting started.*******************Is there any advantage of opening it at one place versus another? Yes. One word: Fees. I can't comment on the brokerages you've mentioned, but you need to learn and understand the fee structure of all of them before you make your decision. There are things like low-balance fees, closing fees (if you ever decide to leave), transaction fees....billions and billions of fees (in Carl Sagan's voice.)Scottrade does not have these...Vanguard has low-balance fees.Hope this helps.CaatDisclosure: I own a Roth at Scottrade with VTSMX and NAESX in it; a Roth at TIAA-CREF with TIINX and TIPBX in it, and I have my husband in a Roth at Vanguard with VTSMX in it.
Here is a link to the table that lets you write special characters. Ooh, lotsa magic! Do you do card tricks too? ;-)fg
Thanks for the suggestions!I didn't even think about opening an IRA with a mutual fund company directly. But doesn't that mean that you are limited to their selection of mutual funds?I don't own any Vanguard funds. What do people like so much about them?My husband and I are both in our late 20's, so we have time on our side. We are very risk-tolerant as well.~cg
The link is handy for HTML docs, but how about that letter or spreadsheet you're working on?Windows comes with its own list of Alt codes - in the Character Map applet. You just need to find it. On my Win2k system, it's at Start|Programs|Accessories|System Tools. Other versions are similar, IIRC. Click once on any character and the code is displayed in the bottom right corner.--PeterBonus tip for TMF posting: It's not documented here, but <pre> and </pre> will give you a fixed width font with a blank line before and after, like this and <tt> and </tt> makes the fixed width without the line breaks, like this.
I didn't even think about opening an IRA with a mutual fund company directly. But doesn't that mean that you are limited to their selection of mutual funds?Yes. If you want to own more than one fund company, either open up at each fund company individually, or look into Scottrade. The only two fund companies that they don't carry that I wish they did are Fidelity and TIAA-CREF. But they have Vanguard, so I'm not complaining. (www.scottrade.com)***************I don't own any Vanguard funds. What do people like so much about them?Good Management. Low Expense Ratios. Good selection of funds.*********************My husband and I are both in our late 20's, so we have time on our side. We are very risk-tolerant as well.Stocks are a fine choice for you then. I stick with my original statement...VTSMX is a very good core fund.Caat
You might start by talking with Schwab, given that you already have experience with them. I don't believe they have ever charged us an annual fee on any of the four IRAs we have with them. But I placed my inherited IRA at Vanguard, because I like their array of index funds.db
I have a Scottrade Roth IRA with VTSMX in it. Vanguard is partly popular because they are the pioneers of the index fund. If you snoop around the fool a little more, you will learn a on how a vast majority of mutual funds dont come close to beating the market each year or over a large period of time. The index fund is a good thing because it is very inexpensive for a fund company like vanguard to opperate. A regular mutual fund has managers and people who works hours upon hours doing research on the next purchase or sell. This costs lots of money. Also, a regular mutual fund cant hold a small number of stocks. When a fund starts, a manager might have some very good stocks in the fund. The bad news comes when he or she starts making lots and lots of gains in the fund. When people see this, they all jump into the fund to try to make the same return. This, in turn, gives the fund manager a lot of money which he or she must invest. The fund manager cant have a small concentrated number of stocks in the now large fund. So he or she must do those hours and hours of research to pick, or settle for a stock that he doesnt like as much as his first lot, but has to buy something to fill space. In an index fund, you have close to none of this. You have the entire index, and there is hardly any turnover of stocks. This saves tons of money, which makes for a very low cost and sound investment. Ok, Ive gone off on index funds, sorry about that. It is my personal belief that if you cant beat the market, join it in an index fund. Some popular ones are VTSMX, and VFINX. Id try to convince your husband that trying to make the most gains at any possible cost can get you into some trouble. Always remember to keep the expenses under 2%. VTSMX's expense ratio is .20% I think. And VFINX is .19% or .18%. Caat might have to back me up on some of this. Hope this helps a little.Have a good one! Nealio
Wow! What neat tips! Just goes to show how much I still have to learn.Thanks to Shaun, Aljo, and ptheland for sharing. Regards...Pixy
If you snoop around the fool a little more, you will learn a on how a vast majority of mutual funds dont come close to beating the market each year or over a large period of time.Actually, if you snoop around the web in general, you'll find that this statement is only partially correct. A good place to start is:http://www.schwab.com/SchwabNOW/SNLibrary/SNLib123/SN123Article/0,5637,872%7C3368,00.htmlOnly about 22% of large cap mutual funds outperform the S&P 500 index funds (but that's still a significan number of funds). However, about 63% of small cap mutual funds outperform the Russell 2000 index funds. So you have to look at where you want to invest your money and how much effort you are willing to expend in research, selection, and monitoring of your investments.I know a number of people who have been invested in index funds for a number of years and were just devastated when over 30% of their asset value disappeared on them last year. Even though they aren't planning on receiving distributions from their funds for some time yet, it was still traumatic to watch it happen. And when they compare their losses to my gains during the same period of time, they bemoan ever having gone into index funds.There are no sure things in the market. Each investor has to assess their own psychology, risk aversion, and goals and act accordingly.Also, a regular mutual fund cant hold a small number of stocks.This statement is, again, only partiall true. It depends on the size of the fund and the size of the companies in which they invest. A mutual fund must own stock in at least 20 companies since they are not allowed to INVEST more than 5% of the total value of the fund in any one company. (If the stock in a company APPRECIATES to the point where it compromises more than 5% of the fund's holding, the fund doesn't have to liquidate any of the holding; they are prohibited from INCREASING any holding beyond the 5% limit). And funds are prohibited (to the best of my knowledge) from owning more than 10% of any one company. So these factors definitely cause problems for monster funds like Fidelity Magellan but are no problem for the Jensen Fund (which only owns around 26 stocks at any given time).In picking funds, the overall considerations should be consistency of returns and size of these returns. As Peter Lynch points out in Beating The Street (page 62 as I recall) "forget about expense ratios". The money represented by the expense ratio has already been subtracted out before the fund's yield is computed. So a fund with a CONSISTENT, long term yield of 15% with an expense ratio of 3.2% is far superior to an index (or other) fund with an AVERAGE yield of 11% and an expense ratio of only 0.2%. Yields on index funds are hardly consistent, since they fluctuate just as wildly as the index on which they are based.Enhanced index funds can be worth looking into. Instead of investing in ALL of the funds in an index, they maintain their holdings in whatever segment of the index is currently performing well. You might call these "semi-managed" funds. Their expenses are usually lower than the "fully managed" funds, and they have more turnover, but the overall philosophy is akin to regular index funds.
¢ Wow, cool! Thanks!Ak, learnin' something new, in the hills north of Fairbanks!
"I have my husband in a Roth at Vanguard with VTSMX in it"They allow that? What value did they put on him.Ak, with dollar signs in her eyes, in the hills north of Fairbanks.
Greetings db:You said that you placed your inherited IRA at Vanguard. So it was not with Vanguard when you inherited it and you had it transferred to them? If this is correct, could you give some details of the process? I have inherited an IRA and I don't like the payment options the company is offering.Alan
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