IRA Commission

[mintberry]

On a regular basis, I make contributions to my Roth IRA. However, I realized how much commission eats up my money when I buy into a mutual fund.

1. How often should I allocate my IRA funds into my mutual funds? Is there a good rule of thumb for this?

2. I was also considering moving my IRA over to somewhere with cheaper commission per trade, so I can quickly allocate my money to a mutual fund immediately upon contributing no matter how much it is... would this be a good idea?

3. Where do you guys personally have your IRAs and how much does your institution charge for commission?

[jIM_Ohio]

3) T Rowe Price

2) probably

1) 20% of gross pay into savings; 15% of gross pay into retirement accounts.

[kork13]

Are you sure you're in mutual funds? Sounds more like you're in individual stocks, or ETF's. Mutual funds normally do not have commission charges, unless they're front-loaded. Are they? What ticker symbols do you hold?

There are MANY options for no-load, low-fee mutual funds. Vanguard, T Rowe Price, and Fidelity are the three most often recommended around here. Just look for MF's that have no load, and low expense ratio's (preferably less that 1%).

As for actually answering your questions, it's generally best to add to your investments at least once/quarter, though most probably do it monthly. I do it every 2 weeks. If you're getting charged some sort of commission, i'd definitely move into less costly funds. I have my IRA with USAA, with no commissions... but the expense ratios are all around 1%.

[maat55]

I'm with T. Rowe Price also.

[disneysteve]

On a regular basis, I make contributions to my Roth IRA. However, I realized how much commission eats up my money when I buy into a mutual fund.

STOP BUYING LOAD MUTUAL FUNDS! Yes, I used all caps because I'm shouting at you! You should NOT be paying a commission to purchase shares in a mutual fund.

To answer your questions:
1. I fund my Roth every 2 weeks (when I get paid) for about the first half of the year until it is maxed out. This year, I maxed it out with my June 13 paycheck.

2. Absolutely move this account to a no-load mutual fund company. If you want to pick one company, Vanguard, T. Rowe Price or Fidelity are tops. If you want a broader selection, Charles Schwab has a big selection of no load funds from various fund families.

3. Our Roths are with Vanguard. They charge ZERO commission. I also have an old IRA with Charles Schwab. They charge ZERO commission.

[Broken Arrow]

Hmm. I could be wrong, but I suspect stocks or ETFs in this case.

With load mutual funds, you're going to get hit the same, no matter how you distribute your buys.

WIth ETFs and stocks, you going to pay trade commission each time you hit the buy button. So, it absolutely makes a difference here.

In fact, in #2, she mentioned "cheaper commissions per trade".

If I was investing ETFs with a brokerage, I would do my best to buy only one lump-sum per year if it can be helped.

[disneysteve]

OP, can you clear this up for us? Do you actually mean mutual funds or ETFs?

[tripods68]

OP think is referring to brokerage commission NOT the front cost 12B purchase of MF. I could be wrong.

For instance, TD Ameritrade DO NOT charge transaction-fee and commission purchasing mutual fund load/no load, except funds held 90 days or less maybe subjected to a short-term redemption fee of .60% of the trade.

[Ima saver]

I have my IRA's with Vanguard. there is no front end load (commission) and the expense ratio is very low.