Self Directed IRA

[corn18]

I have set up a self directed IRA for myself and my wife. I add to them monthly into the cash account. My plan is to buy large cap dividend stocks for the IRA's. I set it up as self-directed so I can buy the stocks I want to buy (MO, O, T, PG, KO, JNJ, XOM, MCD, PEP, PM, GLD, IAU). When I set it up, I didn't think about the broker fee. If I'm putting in 408 each month to each one and buy a one company in each, then I am spending $7.95 x 2 each month in brokerage commission on $917. That's a 1.6% load. If I wait and buy every other month, the load is cut in half. If I do it once a year, it's negligible (0.14%). But if I buy once a year, I lose dollar cost averaging.

I was thinking of leaving it as cash and then just buy 4 times / year. That would be $60 commission on $11,000, so 0.55% load. USAA doesn't charge me any fees for a self-directed IRA so this seems like a good approach.

Thoughts?

Tom

[Retired To Win]

I've had the same issue in the past. What I did initially was to set a $3000 minimum on my stock buys. That way, the $8.95 fee only amounted to 0.3%.

Then I looked around and found Folio Investing. I pay a $30 per month fee, but after that I have a way of making buys with no additional commissions -- so my buys can be as small as need be.

When I got to have enough money, I moved $25,000 to Merrill Lynch. That qualifies me for 30 free trades a month (with no $30 monthly fee).

So those were my solutions.

[corn18]

That Merrill Edge account sounds good with 30 free trades / month, but you have to maintain a $25,000 cash balance. Seems like that would be a huge opportunity cost just to get free trades. A high dividend stock spinning off 4% every quarter would yield $333 / month on $25,000. Seems like you'd be better off putting the $25,000 to work than letting it sit there for them.

I'm going to make 4 trades / year. That's $32 on $11,000 so .3%. I can live with that.

Tom