Roth IRA's bought through Buy and Hold

[Guest freshair]

I would like to know if anyone has opened a Roth IRA through Buy and Hold. I know there is an annual fee of $25 but if you set up a monthly E-ZVestsm with 30 days that fee will be waived. What is the minimum amount you can invest? And what your thoughts are on going through Buy and Hold.

[JanetM]

I looked at them. They allow you buy individual stocks for IRA accounts. Not a great idea unless you have a crystal ball. Mutual funds you at least give you some diversity. Buyandhold also has some pretty steep fees. You could do better with mutual fund company.

[John G]

I am a stock analyst and a stock picker, but I don't recommend that folks get started by buying individual stocks.

Reasons:

1. even in this era of internet commisions you are going to pay too much on small lots

2. you are not likely to have enough assets to be diversified across industries or geographically

3. stock picking eats up a lot of time - are you prepared to spend hours reading company files, annual reports, plus listening to the quarterly conference calls?

I sometimes get ask what I think about a stock. I throw the question back - what exactly do you know about this company? HDQ city? CEO? Recent quarterly earnings? Major competitors? Lawsuits? How safe are their products? Will they soon become technologically obsolescent? What factors will drive the price of their stock higher?

I set this minimum standard - if you can't talk for 5 or more minutes without notes about a company, you don't know enough to own shares. I apply a 30 minute standard to myself.

I would highly recommend developing an initial portfolio of mutual funds. Keep it simple.

By the way, there are other issues besides account fees to consider in choosing a brokerage. Bad execution of trades can cost you more than an annual fee. Same with commisions or margin interest rates. You have to look at many aspects of a brokerage to see if they are a good fit.

Janet jokes about the crystal ball - what you really need to be a good investor is a keen eye for important facts, math skills, patience, research skills, an emotional detachment (avoiding panic and euphoric swings) and lots of hard work.

[Guest freshair]

I used to buy from Buy and Hold just for the stocks for investing but not for any IRAs. I don't use this srvice anymore. I didn't know for the Roth IRA that you could only buy stocks. I though there was some mutual funds in Buy and Hold just for the Roth IRA. I was just looking for something cheap to start off with because most mutual funds, you have to have $2500.00 up front. The other option is to start off with $250 or $500 and have a chunk taken out of your checking account every month to get up to that $2500. I don't make alot of money so therefore I can't chunk out alot of money.

[JanetM]

American Funds has $250 minimum for its IRA accounts. You can do automatic investments monthly.

Disclaimer - I don't work for American Funds but I do have IRA with them. I like the funds they offer.

[John G]

There are many mutual funds that have $1,000 minimum for initial deposit on Roths. Yes, you can also start for less with a systematic program.

Let's say your have 500 to set aside for 2007 and could set aside another 500 in 2008. You could wait to early 2008 and fund a Roth with the 1,000 combined for two years, or start a 100/month contribution rate.

You may have to hunt a bit, but I think you will be able to find a mutual fund or fund family that will meet your needs.

I Googled "low minimum Roth mutual funds" and found some additional suggestions:

http://mutualfunds.about.com/od/cheapmutualfunds/a/500.htm

http://mutualfunds.about.com/od/cheapmutua.../a/under250.htm

http://mydollar.blogspot.com/2005/10/mutua...ow-minimum.html

http://forums.kiplinger.com/showthread.php?t=3250

These are suggestions only, not recommendations. Read the prospectus and online explanations carefully as funds can change minimums and have hidden fees or annual charges... a cursory look at these popped up a lot of familiar names so I think this is a good start.

Google... its a beautiful thing!

INSERT ADDITIONAL MATERIAL: I also ran across a helpful screening tool for mutual funds (see web reference below) where I could set search specs like 1,000 minimum, no load, above average 3 year performance, minimum 4 or 5 Morningstar ratings, and below 1% annual expenses.... this search yielded 114 funds! Now many of these were bond funds, but it looked like about 1/2 were equity/stock funds. You can also select only equities to eliminate the bond listings.

http://mutualfunds.about.com/gi/dynamic/of...ndSelector.html