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I have a very simplistic question that I may be overthinking but here it goes. In the past I've fully funded my IRA's at the beginning of the year with a lump some. Next year I won't be that fortunate and will contribute $500 per month for 11 months. How often should I purchase an investment of my choice? Since trading fee's are $7.50 at fidelity I'd essentially lose 1.5% of my investment to fee's if I purchased the investment of my choice monthly. But there would also be a big oppurtunity costs sitting on cash in theory for 11 months. Should I purchase quarterly? Invest in no fee ETF's until I have say $1500 and then sell and purchase the investment of my choice? Any advice would be great.
I have a very simplistic question that I may be overthinking but here it goes. In the past I've fully funded my IRA's at the beginning of the year with a lump some. Next year I won't be that fortunate and will contribute $500 per month for 11 months. How often should I purchase an investment of my choice? Since trading fee's are $7.50 at fidelity I'd essentially lose 1.5% of my investment to fee's if I purchased the investment of my choice monthly. But there would also be a big oppurtunity costs sitting on cash in theory for 11 months. Should I purchase quarterly? Invest in no fee ETF's until I have say $1500 and then sell and purchase the investment of my choice? Any advice would be great.
Thanks
Well you'd break even on those fees if the market consistently went up 18% per year. I'd maybe try to wait for dips below the 50 day moving average, then get all in with whatever you've saved up.
ETF's should be THE investment of choice. What are you thinking of investing in? Individual stocks? Don't do that. Risky, more trading costs. I invest mainly is VOO and AGG. Just one S&P 500 index ETF and one total bond market ETF.
Well you'd break even on those fees if the market consistently went up 18% per year. I'd maybe try to wait for dips below the 50 day moving average, then get all in with whatever you've saved up.
ETF's should be THE investment of choice. What are you thinking of investing in? Individual stocks? Don't do that. Risky, more trading costs. I invest mainly is VOO and AGG. Just one S&P 500 index ETF and one total bond market ETF.
How on earth did you calculate an 18% return to break even? 1.5%*12 isn't correct the correct be would be 1.522% for each purchase
All my current investments are in stocks/ETF's. $7.50 transaction fee to purchase sotcks/ETF's.
Seems like your best bet is to put that $500/month into a fee-free fidelity fund until you've accumulated enough to make a stock or ETF purchase worthwhile. Then sell the fund shares (I'm assuming you can sell them commission free as well, and buy your stock pick and pay the fee only once. You'd probably get some increase in value while you were holding shares of the fund that could get added to your stock purchase (or, you could also lose value).
All my current investments are in stocks/ETF's. $7.50 transaction fee to purchase sotcks/ETF's.
Won't the many commission free etfs provide you with the same level of returns as this fee-based etfs? I presume this is as a result of investing in actively-managed etfs.
Or you could contribute less frequently and worry less about dca. If you doubled your purchase amounts you are talking about 75bps to overcome
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