Luhar
Dryer sheet wannabe
Hi,
I am a fairly new mutual fund investor (I only invest in No-Load Funds in a Roth IRA, 34 years old, limited funds saved because I have a PhD) and was curious whether anyone has experience with using the "upgrading" strategy. In particular, I was wondering if there are any good books on the topic and how someone who saves relatively small amounts of money on a regular basis can use the strategy without incurring ridiculous transaction fees. For example, I have a Scottrade account (roth IRA) and save money in 50 - 500 dollar increments twice a month (it varies in that range depending on the month). It costs $17 to buy shares in a fund - unless it is a no-transaction fee fund (NTF). The NTF options are limited and therefore, to effectively upgrade I would need to evaluate the fee funds too. With my small monthly investments, the $17 fee makes up a healthy percentage (if I put 50 dollars in a fund, that's essentially a 66% fee). Naturally, I want to limit that percentage. Do people that use the upgrading strategy simply accept the fact that they are going to have to pay high transaction fees? Or do they spread their money across several investment institutions (i.e. Vanguard, Fidelity, Schwab....) to take advantage of each institutions NTF's?
I have read that index investing (especially through Vanguard) is the best way to save on expenses for long term retirement dollars. However, after doing some calculations I expect to need a 10% return on my retirement money to meet my goals. I don't think that's feasible in index funds.
I look forward to hearing your advice - thank you in advance!
I am a fairly new mutual fund investor (I only invest in No-Load Funds in a Roth IRA, 34 years old, limited funds saved because I have a PhD) and was curious whether anyone has experience with using the "upgrading" strategy. In particular, I was wondering if there are any good books on the topic and how someone who saves relatively small amounts of money on a regular basis can use the strategy without incurring ridiculous transaction fees. For example, I have a Scottrade account (roth IRA) and save money in 50 - 500 dollar increments twice a month (it varies in that range depending on the month). It costs $17 to buy shares in a fund - unless it is a no-transaction fee fund (NTF). The NTF options are limited and therefore, to effectively upgrade I would need to evaluate the fee funds too. With my small monthly investments, the $17 fee makes up a healthy percentage (if I put 50 dollars in a fund, that's essentially a 66% fee). Naturally, I want to limit that percentage. Do people that use the upgrading strategy simply accept the fact that they are going to have to pay high transaction fees? Or do they spread their money across several investment institutions (i.e. Vanguard, Fidelity, Schwab....) to take advantage of each institutions NTF's?
I have read that index investing (especially through Vanguard) is the best way to save on expenses for long term retirement dollars. However, after doing some calculations I expect to need a 10% return on my retirement money to meet my goals. I don't think that's feasible in index funds.
I look forward to hearing your advice - thank you in advance!