Opening IRA. I am so confused.

[mjedlin66]

I understand the IRA rules, but I've never had a broker before. I want to fully fund my 2015 IRA before the tax deadline.

I've been reading about commission-free ETFs, because I'd like to follow the same seasonal strategy I use in my TSP. But reading about trade commissions, fees, expense ratios, 30-day trade fee windows, and mutual funds has me racking my brain.

I understand the TSP pretty well but I feel overwhelmed by all of the nomenclature and dozens of different fees on the private side of the house.

What do you guys recommend?

Thanks
-Matt

[Buckeyedog]

Just open an account in Fidelity, Vanguard, Schwab, etc. Then you can buy an ETF for a "commission" that you'll pay when you buy and sell, or just buy an index mutual fund and you won't have to worry about any commission. They all have no load index funds that mirror the C fund and/or the S fund and tons of others. The expenses are still very low as well. Don't get caught up in all the "trading" fees and such. Those are mainly for the stock trader guys. Good luck.

[crondanet5]

Fidelity representatives are very helpful to answer your questions and be sure you understand the rules. They cannot recommend stocks or ETFs though.

[skiehawk11]

Or you can open an account with Wisebanyan. Zero commission fees and the portfolio re-balances based on your risk. The fund generally uses the Vanguard ETFs funds when it allocates funds into ETFs. It also re-balances automatically with no fees. You can open a traditional or Roth IRA account. I've been using them for a bit now and I have had zero problems.

Why pay fees when you don't have to.

wisebanyan.com

[locklarp]

With a Schwab account, you can buy what they call "one source" funds or ETF's that are commission free. You will have expenses but you can get an idea by looking at their expense ratio which is easily obtained on their website. You can open up an IRA online and you can transfer funds directly to Schwab from your checking account by setting up a Moneylink. Schwab will be glad to help with any of this if you decide to go that route. They also have what they call Schwab intelligent portfolios, which are controlled by an algorithm. They are also commission free, but you pay the same expenses as if you bought a one source ETF. They also rebalance automatically and invest based upon your risk tolerance after answering a series of questions. Take a look at their site below for the list of their one source ETF's:

http://www.schwab.com/public/schwab/inv ... ceETFs.asp

[evilanne]

Fidelity representatives are very helpful to answer your questions and be sure you understand the rules. They cannot recommend stocks or ETFs though.

They can't recommend stocks or ETFs? Or do they just charge more, i.e. the Rep-Assisted fee per trade?

I was looking at some of the companies mentioned in this thread and can understand being confused. Fidelity, Schwab & VanGuard all have no fee funds available, but they do have some restrictions on short term trading, which seems to be more restrictive than TSP.

Short-term Trading Fees
Effective September 30, 2013, Fidelity will charge a short-term trading fee each time you sell iShares Funds purchased commission free that are sold within 30 days.
The short-term trading fee will be applied on a first-in, first-out basis, and will not apply to iShares Funds purchased through dividend reinvestment. The short-term trading fee is based on the following schedule:
Online: $7.95 FAST®: $12.95
Please note: Rep-Assisted trades for iShares Funds will be subject to the $32.95 commission per trade, but will not be subject to the short-term trading fee.
Free commission offer applies to online purchases of Fidelity ETFs and select iShares ETFs in a Fidelity brokerage account, which may require a minimum opening balance of $2,500. The sale of ETFs is subject to an activity assessment fee (of between $0.01 and $0.03 per $1,000 of principal). Fidelity ETFs and iShares ETFs are subject to a short-term trading fee by Fidelity if held less than 30 days.

If you buy and sell the same Vanguard ETF in a Vanguard Brokerage Account more than 25 times in a 12-month period, you may be restricted from purchasing that Vanguard ETF through your Vanguard Brokerage Account for 60 days.

Schwab’s short-term redemption fee will be charged on redemption of funds purchased through Schwab’s Mutual Fund OneSource®service (and certain other funds with no transaction fee) and held for 90 days or less. Schwab reserves the right to exempt some funds from this fee, including certain Schwab Funds®, which may charge a separate redemption fee, and funds that accommodate short-term trading.

[evilanne]

Or you can open an account with Wisebanyan. Zero commission fees and the portfolio re-balances based on your risk. The fund generally uses the Vanguard ETFs funds when it allocates funds into ETFs. It also re-balances automatically with no fees. You can open a traditional or Roth IRA account. I've been using them for a bit now and I have had zero problems.

Why pay fees when you don't have to.
wisebanyan.com

I couldn't find much information on wisebanyan. Do they allow you to buy individual stocks or is it limited to mutual funds?

They have a la carte fees for services that are minimal if you do everything online (no paper statements) and remain with them. https://wisebanyan.com/assets/docs/Wise ... hedule.pdf

[skiehawk11]

they only do etfs. If you want individual stocks try robinhood.com. I've used them for several months now. There are no commissions to trading and it's very easy to buy and sell.

[ArrieS]

Or!

Depending on your net worth you can open an account at Merrill Lynch. If you have more than $50,000 you get 30 free trades a month. More than $100,000 you get 100 free trades. Plus, extra perks if you bank with Bank of America since they own them. That net worth is the total of all your accounts.

No early redemption fees and you can buy and sell stocks as well.

But, I will say that with Vanguard after you meet a certain threshold, I believe it's $50,000 in an individual ETF you get access to their admiral shares which has even lower fees.

[crondanet5]

Merrill Lynch has a market chart you can customize to follow bids and asks, high low for the day and more. Oftentimes they beat cnbc on market price updates to the DOW and NASDAQ. No doubt the other companies do the same but I am not familiar with them.

evilanne I am not a fan of ETFs so those restrictions do not apply to my trades.

[evilanne]

crondanet, You are always the one that advises people to roll over TSP to IRA, so what do you invest in that has no fees?

[crondanet5]

I'm not cheap. I pay the fee just like I tip the waitress well.

[evilanne]

Maybe I'm cheap or frugal, but I do have an issue with paying 10-25 times the cost of a single stock trade for both buying and selling which only takes a handful of keystrokes. For my mother, who likes to go and talk to the broker face to face, it probably makes sense; but it can be quite costly when you start adding up the fees. I think the main difference is whether or not you want a self directed online account vs a fully managed brokerage account. I think it is like the difference between Merrill Edge and Merrill Lynch. http://www.wsj.com/articles/merrill-lyn ... 1430832419

[crondanet5]

Good point. I use self directed. I like to buy a thousand shares at a time. If I make $300 I can pay the brokerage $7-9 and still make a gain.

[TSPBuilder]

I understand the IRA rules, but I've never had a broker before. I want to fully fund my 2015 IRA before the tax deadline.

I've been reading about commission-free ETFs, because I'd like to follow the same seasonal strategy I use in my TSP. But reading about trade commissions, fees, expense ratios, 30-day trade fee windows, and mutual funds has me racking my brain.

I understand the TSP pretty well but I feel overwhelmed by all of the nomenclature and dozens of different fees on the private side of the house.

What do you guys recommend?

Thanks
-Matt

Hi Matt,

I was in a similar place back in 2005. I had a fair handle on my TSP account and wanted to see if I could find something like it on the "outside". I found that and more in ProFunds. At the time the company was charging 1.75 to 2.25% in fees per year (which sends most investors packing but I could trade as much as I wanted and when the market started to tank I could slide into their money market until the inverse of the same fund established an uptrend. The past two years they haven't charged any fees. I had a bad year last year in that I only made 22% but it was a great lesson in identifying when I get too greedy and to take my profits and park them (was up to 66% by September). By 3/9/16 I hit 45% and I parked in the money market. It's April 7th and I'm just peeking out again.

One major downside with the leveraged accounts (you don't have to use the 2x funds. They have 1x ones also) is if you are invested 100% (what I do) in a fund and the 2x index goes the opposite way in one day, you have lost all your money. To combat the paranoia this invokes, I researched the historical data and the only instance I found of this occuring was in 2008. I applied my 5 and 20-day SMA to the month and a half before and after and was pleased that there where only a couple days that this happened and I would have gotten out two days in advance when the index hit 35% (72% for the 2x fund).

I am currently looking to try my luck with ETF's for the rest of my portfolio to allow me better control by putting a stop or limit (I think it's called) to sell if the market should head toward a 50+ percent day. So I am feeling your pain as I wade through all the various schemes of brokerages to whittle away at my principle with their fees for trading from one ETF to another and penalizing me for being in one for less than "x" number of days.

Good luck with all the options everyone is sharing with you. I am hoping we both come out the other side relatively unscathed.

By the way, Thank You to everyone contributing such excellent information on the different brokerages that they employ to build their nest egg.