Author Topic: Are individual stocks and EFTs practical for a retiree?  (Read 2148 times)

joer1212

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Are individual stocks and EFTs practical for a retiree?
« on: July 10, 2012, 09:09:48 PM »
If I include some individual stocks and Exchange Traded Funds (ETFs) in my Roth IRA, will I get charged a commission fee every time I take a distribution from them when I retire?
For example, let's say I retire tomorrow. I have my Roth IRA linked to my checking account. I start making withdrawals from my Roth IRA, and have the money electronically deposited into my checking account every 2 weeks for living expenses. Would this trigger a fee of any kind? If it does, I will most definitely not purchase any individual stocks or ETFs. I will only stick to index mutual funds, as these don't charge anything to take regular distributions from.
I know that TD Ameritrade charges $9.99 every time an individual stock or EFT is bought or sold. I can't imagine how it could possibly be worth it to get hit over the head with this fee every 2 weeks just to withdraw your own money.
By the way, the stocks or funds I will buy will be for the long haul. I have no intention of ever selling them. I will only withdraw about 3% annually from them to live off of, but I want to take this withdrawal a little at a time, say, every 2-4 weeks. This way the rest of my principal can remain in the investment to compound away.
To get a better idea of the big picture, this is what I do:

I max out my 401k and 457b every year (34k/yr) in the following:

10% stable value fund
30% Total bond index fund
25% large-cap index fund
9% mid-cap index fund
8% small-cap index fund
18% international index fund

I just opened a Roth IRA, which I will also max out every year (5k). I will be investing in other asset classes here (that my employer does not offer) to round out my portfolio. Here is what I ultimately want to invest in (assuming I don't get charged commission fees for withdrawals):

- REIT index fund (currently have some money in VGSIX)
- Micro-cap fund
- Junk bond ETF (considering JNK or HYG)
- TIPS or short-term bond EFT
- a few individual value and dividend stocks

There you have it.
Remember that I am trying to create a "permanent" portfolio from which I will be withdrawing about 3% a year for life once I retire. I will not be selling any fund or asset in its entirety.







« Last Edit: July 10, 2012, 09:19:29 PM by joer1212 »

velocistar237

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Re: Are individual stocks and EFTs practical for a retiree?
« Reply #1 on: July 11, 2012, 06:35:14 AM »
If I include some individual stocks and Exchange Traded Funds (ETFs) in my Roth IRA, will I get charged a commission fee every time I take a distribution from them when I retire?

If there is a transaction fee, then yes, you have to pay it, even in a Roth. You could sell several months worth of expenses at a time from a single fund to lower this cost, then rotate which fund you withdraw from. Also, some brokers don't charge transaction fees on ETFs that they administer. I believe this is true of Vanguard. You can move your Roth if you want, though be sure to look at the legal details if you do that.

Secret Stache

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Re: Are individual stocks and EFTs practical for a retiree?
« Reply #2 on: July 11, 2012, 06:39:30 AM »
I have a Roth with WellsFargo that allows 100 free trades a year for each of my trading accounts with them.  I'm sure other brokerages offer something like that if you don't like WF so shop around and find a deal.  Now the question is how long will that be available, or will they be in business when I retire...who knows. 

jpo

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Re: Are individual stocks and EFTs practical for a retiree?
« Reply #3 on: July 11, 2012, 01:21:23 PM »
TD Ameritrade also has free-to-trade ETFs, including a health dose of Vanguard funds.