Can I Buy Stocks for a Roth IRA?
A Roth individual retirement account allows you to accumulate money for retirement by investing taxed income today and taking tax-free withdrawals in retirement. Although you can buy and sell stocks within a Roth account, you should consider several factors before doing so.
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Brokerage Accounts
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To set up a Roth that permits you to trade individual stocks, Kiplinger recommends you open an account with a brokerage firm. Although you can work with a traditional brokerage, using an online discount brokerage firm typically offers several benefits, including no custodial fees and low trade costs.
Trading Commissions
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Consider the commissions you will pay each time you trade stock in your Roth account. Depending on the broker, commissions can cost $10 or less per market order that you complete online, as of 2010 (see fees listed at Top Ten Reviews). Some transactions--such as stock-option trades--can incur higher fees. If you call your brokerage to have a customer service representative make a trade for you, the commission may be higher.
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Minimum Investments
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Unlike mutual-fund companies, which require a minimum investment of up to $3,000 to open a Roth IRA, discount brokers often do not require an initial investment minimum, according to CashMoneyLife. Before you open a Roth IRA, make sure you know the maximum you can contribute for the current year (see Resource).
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