Dear 95saab:
There are a couple of avenues open to you. The best from a tax
perspective would be to open an IRA, preferably a Roth IRA if you are
eligible (see IRS Publication 590 for details:
http://www.irs.gov/pub/irs-pdf/p590.pdf "Publication 590, Individual
Retirement Arrangements (PDF 449K)"), which would then allow you to
meet the minimum for opening a new mutual fund account and derive
significant tax advantages. For example, you could buy many funds at
Vanguard Group http://www.vanguard.com with that amount of money. You
want to be diversified, so your best choices are something like the
Total Stock Market Index Fund or the 500 Index Fund. These funds also
have the advantage of being extremely inexpensive to own because of
very low management fees.
The other option I would suggest if an IRA is not possible would be
purchasing an exchange traded fund, such as SPDRS or Vanguard's
VIPERS. The commission on the transaction, if done through a discount
broker, would not be a sizable portion of your assets, so this would
not be an unreasonable approach. Again, you would be wanting to buy
one of the exchange traded funds that mimics a diversified index of
stocks. Most exchange traded funds of this type also have very low
management fees. You would not get the favorable tax treatment of an
IRA, however, but the money would still be available for you to use
without penalty prior to retirement.
Remember that in order to make an IRA contribution based on year 2003
tax return, you must do so by April 15, 2004.
Good luck with your investing.
Sincerely,
Wonko |
