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July 2nd, 2014 at 11:11 am

S has a very small rollover IRA at Fidelity. ($2300) We just recently rolled an old 401(k) into it, so now we're ready to invest in something other than a money market mutual fund. I figured Vanguard's Total Stock Market Index would be the way to go, but unfortunately Vanguard raised their minimum investment to $3000, even for IRAs. So, after some searching and finding almost *no* funds that have less than a $2500 minimum, I figured I'd invest in the Vanguard STAR fund and then, once it hit $3K or greater, exchange into the VTSMX.

Except when I tried to do the trade, I kept getting an error that the fund has a $2500 minimum. So, more research, and I combed through the 10,000+ funds that Fidelity offers as open to new investors, and couldn't find any with a minimum of less than $2500. Fishy. I checked the IRA account agreement, and it says nothing about minimum investments, except that you must meet the fund's minimum requirement. I contacted Fidelity and sure enough, the only mutual funds you can invest less than $2500 in through their accounts are money market mutual funds.

I'm not entirely irritated with their policy, but I'm irritated that a) it's not mentioned in the account agreement anywhere, and b) both the account agreement and the trading platform give the impression that it's the fund's minimum investment requirement that matters, and not Fidelity's. (In fact the trading platform specifically states, "The selected mutual fund has a minimum investment requirement of $2,500.")

So I have a few options: 1) I can leave the money in the money market mutual fund; 2) I can contribute an additional $200-700 to bring the account up to $2500-3000 and invest in one of the Vanguard funds; 3) I can invest in an ETF or stock; or 4) I can transfer the IRA to a new Vanguard IRA and follow the STAR-to-VTSMX plan.

Number 1 is least desirable, because the money is earning almost no interest and since this is long-term retirement savings, I'd rather maximize earnings as much as possible. Number 2 is not much better, since we don't qualify for a deductible IRA and I'd rather use the $200-700 to pay off debt at this point (plus honestly I chafe at feeling compelled to contribute to an IRA simply so that I can invest in a product that might actually make money!). Number 3 is doable, Vanguard has a Total Stock Market ETF with essentially identical performance as the mutual fund. Number 4 is attractive primarily because of my pique at Fidelity.

Actually number 3 is probably the best choice, now that I've listed them all out, because it will get me invested in the better-performing fund from the start. (The STAR fund has been significantly underperforming the Total Stock Market Index for the last couple of years.) In my still-irritated state, though, it would be satisfying to tell Fidelity to stuff it. (Although a) they probably would never know or care why I transferred the account and b) S's current 401(k) is at Fidelity and is a much larger account, and of course we can't move that one.)

So I guess I'll stay at Fidelity and buy the Vanguard ETF -- but I might wait a day or two until I'm less irritated about the whole thing!