I actually have a question for others. Is it better to invest all at once, or spread out the IRA investment over a year. Does the $3000 minimum apply if you already have an account?
I wondered this for a while too. I was investing in a Vanguard Index Fund for my IRA and had $4000 with which to do it. The question was to pay the initial $3000 minimum and use dollar cost averaging to invest the rest over time, or invest it all at once.
From what I understand, this is a little dicey, but all that I have read/researched on the subject is that typically, you want to get your money working for you as soon as possible -- in other words, invest my $4000 right away as opposed to sitting on $1000 of it, which would do very little for me.
Of course, the actual outcome depends on what the market does in that particular year, but given that the market trends upward over the long run, it is more likely than not that your money will start doing good things for you during the year and the more you have invested from the get-go, the better.
I don't claim to be an expert, but this is what I have gathered from the research I have done on the subject. If you google something like: lump sum vs. dollar cost averaging -- you can read what I have read for yourself.
That being said, I personally think that dollar cost averaging is a GREAT thing when you are investing a portion of your income AS you are getting your paychecks!