Can I do this with an IRA?

Question

I know hardly anything about investing. I was just wondering if there is such an IRA where you can invest it in the stockmarket and buy one share of every company in a specific market such as the NASDAQ? They say the stock market as a whole raises 11% a year, so to me buying one share of every stock in the NASDAQ or some other market would be the safest way to go. I am just wondering if I setup an IRA with Wells Fargo if they would actually do that if I wanted to.

Answer 1

I find I have to disagree with the 1st responder. Buying QQQQ is not like buying one share in each stock of the NASDAQ. Far from it. It is a capitalization weighted index. What you wind up buying is a bunch of high pe crap for the most part with a smathering of other stuff thrown in. The top 10 holdings make up 38% +- of the portfolio. What you are buying is a bunch of Microsoft, Apple, and Qualcom with Google, Oracle, and Cisco thrown in for flavor.

There is an equal weight S&P 500 index fund that you can buy. That would be somewhat similar to buying one of each, but not of the NASDAQ, instead of the S&P 500. The symbol of that index fund is RSP. Current price per share $47.98. One return 13.65%. 3 year return 13.06%. The S&P 500 is by many considered a proxy for the market in general. An equal weighted index is exactly like buying one share of each.

Do not even consider buying one of each of the NASDAQ stocks, the brokerage commission would kill you. Not to mention the cost. There are 3000+- stocks listed on the NASDAQ. Assuming average of $10 a share, it would cost you about $30,000 not including brokerage commission.

Answer 2

QQQQ will get you some of the exposure you desire from the Nasdaq, but the real question is: Do you really want to do that? First, the Nasdaq, or the QQQQ ETF, is not a pure representation of the U.S. stock market, which by the way, does not rise 11% every, single year. On average, our stock market has risen about 10% per year, but the key words in that statement are 'on average.' One year, it may rise a heady 25%, and the next 3%, and the next year it may decline 8%, and then decline again by 12% the next year.

Also, there are times when the market has long, drawn-out periods where returns are far above that 10% average (e.g., 1990s), as well as below that average (e.g., 2000 - now). Now, everyone really, really likes the above-average periods, but naturally, do not like the below-average periods. So, you have to ask yourself, when contemplating whether you should invest your whole account in an ETF like QQQQ, "Am I prepared to stick with this investment for a long, long time, even during periods when its earning, say only 1/2 of my 10% target return? If the answer to that question is yes, then go ahead, but you may want to reconsider Wells Fargo. You'll have much better luck, and will keep more of your own hard-earned money by opening an account with a discount broker like Scottrade or TD Ameritrade.

If, however, you find yourself answering no to that question, then do some research on Morningstar.com to find a no-load balanced fund with a decent track record during both bull & bear markets which is open to taking new investments and invest directly with that mutual fund company. That's a good place to start. Then, as you learn more about investing, you will find that there are so many wonderful opportunities beyond the stock market (I'm not anti-stocks, by the way) that you will never again feel like that's the only place to be.

I hope my answer helps.

Answer 3

I do not recall any investment that would allow you to buy just one share of every stock listed on the NASDAQ. You may wish to investigate symbol QQQQ (the 100 largest NASDAQ listed companies), symbol SPY (the S&P 500 stocks) or symbol IWV (the Russell 3000 index stocks).

Answer 4

Yes, and you can do it very easily. Just buy shares of QQQQ (just open finance.yahoo.com and look it up). It pools the money of many investors and does what you are proposing: buying the stocks of many companies, and holding them in a trust. As long as the IRA with Wells Fargo is a brokerage account, then you can do this.

Answer 5

If you want the most diversification for your money, buy something like VTI, Vanguard's total stock market exchange traded fund. Buying shares of this is like buying shares of the entire U.S. stock market.

Also, I wouldn't recommend setting up an IRA with a bank. They will most likely kill you with fees & commissions. A better idea would be to open one with a low-cost discount broker.

Answer 6

You can put stocks in a IRA accout but you have to open a brokerage account. See if wells fargo has one,