investing in non-Vanguard fund via Vanguard

I would suggest doing everything different than you plan. If you are with Vanguard, you should use them for what they excel, their low cost index funds.

If you really want a fund they don't offer as no-fee no-load, consider a low cost broker, who will offers as a regular no-fee purchase.

If you truly believe (I can't comment) the dollar will fall, your best bet is to buy a good overseas fund. You'll get the return of the market, and benefit from the dollar fall.

A Roth IRA is no place for a bear market fund which would be part of a market timing approach, which few, if any, here, would recommend. If you are just getting started, and this small Roth is all you have, an S&P index or total market fund is a purchase that 10 years from now will beat what most investors see for a return. (if the market rises 8%/yr, most investors will see about 3-4, due to bad timing. I can post a reference to the study that makes this conclusion)

JoeTaxpayer

I don't understand this remark.

If you already have a Vanguard brokerage account, and you want to invest in FDPIX, I don't see much of a downside in doing so through Vanguard. The only cost is that you must hold your shares for six months or more; otherwise Vanguard will charge you 1% when you sell (with a minimum of $50 and maximum of $250).

The 1.50% mentioned earlier is the fund's expense ratio, which is presumably the same no matter how you buy the fund.

So, assuming that:

You have decided that you want to buy FDPIX, and You already have a Vanguard brokerage account, and You intend to keep your shares of FDPIX for at least six months,

then I don't see any reason not to buy it through Vanguard.

I misread regarding cost. This is offered NTF (no transaction fee) thru Vanguard. But 1.5%? Ouch. My other remarks regarding the use of such a fund still apply, although as happens with most new posters, we know nothing about him. I have yet to see anyone suggest a falling dollar fund as appropriate for any particular asset allocation. JOE

VBS (Vanguard Brokerage Services) annual cost is $30, unless you are a Voyager or higher customer ($100K invested in _Vanguard Funds_)

ProFunds appears to charge a $15 annual maintenance fee for IRAs, so I wouldn't consider that a cost-effective route either.

As JoeTaxpayer may have implied, other brokers can provide you no fee IRAs with no brokerage account fees and the funds you are interested in NTF.

Mark Freeland snipped-for-privacy@sbcglobal.net

While I agree with you about the OP's investment choices, if he does decide to go with something like FDPIX (or whatever), why not put it in a Roth?

-Will

FDPIX is the falling dollar fund. I did say not to put it in the bear market fund, quoted above, because at least in a post tax account, you can sell and take the loss. In a Roth, you've just permanently damaged what should be long term savings. Even 'Madman' Jim Cramer talks about investing your retirement account conservatively, and leaving the speculating for one's, er, 'mad money'. JOE

I'd say it's a safe investment to park money in the falling dollar as USD has nowhere to go but down. Even the former allies have abandoned USD and more to come soon.

What's speculative is to assume USD has some special value in the eyes of the rest of the world - those days are gone.

Laura - while trimming is promoted, you snipped enough for it to look like I stated FDPIX was speculating. I was specifically referring to the bear market fund (don't know which OP had in mind, he didn't offer a ticker), NOT FDPIX.

I did say "If you truly believe (I can't comment) the dollar will fall, your best bet is to buy a good overseas fund. You'll get the return of the market, and benefit from the dollar fall."

I wouldn't be too critical of FDPIX as part of a properly allocated portfolio. Looking at the prospectus, it takes position in foreign currencies to create movement inverse to the value of the dollar. It does this in a way that provides a yield i.e. interest, along the way. JOE

So what you're really saying is that you believe that any strategy using a bear merket fund is doomed to failure (i.e. will lose money) and thus should not be implemented via a Roth IRA? Or are you just saying that Roth funds should be invested conservatively? If the former, then your recommendation might better be, "don't invest in a bear market fund." If the latter, I don't think I agree unless the OP's overall investment strategy needs to be conservative (or needs some proportion of conservative investments).

-Will

I didn't see you ask this question, but I have never seen nor recommended an asset allocation with a bear market fund, but then I don't generally look at, or recommend, asset allocations (at least not at this level of granularity).

Usually, depending on implementation. If this is a bear market fund that shorts the market, yes. If it is a market neutral fund, maybe not. If it is a fund that invests in companies that theoretically will perform better in a bear market than the broad market, no.

Absolutely, but I think purchasing a falling dollar fund is also an attempt at market timing, unless you think the dollar will continue its decline against other currencies indefinitely. Even if you do believe this, looking at a chart of FDPIX, it appears to have a very low long term return (something like 1.6%) with considerable volatility. How does that fit into your asset allocation?

Having sort of gotten lost in the weeds here, I'll go back to my original point: If we (this group) believe that the OP is investing in a losing investment, we should tell him so. If we believe the investment is worthwhile, then a Roth is a perfectly valid place to have it, depending on the rest of the OP's portfolio, which we know little about.

-Will

While I'm not bullish on the dollar, anytime lots of people say "nowhere to go but down", I start thinking the trend has about run it's course. -- Doug

You sound like Mark Hulbert.

(As I like his stuff, you can take that as a compliment)

I was writing my posts as though this was the equivelent of a money market fund composed of foreign currencies, a diversified basket. If, in fact that's what it is (the prospectus doesn't spell out the holdings, rather stating,"Falling U.S. Dollar ProFund takes positions in financial instruments that, in combination, should have similar daily return characteristics as inverse of the US Dollar Index®. Falling U.S. Dollar ProFund?s assets will have significant exposure to foreign (non-U.S.) ?hard currencies.?) then I'd think it could be part of diversifying same as overseas stocks. It seems the low return excludes dividends, but the fund is so new, it's tough to say. Either way, one can be very well diversified and never need such a product. The foreign currency exposure within the overseas funds is enough. To close, if the fund is purely structured to be 100% inverse to the dollar, I agree it should be avoided. JOE

I suggested this in a message here in 2002 -- you can Google "beliavsky viceira currency" to read the discussion. Here is the abstract of the paper I mentioned.

Foreign currency for long-term investors Authors: Campbell J.Y.; Viceira L.M.; White J.S. Source: The Economic Journal, Volume 113, Number 486, March 2003 , pp. C1-C25(1) Publisher: Blackwell Publishing Abstract: Conventional wisdom holds that conservative investors should avoid exposure to foreign currency risk. Even if they hold foreign equities, they should hedge the currency exposure of these positions and hold only domestic Treasury bills. This paper argues that the conventional wisdom may be wrong for long-term investors. Domestic bills are risky for long-term investors, because real interest rates vary over time and bills must be rolled over at uncertain future interest rates. This risk can be hedged by holding foreign currency if the domestic currency tends to depreciate when the domestic real interest rate falls. Empirically this effect is important.

People who think markets are one-way bets are precisely those who should not speculate. At its current levels the dollar buys more in the U.S. than its foreign equivalents do in many other developed countries. There have been articles in the press about Canadians and Europeans (especially Brits) coming to the U.S. for bargains, while American tourists suffer sticker shock in Europe. Hundreds of academic papers have studied whether "purchasing power parity" (PPP) applies in the currency markets, and I have read dozens of them. My reading of the literature is that PPP does apply at long time horizons, especially when deviations become extreme. At present they have become large. Thus I forecast that the excess (over U.S. money market funds) total return of currrencies such as the Euro, Pound, and Canadian dollar will be negative over an intermediate horizon such as the next

5 years. I well understand that my forecast could be wrong.