I want to start putting $100 every two weeks or either every month into my Ameritrade account and start purchasing a stock once a month. I know this is not smart due to the commission fees, but Im still interested in doing it anyway. Is this outrageously dumb? Ive been researching different stocks, already have a 401K, and just want to do this as something I can play around with on the side. I dont plan on buying and selling, buying and selling, just continually buying once a month for the next year or two.
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I want to start putting $100 every two weeks or either every month into my Ameritrade account and start purchasing a stock once a month. I know this is not smart due to the commission fees, but Im still interested in doing it anyway. Is this outrageously dumb? Ive been researching different stocks, already have a 401K, and just want to do this as something I can play around with on the side. I dont plan on buying and selling, buying and selling, just continually buying once a month for the next year or two.
Think of it this way . . . if you invest $100 each trade, at $10 per trade, you are basically paying a 10% commission on each trade.
so you'd need a 10% return on your stock to just get back to even. Considering most of the time that a 10% return in an entire year is a good return, might not be that good of a strategy. You are already putting yourself in a big hole.
I'd suggest investing $100 each month into a Vanguard fund which has no load fees and only charges about .30% or if you are set on buying a different stock, going to ShareBuilder as you can set up an automatic investment plan with them that only charges you $4 a trade. They aren't the greatest site for traders, but for what you are looking to do they are fine.
I'd also maybe change your strategy to $200 every month, cutting down on commissions as well. $200 a month at ShareBuilder at $4 a trade you are then only paying a yield of 2%.
Just my thoughts . . . good luck with whatever you do.
Think of it this way . . . if you invest $100 each trade, at $10 per trade, you are basically paying a 10% commission on each trade.
so you'd need a 10% return on your stock to just get back to even. Considering most of the time that a 10% return in an entire year is a good return, might not be that good of a strategy. You are already putting yourself in a big hole.
I'd suggest investing $100 each month into a Vanguard fund which has no load fees and only charges about .30% or if you are set on buying a different stock, going to ShareBuilder as you can set up an automatic investment plan with them that only charges you $4 a trade. They aren't the greatest site for traders, but for what you are looking to do they are fine.
I'd also maybe change your strategy to $200 every month, cutting down on commissions as well. $200 a month at ShareBuilder at $4 a trade you are then only paying a yield of 2%.
Just my thoughts . . . good luck with whatever you do.
what do you mean, "they arent the greatest site for traders"? are you referring to someone who buy and sells more often than what I'm looking to do... or the info they provide isnt the greatest?
Thanks for for your input
what do you mean, "they arent the greatest site for traders"? are you referring to someone who buy and sells more often than what I'm looking to do... or the info they provide isnt the greatest?
Get rid of sharebuilder, hold one account and Ameritrade or Scottrade is great.
If you want small investments, go into no load mutual funds, like a S&P from Vanguard..then you are in the market and it is liquid and no fee and you can make direct contributions setup when you buy.
Make sure you check out the cost if any for a mutual fund, some firms have fees to make the trade.
I would rather save up 500-1000 before making a trade, no need in this environment to push it..we are likely not going anywhere market wise for most of the year.
Get rid of sharebuilder, hold one account and Ameritrade or Scottrade is great.
If you want small investments, go into no load mutual funds, like a S&P from Vanguard..then you are in the market and it is liquid and no fee and you can make direct contributions setup when you buy.
Make sure you check out the cost if any for a mutual fund, some firms have fees to make the trade.
I would rather save up 500-1000 before making a trade, no need in this environment to push it..we are likely not going anywhere market wise for most of the year.
Get rid of sharebuilder, hold one account and Ameritrade or Scottrade is great.
If you want small investments, go into no load mutual funds, like a S&P from Vanguard..then you are in the market and it is liquid and no fee and you can make direct contributions setup when you buy.
no load mutual funds.. Vanguard... even though I do have a 401K account?
Im not to familiar with the whole stock, mutual fund thing but I am reading a lot and trying to do research. I just want to be able to research some stocks and pick a few that I like which are low to go along with the 401K.
Bad idea?
I understand about saving up the $500 - $1000.
Thanks wallstreet!
Make sure you check out the cost if any for a mutual fund, some firms have fees to make the trade.
I would rather save up 500-1000 before making a trade, no need in this environment to push it..we are likely not going anywhere market wise for most of the year.
Quote Originally Posted by wallstreetcappers:
Get rid of sharebuilder, hold one account and Ameritrade or Scottrade is great.
If you want small investments, go into no load mutual funds, like a S&P from Vanguard..then you are in the market and it is liquid and no fee and you can make direct contributions setup when you buy.
no load mutual funds.. Vanguard... even though I do have a 401K account?
Im not to familiar with the whole stock, mutual fund thing but I am reading a lot and trying to do research. I just want to be able to research some stocks and pick a few that I like which are low to go along with the 401K.
Bad idea?
I understand about saving up the $500 - $1000.
Thanks wallstreet!
Make sure you check out the cost if any for a mutual fund, some firms have fees to make the trade.
I would rather save up 500-1000 before making a trade, no need in this environment to push it..we are likely not going anywhere market wise for most of the year.
no load mutual funds.. Vanguard... even though I do have a 401K account?
Im not to familiar with the whole stock, mutual fund thing but I am reading a lot and trying to do research. I just want to be able to research some stocks and pick a few that I like which are low to go along with the 401K.
Bad idea?
I understand about saving up the $500 - $1000.
Thanks wallstreet!
no load mutual funds.. Vanguard... even though I do have a 401K account?
Im not to familiar with the whole stock, mutual fund thing but I am reading a lot and trying to do research. I just want to be able to research some stocks and pick a few that I like which are low to go along with the 401K.
I agree with the above posts. Stay away from Sharebuilder, and if you are going to go the individual stock route, try to at least save up a large enough amount that commissions won't eat into your gains. Scottrade has $7 trades, so if you are looking to buy and hold, if you scrape together $500 at a time, your comission wouldn't be too bad. Anything below that and you are starting to push it.
Personally, unless you know what you are doing with your individual stock picks, I'd lean towards the S&P 500 Mutual fund through Vanguard like Wallstreet suggested. That will at least get you a little more diversification than picking a couple stocks, and will significantly cut down on your commission expenses. Very few fund managers beat the S&P 500 on a consistent basis, so the odds of a newbie like yourself beating it are pretty low. Not saying impossible, but the odds are stacked against you if you don't know what you are doing.
As an add-on, if you are looking at this as a long term investment, i.e., you aren't looking to take the money out until retirement, make sure you look into setting up a ROTH IRA, or a Traditional IRA. If you are young and you expect to be in a higher tax bracket in the future, or, if you just have a feeling taxes will go up in the future, I'd strongly lead towards the ROTH. All appreciation on your account is tax free on withdrawals.
I agree with the above posts. Stay away from Sharebuilder, and if you are going to go the individual stock route, try to at least save up a large enough amount that commissions won't eat into your gains. Scottrade has $7 trades, so if you are looking to buy and hold, if you scrape together $500 at a time, your comission wouldn't be too bad. Anything below that and you are starting to push it.
Personally, unless you know what you are doing with your individual stock picks, I'd lean towards the S&P 500 Mutual fund through Vanguard like Wallstreet suggested. That will at least get you a little more diversification than picking a couple stocks, and will significantly cut down on your commission expenses. Very few fund managers beat the S&P 500 on a consistent basis, so the odds of a newbie like yourself beating it are pretty low. Not saying impossible, but the odds are stacked against you if you don't know what you are doing.
As an add-on, if you are looking at this as a long term investment, i.e., you aren't looking to take the money out until retirement, make sure you look into setting up a ROTH IRA, or a Traditional IRA. If you are young and you expect to be in a higher tax bracket in the future, or, if you just have a feeling taxes will go up in the future, I'd strongly lead towards the ROTH. All appreciation on your account is tax free on withdrawals.
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