Buying stocks online?

[HiImSeth]

I'm curious about that as well.. I've not used any investment website/account yet but was thinking about using Zecco when I am ready to do so.

[baking23]

I started an account at Sharebuilder and I only contributed $20 until I get the hang of it. But it looks like it should work out well.

I had had a bit of spare money I was going to add to this but I got new tires and rims for my car the other day. Bummer!

[baking23]

I've put my money into the account I've started on Sharebuilder. Why when I thought it was only $4 a trade is it talking about Market and Limit orders for an extra $15.50?

[sweeps]

Originally Posted by baking23

I've put my money into the account I've started on Sharebuilder. Why when I thought it was only $4 a trade is it talking about Market and Limit orders for an extra $15.50?

This is where Sharebuilder gets ya. The only way you get $4 a trade is during a buy, and even then only when you allow the buy to happen on a particular day and time (Tuesday I believe). If you want to buy in real-time or if you ever want to sell, you're paying a good chunk of change.

SB is only good if you are a true buy-and-hold investor and only plan on selling your shares in a big lot later down the road.

[jIM_Ohio]

The longer you hold a security, the cheaper stock investing is.

Invest $1000 and hold a mutual fund. Cost .75% expense ratio. yr 1 pay $7.50. yr 2 pay $7.50, yr 3-?? pay $7.50. The fee goes up if mutual fund increased NAV.

Invest $1000 with one stock at sharebuilder ($4). Pay $14.95 to sell. $18.95 is total transaction cost.

If you hold MF for two years you come out ahead (cost wise). 3 or more years greatly favors the stock.

Next issue is you would need ~15 stocks to be diversified enough.

I have a sharebuilder account. Use it for my god daughter. Used to use it for myself, plan to continue once I get more cash in other accounts. Sharebuilder is designed for systematic purchases. If you want to time the market, I hear Ameritrade has $7 trades...

[baking23]

Originally Posted by jIM_Ohio

The longer you hold a security, the cheaper stock investing is.

Invest $1000 and hold a mutual fund. Cost .75% expense ratio. yr 1 pay $7.50. yr 2 pay $7.50, yr 3-?? pay $7.50. The fee goes up if mutual fund increased NAV.

Invest $1000 with one stock at sharebuilder ($4). Pay $14.95 to sell. $18.95 is total transaction cost.

Thanks guys! That make sense I just wasn't expecting to see that, especially since I used the coupons and everything.

[baking23]

So now I'm thinking, can I put my money in my IRA into any stock I like? For instance I have American funds, and some other interntional one. If I wanted to invest the money in a regular stock but have it be my IRA contribution for the year, is it allowed?

How does my financial guy earn his money? I know it's a percentage of my investment but does it come out of my portfolio or the IRA folks pay him? I've been thinking about only paying him for his time @ $150/hr but I don't have a lot of cash in my IRA yet and I'm not sure what would be involved in being my own manager (tax-wise, etc...).

[kv968]

Originally Posted by baking23

So now I'm thinking, can I put my money in my IRA into any stock I like? For instance I have American funds, and some other interntional one. If I wanted to invest the money in a regular stock but have it be my IRA contribution for the year, is it allowed?

How does my financial guy earn his money? I know it's a percentage of my investment but does it come out of my portfolio or the IRA folks pay him? I've been thinking about only paying him for his time @ $150/hr but I don't have a lot of cash in my IRA yet and I'm not sure what would be involved in being my own manager (tax-wise, etc...).

Yes you can put the money in your IRA into any stock you'd like providing you have a brokerage account where your IRA is set up. Or your financial guy may be able to do this for you. However I would highly recommend to not just invest in one stock in your IRA. You need way more diversification than that. You'd be better off starting with just mutual funds.

As far as how your financial guy earns his money, ask him, he should tell you because you're the one paying him. He's most likely making it off of the commissions he receives from selling you the funds but he may be taking a percentage of your portfolio too. And he's making a decent commission since he's selling you American Funds. They have some very good mutual funds but their loads and fees are pretty expensive. Even if you pay him a per hour rate, he'll still most likely be making the commission if he continues to sell you funds that he's affiliated with.

[jIM_Ohio]

Originally Posted by baking23

So now I'm thinking, can I put my money in my IRA into any stock I like? For instance I have American funds, and some other interntional one. If I wanted to invest the money in a regular stock but have it be my IRA contribution for the year, is it allowed?

How does my financial guy earn his money? I know it's a percentage of my investment but does it come out of my portfolio or the IRA folks pay him? I've been thinking about only paying him for his time @ $150/hr but I don't have a lot of cash in my IRA yet and I'm not sure what would be involved in being my own manager (tax-wise, etc...).

Go to sharebuilder and read up. YES you can do this. You need to decide what is most cost effective.

Going with individual stocks is a "home run" strategy. If you pick well, you will do quite well. If you do not pick well, you may lose a considerable amount of money.

You need to own ~15 stocks to be diversified enough to have all of IRA in indivudual stocks. My suggestion would be Dogs of the Dow type strategy if this were the case.

The fees would be this. Each month you could contribute $X to sharebuilder IRA. I suggest once a month. Each time you buy a stock (once a month) , sharebuilder will charge you $4. So amount invested is I=$X-$4

Each month switch the stock you purchase. At year's end you would have 12 stocks. TThe following year, repeat (purchasing same stocks you bought previous year). Costs you $48/year. Every year. Once you learn sharebuilder, you might learn how to knock this fee down to $12/year.

This works best if you could purchase $4000 of one stock in one month ($4), then take 11 months off.

The benefit of a mutual fund is "instant diversification" of at least 20 stocks with one purchase, and probably ~1-200 stocks with one purchase. You are paying fees to mutual fund company to choose stocks for you.

If you are paying a LOAD off the top (meaning you put in 1500 and advisor takes $150), then find a better program. T Rowe Price would be my suggestion (tell the jIM sent you LOL).

[baking23]

Thanks for the advice, I might just wait to do this until I get more to put it at one time in my porfolio.