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Okay, due to my previous posts all are aware that I am not too fond of the current market. However, due to my SO I have decided to get some additional info. he wants to buy some stocks and see what happens. Of course this will involve serious research and thought. He has a point that if we buy now when it is low we MIGHT make money, on the flip side, my point is that we also might not. but, I have agreed to look into it. I used to have a sharebuilder account. Not sure if I still do but he does not. Do they offer anything these days to sign up? Also, what if one is a very beginning investor and does not have $500 or $1000 to start. Do we wait until we do? For example, what if I wanted to start today with $50. Is that possible? I did look at the scottrade site but if I am understanding this correctly, they charge an additional $7 per stock to buy it? So a stock that costs $10 really costs $17? except without the benefit of the $7? am I understanding that correctly?
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sharebuilder will let you start with as little as $50. $4 per trade.
I would stick with mutual funds for any monthly contrbution under $400/mo. The $4 transaction costs will eat you with stocks. -
I am not talking about 401K or anything like that. I am talking about buying actual stocks as a person. no monthly contributions. is that what you meant? I have such little knowledge of this area.Comment
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When you buy using a broker like Scottrade, you'll have to pay a transaction fee for everything you buy.
Ex. You buy a stock called IIPER(Made up) for $2 a share and the transaction fee is $3. It'll cost you (Amount of Shares*Shareprice) + Transaction fee.
So if you buy 1 share, it'll cost $5. If you buy 2 shares, it'll cost you 7 dollars and so on.Comment
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As jim said, you should only buy mutual funds at 50 per month. You are getting way ahead of yourselves to attemp to buy stocks at this point.Comment
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Again, I want to be sure I am understanding. This is not about 401k or roth or anything else like that. At this time there will not be any 401k or roth.
I am only wanting information regarding personal purchases of stock. Can you buy mutual funds as an individual person? and I am not really sure what mutual funds are?Comment
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So, basically, it doesn't cost $3 each stock, it is each transaction? As long as you are buying multiple of the same stock. right?Originally posted by MoneyTrev View PostComment
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You can, and very likely should, buy Mutual Funds as an individual. If you're as new to stock investing as it sounds like you are, you probably don't want to do a bunch of research into individual stocks. There's no reason you can't buy a Mutual Fund in a personal account at all.
Additionally when you are making the small purchases you are thinking about, buying a mutual fund can often avoid having your capital eaten up by commissions. If you are paying $3 on a $50 investment, you are going to have to make over 6% just to break even. With mutual funds you have the opportunity to decide when and how you pay your fees. If you buy what they call a "back loaded" mutual fund where you don't pay until you sell, then those commissions can be significantly less painful.Comment
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can you help me understand what a mutual fund is?Comment
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and yes, extremely new to any kind of investing. that is why I have avoided a lot of it in the past.Comment
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cicy,
You might be looking for something like this.
Oneshare.com - Buy One Real Share of Stock. Gifts of Disney Stock and More!Comment
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While I found this interesting, I don't want to pay a $38 transfer fee. That is not making money that is losing money. one stock of kellogg's was almost $100 doing it this way and on sharebuilder it is only $42. but it is interesting as a gift.Originally posted by fruitbowlk View PostComment
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mutual fund will take money from investors- like you, me, maat and others here. They then pool our money together and invest in stocks, bonds, foreign currencies, gold, silver, wheat, corn, swiss francs and another other security.
Most mutual funds only invest in a portion of what I listed.
For example some will invest in all stocks.
Others will invest in all bonds.
Some will invest in a mix of stocks and bonds.
Some might invest in US stocks
Some might invest in Foreign stocks
Some might invest in large US stocks
some might invest in large foreign stocks
How narrow do you want to find the stocks? My suggestion is look for large cap US stocks first. Easy to track, you know the names of the companies (Microsoft, GE, Pfizer) and then learn from there.
Vanguard, Fidelity and T Rowe Price are the 3 places a new investor should look.
At Vanguard look for total market index or 500 index
At Fidelity look for same indexes or Equity Income or Blue Chip names in fund names.
A T Rowe look for Blue chip or Equity Income funds
T Rowe for example will allow you to invest $50/month into one of the funds. They will charge $10/year (assessed in August) until account balance is $5000. Vanguard may not accept any investment until you send them $10,000. Fidelity is somewhere in between.
The entire $50 you send to any of the 3 gets invested. You will own shares of the mutual fund which owns shares of the stocks. If mutual fund costs $10/share, you get 5 shares. If it costs $25/share you get 2 shares.
Each day the shares will go up and down in value. Might go up or down 30 percent in one day ($10 turns into $7 or $13). The shares of the mutual fund go up or down based on the stocks it holds going up or down.Comment
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On the sharebuilder site, it says 9.95 per online trade. Is that per stock you buy or can you buy 10 for the 9.95?Originally posted by jIM_Ohio View PostComment
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My sharebuilder account has been inactive for a while, but automated debits were $4 per transaction.Comment
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