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Let me start off by saying that I'm pretty ignorant on all things investing-related. I've never owned stocks, I can't say that I completely understand the market and how it functions, and I get confused when looking at my 401K statements. I'm not an idiot -- I'm a graduate of a pretty good college, but I just never took the time to understand the stock market.
All that being said, I've got some extra money and I want to dabble in the stock market a bit. I'm not looking for advice on which companies to invest in, as I've already identified a few that I think can turn around pretty quickly. What I am asking is this... how do I go about buying stocks? Do I have to go through a Wachovia or an Edward Jones, or can I simply go online somewhere and purchase 10 shares of company X, and 20 shares of company Y?
Wachovia (Walk all over ya) & Eddie Jones will want to give you advice and charge you a fortune for it. You can open an account at any of the online brokers like Fidelity, Schwab, Etrade, Scottrade, or Zecco. I've been using Fidelity for years and the customer service has always been fantastic. The few problems that I've had were resolved in a prompt and professional manner.
If after reading those you STILL feel confidant then I think you will do a lot better going to the e-trade site and setting up an account there. The "old fashioned" Edward Jones or Wachovia (which is being rapidly merged out of existence...) style brokerage offices are going to KILL a "odd lot trade" -- they charge excessive fees for orders that are not in blocks of 100 shares...
Honestly, you would do better DRIVING TO A RIVER BOAT CASINO than just plunking down money on a few hands of Blackjack "cause you think they can turn around pretty quickly"...
Do you have a tax strategy for this too? You will give up a lot of profit to the IRS without one...
Let me start off by saying that I'm pretty ignorant on all things investing-related. I've never owned stocks, I can't say that I completely understand the market and how it functions, and I get confused when looking at my 401K statements. I'm not an idiot -- I'm a graduate of a pretty good college, but I just never took the time to understand the stock market.
All that being said, I've got some extra money and I want to dabble in the stock market a bit. I'm not looking for advice on which companies to invest in, as I've already identified a few that I think can turn around pretty quickly. What I am asking is this... how do I go about buying stocks? Do I have to go through a Wachovia or an Edward Jones, or can I simply go online somewhere and purchase 10 shares of company X, and 20 shares of company Y?
Thanks!
I work as a Registered Investment Advisor and I can tell you that the best option for you (as a young person) is to invest aggressively in companies that have taken the biggest beating and basically make bets that they will recover. I bought Ford at 1.25 just a couple weeks ago, now it's at 3.2 There are many more bargains just waiting to be snapped up. Hold onto them for a long time, but don't get attached to any one security, as emotions and loyalties are very bad investment tools. Go through something like Ameritrade or Scottrade instead of Fidelity or Edward Jones because the first two are simply places to facilitate a trade while the latter two are full-service Broker/Dealers. The transaction fees at Fidelity are a minimum of $20 a trade, which means you will have to be spending quite a bit of money before that transaction fee doesn't erode any chance at making a profit. I believe E*Trade is about $8 a trade, which is a HUGE difference. I suggest that when you're about 30-35 (depending on how much you make/save) that you see a full-service financial planner (A CFP) to help you plan out your retirement. Start saving now, as the money you invest today will be worth much more than the money you invest tomorrow. And finally, don't worry if your stocks go down, the market fluctuates and you're young enough to ride out the storm. Hope this helps!
Let me start off by saying that I'm pretty ignorant on all things investing-related. I've never owned stocks, I can't say that I completely understand the market and how it functions, and I get confused when looking at my 401K statements. I'm not an idiot -- I'm a graduate of a pretty good college, but I just never took the time to understand the stock market.
All that being said, I've got some extra money and I want to dabble in the stock market a bit. I'm not looking for advice on which companies to invest in, as I've already identified a few that I think can turn around pretty quickly. What I am asking is this... how do I go about buying stocks? Do I have to go through a Wachovia or an Edward Jones, or can I simply go online somewhere and purchase 10 shares of company X, and 20 shares of company Y?
Thanks!
I'm more or less in your shoes. In my 20's, have my first taste of excess income, and don't want to spend it. I don't have enough money to need someone else manage it, nor do I want to pay someone else to do that anyway.
The best deal that I found was to open up an account with Bank of America. If you open a checking account, you get a free brokerage account, with no fees and a flat $10 per trade. If you add a direct deposit to that checking account, they waive the checking fees, and you're in the clear. I've set my own rules that I hold myself to, with my paycheck split 75/25 between my old "spending" bank, and my new "saving" bank.
You can really lose your ass, but I probably don't need to tell you that. I'm not at all qualified to give investment advice. I went out and bought Ben Graham's book on value investing, "The Intelligent Investor". Since I began this summer, while my 401k has crashed and burned, my own personally-managed (albiet small) piggy bank is up about 10%, and I haven't yet been burned on a trade. I like to invest in simpler businesses I can understand, and I likely just stumbled upon a good time to be cautious.
I want to stress how complex investing is to a newbie like me. It isn't the known knowns, or the known unknowns that are the problem... it is the unknown unknowns. The piano that falls out the sky, the earnings that were fabricated, the cryptic accounting footnote on the bottom of page 53 of the 2006 annual report, that really means, "We aren't actually making this much profit."
I have the luxury that my dad was a financial planner/broker for many years, and I rely on him to keep me from doing stupid things while I begin the long educational process of managing my own money. I highly recommend that you find someone competent, trustworthy, and free.
The best deal that I found was to open up an account with Bank of America. If you open a checking account, you get a free brokerage account, with no fees and a flat $10 per trade. If you add a direct deposit to that checking account, they waive the checking fees, and you're in the clear. I've set my own rules that I hold myself to, with my paycheck split 75/25 between my old "spending" bank, and my new "saving" bank.
There are plenty of brokerage firms that charge less then $10 per trade and they have less stringent account requirements then BOA.
Scottrade charges $7/trade and only has a $500 min balance.
Firsttrade charges $6.95/trade (not sure of min bal requirements).
Scottrade & Firsttrade are two of the more popular firms but there are many others
There are plenty of brokerage firms that charge less then $10 per trade and they have less stringent account requirements then BOA.
Scottrade charges $7/trade and only has a $500 min balance.
Firsttrade charges $6.95/trade (not sure of min bal requirements).
Scottrade & Firsttrade are two of the more popular firms but there are many others
Wachovia was the first place I looked. Their prices were not remotely competitive. Something like $15 per trade, plus an amount per share, plus a high minimum balance, plus annual fees, plus more fees if you step out of line. It was my "old" bank, and I agree with the walk-all-over-ya quip.
Scotrade was the first I signed up with, since they had the best rates I found. Never put in any money, and I thought their interface was awful. I was also bombarded by junk mail, phone calls, and emails.
BofA is fee-less, with no minimum balance. They have a powerful web interface for research and trading, which is mainly what seperates these self-directed brokerages from one another. I suspect that since their firm has other revenue sources, that's why they aren't forced to nickel-and-dime me, spam me, or generally be a pain in my ass. The extra $3/trade is worth it to me. I suppose if someone didn't want a BofA checking account, then it wouldn't be for them.
First rule of investing: don't lose money. This is a treacherous time to start investing. Forget fundamentals. The markets are in chaos ruled by emotions particularly fear. That's why Treasuries are so popular. Nobody knows what to do to they're dumping $ in a "safe" haven till the smoke clears. Remember, more money was lost from 1930-32 than in 1929. That said when the smoke does clear it will be a once in a lifetime opportunity to snatch up historic bargains. Look up Martin Weiss. He's been sounding the alarm for a while about what's happening now and seems to have the soundest grasp of what's likely to happen.
A bear market is no place to start. Put it in the bank in CD's until the market recovers and in the meanwhile learn about investing and all the different investment vehicles - stocks, bonds, mutual funds, etc.
Never, never buy what you don't understand.
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