Investing 102

[SSLance]

I'm sure this was probably covered earlier in the thread, but maybe things have changed since then...and it's something I'm looking at now so why not ask?

Who are you all mostly using for investment accounts these days?

I grew up in the investing world where you either paid hefty commissions on every equity trade or you paid a management fee quarterly to get the free trades. These days with Etrade, TD Ameritrade, and others doing free or very low cost trades...who is the hot ticket to use?

To me, if there were several houses that offered basically the same account fee structure, I'd be interested in the one that has the best\easiest to use research tools built into the online account.

[toy71camaro]

Originally Posted by SSLance

I'm sure this was probably covered earlier in the thread, but maybe things have changed since then...and it's something I'm looking at now so why not ask?

Who are you all mostly using for investment accounts these days?

I grew up in the investing world where you either paid hefty commissions on every equity trade or you paid a management fee quarterly to get the free trades. These days with Etrade, TD Ameritrade, and others doing free or very low cost trades...who is the hot ticket to use?

To me, if there were several houses that offered basically the same account fee structure, I'd be interested in the one that has the best\easiest to use research tools built into the online account.

I use ShareBuilder. I got free $ for signing up with my Costco account. Their Roth IRA accounts are free (ie. no monthly/yearly costs). Same with a regular account. Plus i get Market/Limit Trades at like $5.95. But if i "auto-invest", it will make the Market trade on tuesday for only $2. When i started, i was only doing a hundred bucks here, a hundred there, so $6 was nearly a 6% hit on my newly purchase stock. Thus the happiness for the $2 entry fee. But now i've learned to stick to at least $1k purchases to make it worthwhile.

I also have a Schwab Account. Mentioned earlier in this thread for its great research tools. But i dont have anything invested into that account. I opened it solely (at this point) for research.

[GregWeld]

I have accounts that are pro managed -- and accounts (the one I use here for expamles and showing off) at Schwab… and Fidelity.


I like Schwab because it costs me nothing - has great tools - is easy to use - and I have a branch right down the street if I need a check or to deposit a check. They also have good mobile tools.

One thing I would NEVER do is go with an individual to manage anything I have… the temptation is just too great and the stories are on TV every day… So stick with a commercial brokerage for all your transactions.

[SSLance]

Thanks everyone... I forgot about Schwab, they were one of the first low cost investment accounts to come along if I remember correctly.

I've got all of my current accounts with Merrill. When I was active in the market, I had my larger accounts in the "Unlimited Activity" plan which worked out pretty well. I dropped out of it when I went to cash.

If I start up again, I'd like to do it on my own mainly with stocks and ETFs so I need to find a way to make trades on the cheap. That ain't happening with a Merrill Account these days without being in one of their management plans.

[WSSix]

Vanguard and Fidelity for me. I started Vanguard on my own years ago. Fidelity came about through work and I've simply expanded my use of it from there.

[Sieg]

+1 for Schwab - There website is excellent and their mobile app is very good as well.

[GregWeld]

So with the latest news regarding China's ban on BitCoin.. Let's revisit my "investing 102" reasons for NOT wanting to plug this type of an "investment" or put more value on it other than the gambling hype associated with this type of an investment.


By my latest count -- most on here are relative newbs to investing or are complete investing virgins. Thus the reason for so many pages devoted to breaking down investing in it's simplistic form… i.e., saving some money - putting it to work - making it work for you. Compounding over time and ending up with some real money.


Most of you are just beginning and perhaps most have a main goal of retirement some time in the not too distant future. With a goal like that - gambling isn't the best way to get to that goal.

I'm not against BitCoin one bit (pun?)! I'm really not. If a guy is 20 or 30 something - has a great job - has 100K in his retirement account - isn't in debt up to his eyeballs… and wants to play with 5 or 10K trading BitCoins… I'm fine with that. Maybe a guy can score big and double or triple or quadruple his money and his 5 becomes 20! AWESOME! But what I think is closer to the "Investing 102" reader is that most are not there YET. And what I've spent an awful lot of time on in this thread is to try to get folks to recognize the difference between INVESTING and GAMBLING. To most - gambling means taking some pocket money and going to a casino for the night - if they win big - they buy dinner and have some fun. Sadly - most find out that they don't build these big casinos on the winners of the world. They're built with the losers money. The winners are for show - to suck the life out of the losers.

BitCoin saw a drop on Friday of 20% or more - 30% in some markets. Why? Because the Chinese government banned it. BOOM! 20 or 30% of your "investment" just got blown away. THAT IS WHAT I'M AGAINST! I'm not against the fact that you might get lucky and ride this bad boy to the top.

Here's what happens to many (most) investments like this….it can be flipping houses - in the late 90's it was dot.bomb investing… in Holland years ago it was Tulips… As the "winners" win -- more and more people decide it's time for them to pile on -- driving the price up -- which is a self-fulfilling vacuum sucking more people in driving the price higher - UNTIL - the bottom drops out. Do some folks make a killing?? Hell yes! Do most lose? Yep. The problem is that the only reason the price is going up - is because someone paid more than the last guy did… and as long as that's sustainable - everyone is good… but the minute the selling starts -- people can't get out fast enough. THE REASON FOR THAT is because nobody really wants to own the stuff - they just want the price to go up over what they paid! Thus the gambling part! When you buy - you're just gambling (betting/hoping) that tomorrow the price will be higher. You really own nothing. There's not a nickel of income produced. It's simply that MAYBE the price will go up.

A 20 or 30% overnight price drop is gut wrenching to most folks. Yeah it might go back up - THIS TIME - and when it does - it'll suck some more people in… but when is it the end? Who knows!

Most folks go to the casino and at some point they have a "gain"…. but by the end of the night - most have put all the gain back, including the cash they started with…

[GregWeld]

The questions repeated often in this thread is "win should I buy"? We're talking about people that want to try to pay .50 or 1.00 per share lower than current prices. OR maybe wait for that big 10% drop in the overall market. When you add in the fact that the purchase might be for 50 or 100 shares or less… and you do the math… we're not talking about a huge savings IF they get lucky waiting for the right time to get in. If during their wait, they miss a dividend payment - of .35 a share… we're talking about even less of a "score" by waiting for the best price.

Let's take this week… the market was dripping it's way down… so if a guy was waiting to buy he watches that and thinks -- ah ha! I'm brilliant! Then BOOM Friday we go up 200 points! Now they're all in a panic having "missed" the chance. Don't be that guy.

Steady wins this race… and it's not about the dollar or even two dollars per share price you're going to "make" buying low. That difference pales in comparison to the compounding over time. You're not going to be able to retire next week because you scammed the market for a buck a share this week. Put your money to work whenever you have the amount saved that you want to invest. Over TIME this will average your cost. 20 years from now you'll look back and what you'll see is a brilliant investor that just booked his trip to Hawaii… and paid for it with this months dividend checks. You'll never see the buck you saved by waiting to get in the market.

[GregWeld]

So remembering that when WE (I) or anyone else - mentions a particular stock in this thread -- nobody should take that as an indication to buy or sell. I use them for the investing 102 "thinking cap" --- not as a buy this or sell that.


I mentioned that I was particularly disappointed in my last couple of (INFREQUENT) McDonalds (MCD) visits… and that, in fact, I was selling my shares because I figure I'm just mister Joe Average -- and that if I'm disappointed - perhaps others are as well…

Remember that our goal is to always keep an eye on "fundamentals" and that, to me, doesn't mean I have to comb thru the annual statement looking for some foible… What that means to me is that if I own Home Depot (HD) and I stop going there because they're out of stock - or their prices aren't competitive etc -- then that should be a heads up for me. For me - that is a basic fundamental.

So with McDonalds -- I've tended to stop at a Starbucks (I own it) and get a good cup of coffee and one of their breakfast sandwiches… rather than McDonalds.

BUT --- HERE IS WHY I'M POSTING THIS….


When I check the ONE YEAR TOTAL RETURN on MCD… it's 13.5%… True we've had a strong stock market and a rising tide tends to float all boats. But that's still a pretty dang good total return for what should be a "steady eddie".

My point is -- that just because you "think" one way -- the numbers may in fact prove you wrong. So it's always wise to be diligent about your investments --- think about them --- and do just a modest amount of homework (research) to either confirm or deny your thoughts.

[GregWeld]

Sorry -- I forgot to include some info….


I had bought Starbucks (SBUX) because I like the place… and frequent their stores and buy their coffee for home brewing. Their Total Return for one year - 50.8%

I don't hold much of this - simply because of it's paltry 1.3% dividend… but remember that we have to look at TOTAL RETURN over just the dividend payout === because it's the total return that makes your money grow!!