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Brokerage Account/Stock Trading Questions
Lanthis
Registered User regular
Registered User regular
Hello all,
I've been planning to invest in the stock market, and I had a few questions:
- Is a 1 day delay on fund transfers normal? Is there any way to expedite transferring funds to and from your account?
- Can anyone recommend a good brokerage? I don't anticipate needing any personal advice or frills, although real time trading service may be important.
I've been planning to invest in the stock market, and I had a few questions:
- Is a 1 day delay on fund transfers normal? Is there any way to expedite transferring funds to and from your account?
- Can anyone recommend a good brokerage? I don't anticipate needing any personal advice or frills, although real time trading service may be important.
Lanthis on
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Let's say you decide to go with $5,000: the least you're going to pay for real-time trading is $7 per trade. You're going to want a well-diversified portfolio, so that's a bare minimum of ten stocks. So, as soon as you buy in, you're immediately down over 1%. Assuming you hold this same portfolio for a few years, that's easy to make up for, however, if you're going to do that, why not just buy into a mutual fund, instead, and save yourself the 1%? And if you're doing real-time trading, the brokerage fees are going to eat into your gains so much that it's not going to be anywhere near worth it.
If you want funds with no delay on trade execution, then you'll probably want an ETF instead of a straight up mutual fund. ETFs are like stocks, there is a fee to trade them. Also when buying most securities, although you'll get the trade execution price (or price at close) it may take a day or two for the transaction to actually credit/debit your account. If you bought a stock this morning and sold it this afternoon, your balances might not reflect the transactions for a day or three.
Different funds might have different delays (e.g. foreign funds).
I like Vanguard, very low management fees on the Indexed funds. Regarding real-time trading: you aren't going to be day-trading funds you know.
What I'm looking to do is value investing in particular undervalued stocks.
Yes, you can make money investing in a small number of stocks with an investment of $5000. I've done it before on several occasions, mostly in the late 1990s. I turned $5000 into $9000 in the space of maybe 9 months, primarily on a very good trade of the World Wrestling Federation, along with a few other trades.
Mutual funds and index funds are good ways to track the market, and you can do OK in the right ones. This year, precious metals funds were a good buy and basically everything else that moved took a run straight into the shitter.
With the small-number-of-stocks strategy, you can lose big if you're not careful. But hey, that's what stop orders are for. If you're terribly risk averse, you can go with Grandpa Thanatos's strategy up there, living large and grinding out a big 6% return every year. But I say go big. You only live once.
The ones I'm invested in, for instance, have somewhere around 17% 20-year averages. I don't really consider brokerage fees "risk," I consider them "ass-raping."
Yes, mutual funds don't have as great a return as single stocks. But they're not nearly as risky. And your goal should not be to make a big killing, it should be to make consistent moderate growth. The more risk you take, the farther in the hole you'll fall if things turn sour on you. And the farther in the hole you are, the harder it will be for you to get out of it.
Which mutual funds are they?
Are they still open to new investors?
I honestly barely look at the statements from the funds, because I'm in for the long haul, and I know that one quarter, one year, or even three or four years isn't going to mean much in the long-term.
It is up to you if you want to buy stocks. You don't need $10,000. Mutual funds are the advice of people who shouldn't be giving advice. That's not to say that they are a bad decision, I tend to keep most of my money in them, but they aren't particularly useful advice, either. They are just an easy answer.
Actual advice is when someone points out exactly why a particular stock would be a good buy.
If you know of a good stable company that is currently undervalued for no good reason, buy. I bought recently (with much less than $10,000 or even $5,000) on a stable, large company that happened to be trading really low for no good reason, and I made a good return in no time, enough to make the $14 in fees meaningless.
Buying stocks based on hot tips is a terrible idea.
And Yar, I'm fully aware that you can make money doing that, but it is very risky, and generally the rewards aren't worth the risk.
The OP looks like he's after some day-trading. Which is super risky. He also specifically said he didn't need an advisor on what to buy, yet everyone is telling him to get an advisor and then to buy mutual funds, neither of which he wants to do, and they are just a double waste anyway. Like I said, an advisor who advises mutual funds isn't really advising anything.
If you want a savings account that is way riskier than regular savings but with a somewhat better average return, put money in mutual funds. It's a good place for retirement funds, for example.
But this guy wants to actually trade. And trading is risky if you don't know what you're doing. If you don't know what you're doing, you look for "hot tips." If you don't know what you're doing, you buy mutual funds.
If you do know what you're doing, you research financial statements, balance sheets, market analysis, etc., and buy heavily into companies that are stable and vauable but are trading low for no real reason. And over time this is more profitable than day trading or mutual funds.
I'm just curious, what % did you make, and when were the buy/sell dates? Depending on when you made those transactions, you might be confusing investment success with general market trends. If you bought in March and sold in May, you were merely riding the general wave. Not to discredit you, but it's something lots of people I talk to never consider when they see how well their stock picks are doing.
Well, for the sake of completeness I should note that both of those sentences are not without their fair share of criticism. For example, see these contrasting theories to your approach:
Random Walk hypothesis
Technical Analysis
Behavioral Finance
As for the OP, Scottrade is $7 a transaction. You can get cheaper (Sogotrade, Zecco) but I don't know anyone who uses either. To be fair, I know few people who bother with individual stocks, anyway.
Go to this website.
Read it. Throughly.
Sign up for their forums and ask the original question there.
Also listen to grandpa thantos. You will make far more money in index funds than you will trying to beat the market on value investing. At least with the amount of money you are investing. Even if you put that 5000 into tomorrows Google and sat on it for 10 years. You would make similar gains off 5k just earning 12% I am also guessing that 90% of the stocks you pick will not be the next Google.
Don't ask for serious financial advice from a gaming website.