I’ve been checking out Scottrade, E-Trade, TD Ameritrade, and so on. I’m a newbie but I do watch Cramer and Mad Money all the time. What’s your opinion on the best online stock trading service?
Stay away from TD Ameritrade, formerly TD Waterhouse. They are so complicated. The ask you questions about everything like do you live in a house, what’s your mortgage, and so on. They want to try and sell you everything, including a bill pay service! LOL… I was just like screaming at my computer monitor, “All I want to do is trade stocks, COME ON!!”
The best is Scottrade. It’s simple. You want to trade stocks and that’s all it does. It’s only $7 a trade and has same day direct deposit of funds. They also understand that taxes are a pain and so they have great reports and year end that make doing your taxes a lot easier.
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E-trade is pretty simple to use. I suggest going with someone live though, like you local Edward Jones office. You son’t pay too much in commission, and the advice can be invaluable, espcially since you are new to this sort of thing.
Rookies should not own individual stocks.
I suggest you read anything by John Bogle of Vanguard. Stick with mutual funds or ETFs. If you have small dollars to invest, that is, less than $50,000 you are better off with low cost indexed mutual funds as the trading costs of ETFs will kill you.
If you own fewer than ~50 stocks in equal dollar amounts you are inefficiently diversified. Go with mutual funds or ETFs, buy and hold.
Cramer will help you to achieve a million dollars – assuming you start with $10 million. Do your own research. Also, the poster who suggested ETF’s was right on. Start with those and you will gain experiance while not losing everything.
I was in your position with a couple of k in my college student pocket and not a lot of experience.
I followed some ‘theories’ but every stock trade just resulted in me paying out a minimum of 1% in fees just to buy it. My returns were crippled. THEN Etrade & Ameritrade started their “account maintenance fees” of 15 – 20 dollars every 3 months. That was 1-2% percent of all the money I had! It was awful.
If I had to do it over again, I’d go with no fee DRIPS (dividend reinstment plans). I’d pick a strong company with good dividend returns (I’ve done well with Southern Company (SO)) and let the money sit there. Why? It’s not a glamorous investment.. it’s not going to get me 10% in a month but with investing.. you need to have something that will give you solid, predictable gains. That way you have backup when you do riskier ones… it’s called diversification.
If I didn’t want something that safe.. I’d go with an EFT. EFT stands for exchange traded funds. They’re a select group of stocks that are bought.. and then rarely sold unless necessary. In other words, they’re passively managed. This saves you money in two ways – for one, you don’t have to pay a big shot group of people for their continual oversight and trading of your basket of stocks.. and two.. it minimizes your tax burden. During the stock market crash in 99-00, mutual fund holders were not only paying high fee loads while the value of their mutual fund plummeted.. they also had capital gain tax to pay. That sucks.
You can pay tax on a mutual fund that decreases in value if your manager sells funds that have increased in value (thus earning money and making you pay tax on it) while not selling stocks that are losing money (and therefore not offsetting the gain)
So in summary.. consider two things. DRIP plans and EFT funds. Ishares is a company that trades in a lot of EFT funds.. there’s also one I’ve been eyeing for awhile.. symbol EEM. Developing countries EFT.. unbelievable performance w/in the last year.
Anyway food for thought. Just pay attention to your costs of trading – whether it be mutual fund expenses or stock trading expenses.