What online brokerage firm should I choose?
I have a few hundred dollars I would like to invest. I intend for it to be a one-time purchase of stocks of a particular company. No future selling, or buying, just this one transaction and either the stock rises in value and I earn money, or I loose what I invest. Is there any specific online brokerage firm you suggest for me to use? In my research, I’ve found two main options: a brokerage firm that chargers per trade, and one that charges a monthly fee. As I plan to make the initial purchase and nothing more, I believe a per-trade deal is better. What companies are best suited for a prospective customer such as me? Also, the cheapest per-trade deal would be ideal, naturally.
Jim, the stock is priced at less than $5 a share, and given the particular industry of the company, and it’s place in that industry, I am confident that within the next five years, the price will, at least, double, and more over a longer period. Again, this is money I can afford to lose, so why not put it some place where, long-term, it can earn me something (even fifty dollars). I do not intend to sell and rein-invest, if anything, I’d just buy more shares. Thanks, anyway.
Jim, the stock is priced at less than $5 a share, and given the particular industry of the company, and it’s place in that industry, I am confident that, within the next five years, the price will, at least, double, and more over a longer period. Again, this is money I can afford to lose, so why not put it some place where, long-term, it can earn me something (even fifty dollars). That certainly sounds wiser than my alternative idea of a couple of new pairs of jeans, or a fun weekend trip. I do not intend to sell and reinvest but just leave it alone, and, if anything, I’d actually buy more shares. Thanks, anyway.
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April 11th, 2010 at 10:57 am
Obviously the per trade arrangement is better for you if you are making only one trade.
Investing a few hundred dollars is an exercise in futility. Let’s say your commission per trade is $10. You buy $300 worth of stock but it costs you $310 with commission. OK, the stock goes up 25% – that is a very large increase and doesn’t happen very often especially in today’s market. Now you have $365 ($375 – your $10 fee). Now you have to sell it and incur another $10 fee. You have made $55 on your investment. Not bad on a percentage basis, but is it really worth any amount of time and trouble to make $55? And that is assuming the stock goes up 25% – it may go down.
April 11th, 2010 at 11:11 am
I have been investing for a couple of years and my suggestion for you is to choose the brokerage account that does not charge a monthly fee. Research the top-ten online brokerage accounts such as E*Trade, ScottTrade, TDAmeritrade ect… and decide which one suits your trading style best. You’ll be able to find their commissions and usage fees pretty easily.
Instead of a one-time purchase of one type of stock, I suggest depositing your cash into the account and using their research tools to find some good dividend-paying stocks. If you don’t already know what a dividend is, it is a cash payment companies make to their shareholders every three months (4 dividend payments per year). For instance, E*Trade is the account I own and has excellent stock screening / researching tools.
Just like anything else you’re new at, start out small and choose 3-4 companies you like with good dividend yields (around 5-10%) and start buying up shares as you save up extra cash. Once you have a couple of thousand you’ll start getting your dividends. You can take the money and spend it on yourself, or just buy more shares and compound your gains. As volatile as the market has been, the overwhelming majority of my dividend stocks have remained stable for the past two years.
In a recession, utility / service companies such as T, FGP, CNP are nice grabs. Buy the shares on days when the market has dips, hold, and buy more shares. After a while you’ll have a great supplement to your income as the dividend payments keep coming and your portfolio grows.
Beware though, when divided yields (yearly cash payment divided by share price) are quite high (over 10-15%) this is usually too good to be true. Their share price may have tanked recently, or some other event has put the dividend at risk.
Otherwise, I agree with the other answerer on that it’s pointless to hope to make a great gain on a couple hundred, one-time only.
April 11th, 2010 at 12:09 pm
Check out Sharebuiler.com and see if they meet your needs.
April 11th, 2010 at 12:52 pm
a “few hundred” limits your choices the popular ones are e-trade, scottrade sharebuilder etc…, You have to find one that works for you if you plan on making monthly payments into it and not doing trading then Sharebuilder is your best bet. But you have to find one that suits your needs.
April 11th, 2010 at 1:04 pm
Check out Zecco. You will pay zero commissions.