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Author: tonyr007 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 398  
Subject: Re: Finding/starting an investment in the Wichit Date: 12/10/1999 11:16 AM
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Barb,

Here's my take on your last couple posts.

Limit Orders: The brokerages I have dealt with, both full service and automated, allow limit orders. However if you place a limit order there is a possibility that you will never get the trade executed. There are a number of articles in the Fool library on limit orders. I personally don't use them because I pick my stock and buy. With a limit order if you want a stock and the price is even 1/32 over your price your trade won't be executed.

Also most brokerages allow touch tone telephone transactions. While a little more expensive, you can at least get a current quote and you don't have to be near a computer. For you this would work. The phone numbers are toll free and all you need is about 5-10 minutes on the ground.

Emergency funds, mutual funds, individual stocks.

Emergency funds: You should have an emergency fund equal to about 6 months of expenses in a relatively liquid, stable account. I structure mine as follows:
one month in a regular savings account, each month I open a one year cd until I have one for each month. Then every month I add to that month's cd. This gets me a better interest rate than regular savings and by having a cd available every month my money is liquid and I won't lose interest in a pinch.

Mutual funds: I do not like mutual funds that are not in tax free/deferred accounts such as an IRA or 401K. The reason is the paperwork invovled at tax time when you sell. I had a mutual fund for 7 years in the 80's and when I sold it, I took me about 8 hours to figure my tax basis for the sale. I had to back through all of my statement add my capital gains and dividends which were reinvested and then add the money I spent outright for the shares. Then I had to separate it between long term and short term gains. It was not fun.
This same problem will occur with DRIPs. So keep all statements until 7 years after you sell.

A mutual index fund for your IRA or 401K is great. You don't have any paperwork to worry about. I have my 401K contributions go to an S&P 500 Index fund.

My IRA is where I currently have individual stocks, since I have a long time before I will need the money.

My recommendation is do not count your 401K into your emergency fund. Keep them separate. Your 401K is probably going to form the backbone of your retirement.

Hope to hear from you when you get back.

Tony - posting and running 8^)
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