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I'm going to be opening retirement account soon. Likely it will be a Roth, self directed acct. My situation is both simple and complicated, so for the time being I will ask the question that is weighing most heavily in my mind.

How are safekeeping fees calculated, at least in general? What do I need to know to make a good decision?

My scenario is this: opening a Roth IRA with only $1000. From what I have been reading online it appears that safekeeping fees would almost eat up any gains I could possibly hope to make.

For example, a Wells Trade account (yes, possibly a bad choice, but a good example of why I have this question) charges $150 per position, with the footnote of "Safekeeping fee is only charged on those securities eligible to be held in street name"

Add on the fact that they would charge me a fee to issue a physical certificate, so either way I would be hit with a fee, it makes no sense.

I know situations vary, accounts with much larger investments wouldn't really "feel" such a fee. For instance my dad doesn't pay such fees and can't even answer my question, but he has a large managed portfolio For me though it would kill me.

I will go into my situation in more detail later but thought simplifying it would be the best approach for the moment. But it comes down to the fact that I have to begin somewhere. I will likely inherit a portfolio in the future and feel the need to educate myself now so I can make the best decisions when the time comes, even though it is a managed account I'd like to be able to keep an eye on things; I also may need to help keep an eye on things as my parents age.

So. What's the deal with safekeeping fees? How can the small/ beginning investor avoid them? How do I determine what stocks/funds cam be held in street name? At the moment this is the first sticky point keeping me from opening an account.

I'm a complete newbie, so forgive my ignorance. lol
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Open an account at Vanguard -- the fees are lower.

https://investor.vanguard.com/what-we-offer/iras/low-cost-va...

intercst
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My scenario is this: opening a Roth IRA with only $1000. From what I have been reading online it appears that safekeeping fees would almost eat up any gains I could possibly hope to make.

... here is some information on "safekeeping fees" ... a major ripoff!


http://beginnersinvest.about.com/od/choosingabroker/qt/inves...



... if you want to have a self directed IRA acct for stock purchases, check /w any of the major brokerages .. ETrade, TDAmeritrade, Interactive Brokers etc. These brokers have varying fees and commissions but none of them stoop to the "safekeeping" fee nonsense...
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I have a Roth IRA with TD Ameritrade and the only fee I've ever paid is the ~$10 I paid to buy the shares of BRK.B that I have in that account.

What the heck is a "safekeeping fee"?

D.
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This is through Wells Fargo, yes? The safekeeping fee is total nonsense. Any decent brokerage (Schwab, Fidelity, Vanguard, etc., etc.) will be delighted to have you open a Roth without any such fees if you are going to direct it yourself. Plus, they will provide (limited) free advice and education.
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PS: You have no need to hold the physical certificate.

One other thing: if you are a complete newbie (and every one of us was at one time), I strongly urge you not to try to pick individual stocks. Invest in a broad market ETF (such as one of the Schwab no-fee plain vanilla ETFs) or no-load/minimal fee mutual fund equivalent (e.g., from Vanguard).
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No one has mentioned Scottrade. www.scottrade.com I have had a Roth account with them for about ten years now and have never even heard of this thing called "safekeeping fees" until today. Another benefit of Scottrade is that (I believe) all it takes to open an account is $500.

I agree with the thought that as an investor you want to keep any fees to an absolute minimum. Other discount brokers may be even better for your purposes if they offer ETFs with no commission and no "safekeeping fees."

culcha
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I give another shout out for Scottrade.

https://www.scottrade.com/online-brokerage/online-broker-com...


One advantage I've found is being able to link my bank account with Scottrade is much easier.
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Thanks for the responses. The whole idea of safekeeping didn't seem reasonable to me, at least now I know my instinct was correct.


I'm going to check out all the brokerage firms suggested, it gives me a great starting point. I was not really considering an account at Wells to be honest, seems that all the feedback I've gotten so far has been negative.

I have a few reasons for considering a self directed account. One is the management fee of a managed account. My plan was to begin with something along the lines of a mutual fund or an ETF, as MisterFungi suggested. Somewhere down the road I may decide to pick stocks, but I know I'm not anywhere close to being ready for that yet. I'm assuming it would only make sense to pick a stock is if it doesn't represent much of my overall portfolio, and if I get some good advice.

For the past few weeks I've been playing around with the stock simulator at Investopedia. I've learned a lot during that time. I've actually picked a few that I'm sorta proud of: Krispy Kreme, IBM, and a Vanguard small cap (VB). Of course I've also picked some real losers too. From that I realized I need to find a decent mutual or ETF to put my money into.

So Schwab no-fee plain vanilla. Any other suggestions of things I should look into?

I still have a million questions, but you all have given me some great feedback to get me started on the journey.

Next steps: pick a brokerage firm and an ETF or Mutual Fund.


Again, thanks everybody!
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What were the losers you picked?
How do you know they are losers?
How long did you watch them?

I ask because I've seen lots of stocks turn around that had been doing a nose dive.
Picking stocks is not easy.

AM
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I've actually picked a few that I'm sorta proud of: ...
This is a phrase in the same class as "I'm going to take a flyer." It's a signal that the person who uttered it is going to have a gruesome failure.

But at least with your original question you realize that there's a lot that you don't know.

Brokers: Just2Trade, Optionshouse (but get the account open quick, their commission is going up soon). I have accounts at both, and have relatives that I had open their account at both. Never had a problem with either of them.

My number 1 piece of advice for a newbie is read this paper and start with this method. FundAdvice.com: "The ultimate buy-and-hold strategy"
http://www.fundadvice.com/articles/buy-hold/the-ultimate-buy...
http://www.merriman.com/bestofmerriman/ultimatebuyandholdstr...
They keep changing the link, so you might have to search for the current version.
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Many custodians have an annual maintenance fee, often $40 or so per year, for small IRA and Roth IRA accounts. Perhaps not all, but it is something to look into when deciding.

There is a Discount Broker discussion board where the fees and features of various brokers are discussed.

A mutual fund account can be your low cost option if you plan to invest in mutual funds. And both Fidelity and Vanguard have stock broker divisions, making it easy to move into stocks and ETFs if you want to later. But note that brokers often charge fees for mutual fund transactions--except for a list of preferred mutual funds, which are free of transaction fees. This list can be important if you plan to own mutual funds in your brokerage account.
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A mutual fund account can be your low cost option if you plan to invest in mutual funds. And both Fidelity and Vanguard have stock broker divisions, making it easy to move into stocks and ETFs if you want to later. But note that brokers often charge fees for mutual fund transactions--except for a list of preferred mutual funds, which are free of transaction fees. This list can be important if you plan to own mutual funds in your brokerage account.

One thing I did was to open two Roth accounts. (Note to lurkers: This doesn't double your possible annual contributions; the same limit holds as always; you just have to divide your limit between the two accounts.) I have one at Vanguard, where I buy their funds, and one at Scottrade, where I buy individual stocks.

culcha
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For the situation you described, I recommend Scottrade. They have the lowest minimum and no fees other than trade commissions(7 for stocks or ETFs).

I have accounts there as well as Schwab. I have used Vanguard and a couple of others in the past.
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I have never paid a fee to purchase Vanguard funds. And I only pay $2 per stock trade at Vanguard now that I've used up all my free trades for the year. Purchases of Vanguard ETFs are still free.

I've never been able to figure out why anyone would purchase Vanguard or Fidelity funds through a broker instead of directly. Well....I take that back. If you want all your information in one place, but want your money in different places, some place like Schwab would be a viable option.

AM
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How much money do I need to open a Vanguard IRA®? $1,000 for any of the Vanguard Target Retirement Funds or for Vanguard STAR® Fund.

$3,000 for most other Vanguard funds. (Some funds have higher minimum investment requirements.) $1,000 for any of the Vanguard Target Retirement Funds or for Vanguard STAR® Fund.

$3,000 for most other Vanguard funds. (Some funds have higher minimum investment requirements.)


With $1000 to invest in a Roth, Vanguard offers limited choices, IMHO.
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In some cases Vanguard will accept lower minimums if you set up an automatic withdrawal/contribution program with your bank account.
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Thanks again for all the help! I've done a bit more thinking and have a scenario I'd like to throw out there and see what thoughts everyone has.

Scottrade seems to be a good choice. It would allow me to get my feet wet with a minimum initial investment, with low to no fees involved (correct me if I'm wrong there, please).

So. I open a Roth IRA account with Scottrade, investing $500. Looking around I think the Schwab SCHX ETF might just be a decent choice for a long term investment. SCHX tracks the Dow large cap total stock market index, appears to have a low expense ratio, and I'm comfortable with their current major holding....granted, with my limited knowledge that doesn't say much. Some of you may ask why I wouldn't just buy direct from Schwab save the $7 cost of buying the ETF, it's a good question and the only answer I can give is: it allows me to get in at only $500 and over the long run that $7 wouldn't really kill me.

Is something like SCHX a decent beginning investment? Am I an idiot to consider getting that through Scottrade instead of just going to Schwab directly?
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Your plan sounds reasonable to me.

A large cap total market fund is a solid core holding. Keep in mind that some small cap stocks can do very well. So a total market fund (such as VTI) that includes small cap and mid cap stocks could give better performance.

Large cap stocks tend to be well established companies. They are often industry leaders and your funds should be safe there. But they also tend to be mature companies with little growth potential compared to the small caps which can be high risk but have large growth potential. Hence, a mix of the two can give better results over time.
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dsr10,

You wrote, For example, a Wells Trade account (yes, possibly a bad choice, but a good example of why I have this question) charges $150 per position, with the footnote of "Safekeeping fee is only charged on those securities eligible to be held in street name"

Before everyone jumps to conclusions here, I'd call Wells Trade and ask about this fee.

I think this safekeeping fee is only if you deposit certificates issued in your name with Wells Trade AND you want them kept in your name AND the issuer offers the option to hold them in street name. Street name is where the issuer's trustee just makes an accounting entry that records the holding broker's name and number of shares. No physical certificates are issued.

If I'm right, the safekeeping fee is an unusual fee designed to discourage the account holder from depositing physical shares for safe-keeping. Essentially they're charging the account holder a maintenance fee to physically store the certificates in a safe; but they're still offering it as a service.

Likely the reason other deep discount brokers don't list this fee is because they won't accept physical certificates unless you are willing to have them transferred to street name. In other words, they don't want to be physically responsible for your certificates.

Just my opinion...
- Joel
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dsr10,

You wrote, Scottrade seems to be a good choice. It would allow me to get my feet wet with a minimum initial investment, with low to no fees involved (correct me if I'm wrong there, please).

Hold on there! I used to have a Scottrade account. I no longer recommend them. Other brokers offer similar pricing with a better mix. Also Scottrade is one of the few brokers that lacks a no-transaction fee ETF offering. Transaction fees are very important when you're making small purchases and all major brokers now offer a line of no transaction fee ETFs.

Also, So. I open a Roth IRA account with Scottrade, investing $500. Looking around I think the Schwab SCHX ETF might just be a decent choice for a long term investment. SCHX tracks the Dow large cap total stock market index, appears to have a low expense ratio, and I'm comfortable with their current major holding....granted, with my limited knowledge that doesn't say much. Some of you may ask why I wouldn't just buy direct from Schwab save the $7 cost of buying the ETF, it's a good question and the only answer I can give is: it allows me to get in at only $500 and over the long run that $7 wouldn't really kill me.

Schwab may not let you open an IRA with only $500; but other brokers will. Try TD Ameritrade. They have no account minimum for an IRA. They also offer 101 no transaction fee ETFs. All of these ETFs have reasonable to ultra low expense ratios and are issued by well-known companies like Vanguard and iShares.

SCHX is very like a basic S&P 500 index fund. If that's your objective, you can open an account with TD Ameritrade and buy IVV with no fees and just your $500. The expense ratio is slightly higher - 0.07% instead of 0.05%. That will cost you 10 cents in performance in the first year and will likely take you 30-40 years before the expense ratio reaches the $7 commission you'll pay at Scottrade.

Finally, Is something like SCHX a decent beginning investment? Am I an idiot to consider getting that through Scottrade instead of just going to Schwab directly?

Yes, SCHX is a decent beginning investment. No, you're not an idiot for considering it. But you haven't considered the cheapest combinations yet...

- Joel
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dsr10,

BTW for a small account there may be other issues to consider. The biggest one being whether or not you can be fully invested. (Not everyone will want to be - at least not all the time. But if you're young, you probably want to be fully invested and yet your relatively small balance will work against that objective.)

Buying something like IVV at today's closing price of $170.21, gives you only 2 shares with $159.58 left over. (SCHX would let you buy 12 shares with $13.16 left over ... minus commissions.) Sure you can use that to help you buy that next block of shares. But you will almost never be able to put it all into a fund. Buying an open-ended fund (like a Vanguard mutual fund) fixes this issue at the price of a higher expense ratio.

Also what will you do with dividend payments? Again, you can roll them into your next purchase. But lots of brokers let you re-invest the dividends back into the stock issuing the dividend at no charge. Scottrade offers a quirky "FRIP" plan that isn't quite like other DRIP plans ... but it might work for you. TD Ameritrade and others offer the more traditional DRIP scheme. Most open-ended funds offer dividend reinvestment too.

Even now with ETFs being so accessible I often tell small-time, new investors to just open a mutual fund account and make regular contributions for a while. Soon you'll accumulate enough money to start making some serious investments at a brokerage. When that happens you can put your money into individual issues. (Of course if you're putting in $500/month you can probably just ignore these comments. Most of the people I tell this to are young and just starting out.)

BTW, some brokers offer a decent open-ended, NTF mutual fund selection. So if you think about going that route, you might do a mix and just put excess cash into a mutual fund at the brokerage until you're ready to make the next purchase...

Anyway, issues for you to consider...

- Joel
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Boy oh boy. This certainly is an onion with a ton of layers, though I expected that. So much food for thought, I can't even respond to all the things that have been posted yet.

But a good point was made about me possibly not understanding the fees involved with an account at Wells. I recently ran into that issue with them when I put some money into a checking acct so I could get a secured credit card (trying to repair some dings on my credit due to tough times a few years ago). It turned out that I had misunderstood some fees, even the bank manager admitted the wording was confusing.

I actually have at least $1000 to begin with, so maybe that changes things a bit. Perhaps I should think about beginning with that amount if it gives me better options and benefits. Main reason for saying $500 was, well, I'm nervous and that seemed less scary and fewer choices to have to think about.

The scenario I was thinking of today was something along the lines of Vanguard small cap ETF VB and the SCHX, roughly $500 in each.

Divendends was another thing I was completely confused about, just didn't know how they were best handled.

*sigh*

It may be to my advantage to keep plugging away at learning the best way to enter this whole thing. I was thinking I might be able to take advantage of the market reactions to our govt shutdown, but with the way the market went today it appears I may not get that chance....but who knows I suppose. Not that I am in a hurry to get in, but I'd like to enter a a good point.

Simulators are one thing, but I'm the type type that learns best when something is for real.

I'm going to cool my heels a bit and keep investigating. You all have been such great help! Gonna keep working on making a good decision.

Thanks all!
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I second what Joel said.

For a small account, just open a mutual fund account with Vanguard or Fidelity.
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Don't take this as an insult, but when you said "I was thinking I might be able to take advantage of the market reactions to our govt shutdown"[*] and "I'd like to enter as a good point."[**] it was evidence that you have no idea about how the market works. Nothing wrong with that--everybody starts out knowing nothing. But what it means is that you are likely to make mistakes due to ignorance and it'll cost you a bunch of money. Right now, you don't know what it is that you don't know -- and that's the worst place to be.

The very best thing you could do is put your money into some sort of Whole Market mutual fund while you further your education. Problem is, most minimums are $3000. The only Vanguard funds I see with $1000 minimum are balanced funds. Personally I'd go for VTTSX since it's a 90/10 fund. When you've learned enough to figure out why VTTSX isn't where you want to be, you'll know better places to put it.

Don't open an account with a broker. Your account is too small and the commissions will eat you alive.

-----------
[*] "Nobody ever got hit by a bus they saw coming." If everybody and his brother knew about this shutdown, the market has already taken it into account. Do you think that *anybody* wasn't aware of it?

[**] Everybody wants to get a good price. Just like everybody wants to date the Homecoming Queen. It can't be done, and only naive people think it can be done. Doesn't matter anyway, in the long run. Do you think that 40 years from now it will make any difference if you saved $1 and paid 24.39 instead of 25.39 for VTTSX? At that point, VTTSX will be somewhere around 700.
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No offense taken. I'm here to learn and want unfiltered responses.

When comparing mutual funds and ETFs is there anything I should know? Or good resources anyone could suggest I study? I really do want to make a good decision, and learn how to go about it.

I've asked so many questions, I hope I'm not coming across as someone who wants others to hold my hand. I love learning, just needing some guidance so I can get on the right path....and you all have done such a great job of helping get there.

Can't believe how patient you've all been with me.
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dsr10,

You wrote, It may be to my advantage to keep plugging away at learning the best way to enter this whole thing. I was thinking I might be able to take advantage of the market reactions to our govt shutdown, but with the way the market went today it appears I may not get that chance....but who knows I suppose. Not that I am in a hurry to get in, but I'd like to enter a a good point.

Simulators are one thing, but I'm the type type that learns best when something is for real.


Actually analysis paralysis is a very real danger to your investment strategy. At some point you have to set something up and live with it. Not investing means not participating in the market at all.

So the first order of business is to select a place to invest. The best way to do that is to look at costs. Once selected, a beginning investor should probably pick a broad market investment and start a plan of recurring contributions to create a habit of saving and investing.

Beyond that, you can make modifications as you go to try to cut expenses further, produce additional gains through direct or individual investments or to mitigate risks. These things you'll pick up and experiment with over time. It might involve new investments or even new accounts. Just don't expect to figure it all out in one go.

- Joel
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dsr, one advantage of Schwab is that they have actual people in actual offices pretty much everywhere. You can walk in and tell them what you want to accomplish, and they will answer your questions, for free.

For now, you could ask them about opening an IRA with a starting deposit of $X. You don't even need to decide how you want to invest it right now. In fact, I would probably wait a bit on the investment decision, in view of the craziness in DC at the moment. But that's up to you.
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one advantage of Schwab is that they have actual people in actual offices pretty much everywhere. You can walk in and tell them what you want to accomplish, and they will answer your questions, for free.

I like Schwab Bank. Back in the day, I referred many dozens of my customers to Schwab Bank for a free HELOC at Prime Rate minus 1% for life. I wonder if they still offer those terms on a line of credit. Nawww...
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MisterFungi,

You wrote, dsr, one advantage of Schwab is that they have actual people in actual offices pretty much everywhere. You can walk in and tell them what you want to accomplish, and they will answer your questions, for free.

Schwab is not the only discount brokers with local offices.

When I lived in north Texas, I found that Fidelity, Scottrade and TD Ameritrade had some of the best branch locations, relative to where I lived and worked.

However I never found Scottrade on-site staff to be terribly useful. I used the offices from time to time to drop stuff off so I could avoid sending it by mail. Mostly my prior year's Roth IRA contribution after I'd done my taxes; but in one or two occasions to respond to a corporate action and once to deposit a physical stock certificate. Even though they were one of my first brokerage accounts, I always left feeling I was educating them about my investment options and how stuff worked - not the other way around.

Fidelity may have had the most local offices of all the brokers I used - they had 5 offices in the DFW metropolis. They have 4 offices in the Seattle area, where I am now - same as Schwab, actually. But I've never visited a branch office. Fidelity and I have had a mixed relationship and I'm still nursing a grudge against one of their absurd policies. But they're also my current 401k and ESPP plan provider, so they hold a significant portion of my assets.

I have been impressed with TD Ameritrade's service, online, on the phone and in-person. Of course in-person could have been luck of the draw at that office. Or it could have been that TD Ameritrade hired more experienced staff or did a better job training. Hard to tell. It was always interesting discussing investment options with them and I never felt like they were making a hard sell.

I also have an accounts at E*Trade, but they have never had convenient locations for me. And for the most part, this has not been an issue.

- Joel
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...one advantage of Schwab is that they have actual people in actual offices pretty much everywhere...

Which is exactly the reason I went with Scottrade 20-some years ago. And have been with them ever since. When I have a question, I just drop by to the local office.
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What kind of questions would require a trip to an office? What questions/answers can't be done by phone?

At once time I had an account with Scottrade, and there was an office 5 minutes from my work. I could drop things off there, signed forms & so on, but all they did was put them in the mail to the back-office.

I once wanted to make a withdrawal from my account, so I stopped in. They took my signed form and said that in 3-5 days I'd get a check in the mail, or I could come in -- in 3-5 days -- and they'd hand it to me.

So, basically, a visit was no better than a phone call and US mail.
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Rayvt,

You wrote, So, basically, a visit was no better than a phone call and US mail.

Not quite. I always get some kind of receipt dropping something off. That makes delivery to their home office their problem, while lost mail I sent would still be my issue. So having a local office can be nice from a safety standpoint. (Not long ago I hand-delivered a large settlement check to a local branch office for that very reason.)

- Joel
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OK - maybe "questions" isn't the right word. Let's try "issues" or "situations". I just like the idea of being able to sit down with someone and discuss something - it works better than doing it on the phone.

A couple of years ago when I retired, I had a significant amount of money transferred to my IRA. I went to the local office, found out everything I needed to know, got the correct forms and was able to coordinate things between my employer and Scottrade.

I was a LOT more comfortable doing it this way than having to deal with some customer service rep on the telephone.
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Scottrade having a local office made removing a custodian from accounts easier for me(3 times)as well as dealing with joint accounts after death(two times). It also helped when beginning to use Coverdell money the first time.
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Looking at TD Ameritrade today, they appear to be a candidate; not that I really know what I'm talking about. But they offer some of the ETFs (with no transaction fees) I've been thinking of, as well as competitive fees, and the ability to grow further with them as I progress.

Even if I decide on some other ETFs or mutual funds, they seem to have a decent selection to choose from...again, I really don't yet know enough to say that with confidence. But, they seem to be a decent candidate, and a starting point for comparing others too.

As I said earlier I am a bit confused with dividends and how they are handled. Though it appears at first glance that TD would give me the ability to reinvest the dividends at low to no cost, provided I accumulated enough to invest them back in; though I could use that as a reason to contribute more to the account.

Any advice on for me learn more on how reinvesting dividends actually works?

I think picking a broker first was a good idea, it's seemed to help me focus a bit more.

I've learned a lot already. Thanks to all those that have contributed to this discussion.
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Even if I decide on some other ETFs or mutual funds, they seem to have a decent selection to choose from...again, I really don't yet know enough to say that with confidence. But, they seem to be a decent candidate, and a starting point for comparing others too.

As I said earlier I am a bit confused with dividends and how they are handled. Though it appears at first glance that TD would give me the ability to reinvest the dividends at low to no cost, provided I accumulated enough to invest them back in; though I could use that as a reason to contribute more to the account.

--------------



Argh! This is just making my head explode.

Why would anyone even consider a company that charges you a fee to reinvest dividends?

And what kind of ETFs does TD offer? Even if they don't charge anything for you to purchase, what are the management fees on the ETFs you might consider?

Frankly, if I had less than $3K to work with I would still choose a good mutual fund like Vanguard over a brokerage house and just park my money in a money market until I had enough to work with. Meanwhile, use the time for figuring out what's what.

Word of warning: it's REALLY easy to lose your shirt if you are not careful.

AM
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dsr10,

You wrote, As I said earlier I am a bit confused with dividends and how they are handled. Though it appears at first glance that TD would give me the ability to reinvest the dividends at low to no cost, provided I accumulated enough to invest them back in; though I could use that as a reason to contribute more to the account.

TD Ameritrade's in-house DRiP (Dividend Reinvestment Program) - like most broker's in-house DRiPs - lets you sign up to have individual stocks (or all future stock purchases) reinvest their future dividends at no additional cost to you. This is typically done by assigning you fractional shares - the only way most brokers will sell you fraction shares of an exchange-traded security.

The purchase is done at the discretion of the broker on the day the dividends or interest payment (some issues pay dividends that are treated as interest) are credited to your account. This is usually done the afternoon after the pay-date. TD Ameritrade will credit your cash account with the income, then deduct it for the purchase - not necessarily in that order, BTW. The additional shares will then appear in your stock positions.

There are two important dates for dividends. There is the date of record (or record date) and the date of payment (or pay date). To obtain the dividend you must hold the security on the record date. The pay date can be anywhere from one day to a month later. If you sell the security after the record date, you will still receive the dividend - and if it was set to re-invest, you will get additional shares even if you thought you'd sold your entire position. (Happened to me once.)

Brokers also reserve the right to refuse to DRiP a security. This seems to depend on how thinly traded or how many shares are held at the broker by other accounts. However, I've owned a few very thinly traded preferred issues in the past and have had no trouble with TD Ameritrade enrolling them for DRiP.

- Joel
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AngelMay,

You wrote, Argh! This is just making my head explode.

Why would anyone even consider a company that charges you a fee to reinvest dividends?


Perhaps you should look at the TD Ameritrade site yourself. TD Ameritrade does not charge anything to DRiP shares. See page 9 of the TD Ameritrade Account Handbook: https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA0...

I know how it works partly because I've used their (and other's) program.

Also, And what kind of ETFs does TD offer? Even if they don't charge anything for you to purchase, what are the management fees on the ETFs you might consider?

As I've said before, they offer 101 fee-free ETFs. They include issues from iShares and Vanguard, which are low-cost leaders. Don't believe? See their lists for yourself:
http://research.tdameritrade.com/grid/public/etfs/commission...

Finally, Frankly, if I had less than $3K to work with I would still choose a good mutual fund like Vanguard over a brokerage house and just park my money in a money market until I had enough to work with. Meanwhile, use the time for figuring out what's what.

This I might agree with, though Vanguard still has pesky account minimums and low balance maintenance fees - though I'd admit they are pretty reasonable. But then I gave similar advice in an earlier post myself.

- Joel
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Thanks a ton Joel.

I have a better understanding of how dividend are handled now.


In general. Most, if not all, of what I've posted is me just thinking aloud. It's been a great help getting feedback from everyone, I've learned a lot. It's also helped me focus, that's turned out to be something I needed to do.

My situation is unique (read: odd, bizarre, unusual). My initial goals aren't what many may think they should be, mainly I'm attempting to learn by doing,it's the best way I learn. Minimum initial funding and low risk is very important at this point in time. I don't mind, too much, making mistakes along the way, provided I learn something from those mistakes. At $1000 I can handle any mistakes I make along the way.

I can handle putting more money into this, but I am not yet comfortable doing that. The other money I have is money I use as capital to do other things that give me decent profits (long story, feel free to ask about it; but it may explain why I'm not willing go the route of a money market), so for now I'm planning on keeping it small, even if that means I suffer a bit short term. That $1000 I consider an investment in my financial education.

I want to start small, slow and conservative. In a year I hope to have learned enough to begin doing more. Right now,I don't plan on investing more than I can handle screwing up....too much.

As I mentioned earlier, I want unfiltered feedback, that's why I'm here.. Please feel free to say what you think, I'm a big boy, I can handle it.

Some great advice and feedback has been given. I want everyone to know how much I value this discussion, and not be offended if I continue to ask questions that appear to disregard the input I'm getting. I've made tremendous strides in a relatively short time, I give most of the credit to this discussion.

I also don't want to make anyone's head explode along the way. Seriously.

Thanks to all those that have participated, it's been such a great help.
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for now I'm planning on keeping it small, even if that means I suffer a bit short term. That $1000 I consider an investment in my financial education.

I want to start small, slow and conservative. In a year I hope to have learned enough to begin doing more.


Unfortunately, $1000 is too small to "learn by doing". It's like sitting down at a $100 ante poker table with $1000. Just (barely) enough to get you in, not enough to keep you from losing it all in the first few hands.

To invest in individual stocks & ETFs, the realistic bare-bones minimum is $5000 -- 5 positions of $1000 each. Even then, the friction -- commissions & bid/ask spread -- is going to take the bulk of any profits.

The fact that most mutual funds have a minimum initial amount of $3000 should tell you something.
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Exactly, ray.
I can't imagine buying individual stocks with just $1000.
The only place I would put it would be an extremely low-cost index fund (if I could find one with such a low minimum) or a money market until I had enough $$$ to actually do something with it.

AM
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You've both made great points, gimme a bit to absorb that info.

By conservative (I've probably mangled the usage of that term) I mean going into two ETFs, but absolutely no stocks. I'm not in the position to buy stocks yet, that much I have figured out.

Having said that, what are your thoughts on investing in two ETFs? For example PKW and VB, 50/50-ish (roughly equaling about $1000 or maybe a little bit more). VB from TD Ameritrade would be commision free, PKW would cost me about $10 to buy. Keep in mind I'm still just throwing out my thoughts, not ignoring advice. An index fund has always been an option I've considered, and yeah, probably what I should do.

It just seems that I would learn from doing that. I would learn the fees, expense ratios, how dividends work, watching what the funds invest in, and all the rest. I dunno, long term they seem to be something I could possibly keep as I expand a portfolio. One year of holding those, would I really stand to lose much in expenses? As long as I didn't lose my butt on them I would be happy with what I've learned along the way and be more confident in putting more money into the market. Using the simulators is only teaching me so much, because I don't have the drive to dig deeper knowing I have nothing real involved.

A year from now I would be in a better financial position, I'd also be in a better position knowledge wise; then I could begin to expand (hopefully wisely and "conservatively"), and I'd wait quite a bit of time before I even considered buying individual stocks.

I will look into a low cost index fund more now that you've mentioned it, so thanks for that input.

Thanks again for listening to me babble like an idiot.
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I want to thank everyone for participating in this discussion. Each and every reply has helped me enormously. I've learned a lot, and really enjoyed doing it.

I've come to the conclusion I'm better off waiting before I do anything with the market, analysis paralysis aside. I'm better off continuing to to what I've been doing what I've been doing for the past few years, I'm going to go with what I know. I'll continue my education and learn about the market, in the long run I know I need to do it.

For now my I make much better profit from my capital than I ever could in the market. I'm able to flip vehicles; buy and sell antiques and other tradables....and last year I tripled my money, so not bad, couldn't do that in the market.

Too bad though. I was really hoping to find a way to get into the market with around a grand to learn how things work so I could learn how to be successful in the long run.

Now I suppose I will find a way to learn without actually putting something into it, because it seems that isn't realistic. I'll find a way to do it, somehow.

I'll keep returning here to continue my education. Granted, I will likely continue to ask questions that frustrate some, but hopefully I will find a way to do that without annoying you all too much.


Thanks again!
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