No. of Recommendations: 0
I am 21 years old and interested in investing. I plan to follow the Foolish Four or some variation of it. I only have about $500 of beginning capital. Should I put this into an IRA (which most brokers do not have a minimum deposit) or into a standard fund? I believe I am eligible for the $2000 tax deduction. My (soon to be) wife does have a 401k plan where she works, but we will not make over $35,000 this year together. My last question concerns brokers. Are there any that will accept a $500 initial deposit? ETrade appears to accept a minimum of $1000, which I may be able to scrape together. Any information would be appreciated.


prime@udel.edu
Print the post Back To Top
No. of Recommendations: 2
On Tue, 08 Apr 97 23:05:47 -0600, jeremy wrote:
<<

I am 21 years old and interested in investing. I plan to follow the Foolish Four or some variation of it. I only have about $500 of beginning capital. Should I put this into an IRA (which most brokers do not have a minimum deposit) or into a standard fund? I believe I am eligible for the $2000 tax deduction. My (soon to be) wife does have a 401k plan where she works, but we will not make over $35,000 this year together. My last question concerns brokers. Are there any that will accept a $500 initial

deposit? ETrade appears to accept a minimum of $1000, which I may be able to scrape together. Any information would be appreciated.





prime@udel.edu

>>

I'm am in almost the exact same situation. (23 getting marries minimal income) I've found through calling the online brokerage 800 numbers that quite often they will allow you to open an account with a balance less than their advertised minimum. Some of them do have catches though. One place wouldn't let you trade until the minimum was reached, another place charged an additional fee to open the accound, etc....my advice is to just call them. All of the account systems are different too in terms of pricing, so remember to get all the information, and don't be afraid to ask. We're micro investors right now, but in a few years we won't be.

Metro
Print the post Back To Top
No. of Recommendations: 0
On Tue, 08 Apr 97 23:05:47 -0600, jeremy wrote:
<<

I am 21 years old and interested in investing. I plan to follow the Foolish Four or some variation of it. I only have about $500 of beginning capital....

... My last question concerns brokers. Are there any that will accept a $500 initial deposit?

prime@udel.edu

>>

I just saw Meto's posting as well. Its good to some early planning.

I just opened an IRA with Waterhouse. There is no setup or maint. fee and their are $12/trade (until 3/31/98). I figure if they really crank their rates up then I can always look elsewhere. They do have a $25 closing fee which I view as cost of handling the paperwork.

I posted a similar question about the amount to start trading with in the "Beating the Dow" forum. Realize the the smaller the amount the larger a hit commissions will take on your portfolio (percentage wise). One reply advised a 2% max for commisions over the course of the yr. With a Foolish Four (8 trades/yr) you are talking about $96 (@ $12/trade) in commissions or 19% of your initial investment.

Don't let that discourage you though. Just keep saving and you'll be there in no time. You're way ahead of most of your peers.

Good Luck
Rick
Print the post Back To Top
No. of Recommendations: 2
I have a question that should help me decide which way to go. If I open a standard account and then decide at the end of this year to transfer my securities into an IRA account, do I have to pay capital gains on the profits? If I don't then it seems better to open a standard account and decide later whether I want to have an IRA. Any help on this matter would be appreciated.
Print the post Back To Top
No. of Recommendations: 0
On Sun, 13 Apr 97 13:50:42 -0600, jeremy wrote:
<<

I have a question that should help me decide which way to go. If I open a standard account and then decide at the end of this year to transfer my securities into an IRA account, do I have to pay capital gains on the profits? If I don't then it seems better to open a standard account and decide later whether I want to have an IRA. Any help on this matter would be appreciated.

>>

A little more information that I forgot to include. I currently do not have access to a 401k but I expect to by the end of the year. This is the reason I am wary of depositing my money in an IRA. If I have a 401k by the end of the year I will not be able to deduct the money I put into the IRA on my taxes which takes a lot of the benefits away (Hey, even in my tax bracket that is a savings of approximately $500).
Print the post Back To Top
No. of Recommendations: 0
On Sun, 13 Apr 97 17:15:22 -0600, jeremy wrote:

This is the reason I am wary of depositing my money in an IRA. If I have a 401k by the end of the year I will not be able to deduct the money I put into the IRA on my taxes which takes a lot of the benefits away (Hey, even in my tax bracket that is a savings of approximately $500).

>>

Actually, you can deduct IRA contributions even if you have a 401k but only if you meet certain income criteria. If your adjusted gross income (AGI) for `96 was $25k or less then you can deduct a full $2k IRA contribution. If your AGI is $35k or more than you can't deduct your IRA contribution. If AGI is something in between then you can deduct a portion of your contribution.

Hope this helps.

Rick
Print the post Back To Top
No. of Recommendations: 0
On Tue, 08 Apr 97 23:05:47 -0600, jeremy wrote:
<<I am 21 years old and interested in investing. I plan to follow the Foolish Four or some variation of it. I only have about $500 of beginning capital. Should I put this into an IRA (which most brokers do not have a minimum deposit) or into a standard fund? I believe I am eligible for the $2000 tax deduction. My (soon to be) wife does have a 401k plan where she works, but we will not make over $35,000 this year together. My last question concerns brokers. Are there any that will accept a $500 initial
deposit? ETrade appears to accept a minimum of $1000, which I may be able to scrape together. Any information would be appreciated.


prime@udel.edu
>>
Print the post Back To Top
No. of Recommendations: 0
On Wed, 23 Apr 97 18:42:44 -0600, indiana_jones wrote:
<<On Tue, 08 Apr 97 23:05:47 -0600, jeremy wrote:

Fidelity investment will allow you to start with 500.oo with certain funds.

>>

>>
Print the post Back To Top
No. of Recommendations: 0
On Tue, 08 Apr 97 23:05:47 -0600, jeremy wrote:
<<I am 21 years old and interested in investing. I plan to follow the Foolish Four or some variation of it. I only have about $500 of beginning capital. Should I put this into an IRA (which most brokers do not have a minimum deposit) or into a standard fund? I believe I am eligible for the $2000 tax deduction. My (soon to be) wife does have a 401k plan where she works, but we will not make over $35,000 this year together. My last question concerns brokers. Are there any that will accept a $500 initial

deposit? ETrade appears to accept a minimum of $1000, which I may be able to scrape together. Any information would be appreciated.

Perhaps you might consider investing in the "Dow Dandies" as the ten dividend-paying stocks in the DJI with the lowest yield beat the Dow Dogs seven of the last ten years. I think careful analysis will eventually show that the "Dogs of the Dow" work when you back fit the data.

Lowell

Print the post Back To Top
No. of Recommendations: 0
your question... if i read it right.... was the fact that you were hesitant about depositing money into an IRA and a 401k plan.... I found that you CAN deposit tax free into both an IRA and 401K simultaneously.... the difference being ( i have found) is that the 401K is figured immediately as you get paid and the IRA is deducted at the end of the tax year.... in my experience... i had deposits made to both with no problems or queries on my tax returns.....

I just wish i was younger and know what i know now as far as tax deferments and advantages.....

Good luck to you and i will bow to experience if there is someone that can give you better advice...
Print the post Back To Top
No. of Recommendations: 0
Did you know that you could go direct to some companies and buy stock with out a trade fee? P&G is a good start and pays a nice Div.
Print the post Back To Top
No. of Recommendations: 0
It is more important what you do with your money after you earn it than how (or how much) you earn. The key is NOT to spend all of your earns given that there are only three ways to make money: land, labor or capital.

As a starting investor, first establish your emergency reserve fund while eliminating all debt. As your grandparents lived, if you don't have the cash to buy the thing(s) you want then you save until you can afford it. Debt is the number one enemy of financial independence, ergo credit is the number one evil...path to slavery.

This aside, self directed IRA's tend to be better than 401k's because the traditional IRA provides you greater options than the hand full of mutual funds typically offered in a 401k. In an IRA you can start with core ETF's that function like mutual funds but don't have the fees as they trade like stocks. XLI (the industrial ETF) is hot right now, but there are many options.

Must of the discount brokers have no fee IRA's with low trade costs, so look at a few and the save as much of your earnings as possible after you have achieved an adequate emergency fund of at least 2-months income.
Print the post Back To Top
No. of Recommendations: 0
Scottrade (www.scottrade.com) has a $500 minimum and no minimum number of trades. Plus low commissions $7.

http://www.scottrade.com/online-brokerage/online-broker-comp...
Print the post Back To Top
No. of Recommendations: 0
A Roth IRA might be a better choice since you will be eligible now and may not be in 5 or 10 years. I started one for my children when they first started working. I could not afford to add to it when they they graduated from high school but they know they withdraw from it now for their first house or wait and it will be available for withdrawal without having to pay federal taxes when they retire. It was always less than the five hundred dollars you have. I opened the first one at our local credit union when a local dentist paid $50 dollars for washing his office windows. Needless to say it was not his favorite present but it has been a comfort when emergency savings have a way of disappearing.


Good luck
Print the post Back To Top
No. of Recommendations: 0
Just started following this site but I've been investing for a long time & have had much success. Dollar cost ave. has worked for me over the long term. Having the $ taken out of your check or checking acct. ea. mo. is a great way to paticipate. Personally, Mut. funds & or ETFs are an easy way to diversify. I like Fidelity Index funds & Broad-ranged ETFS, ITOT, IJH, for ex. FSEVX, & FSTMX are tweo of my favorite Index mut. funds. Automatically reinvesting dividends & cap. gains over the long term is the best way to grow your money. Paying .07-.10% for Fidel. index mut. funds is the cheapest & most profitable way to make your $ grow over the long term. ( I personally don't understand day traders. Most of them lose $ over the long term. To me it's the difference betw. gambling & INVESTING). Good luck
Print the post Back To Top
No. of Recommendations: 0
I'd check with Fidelity & or Vanguard to see what their minimums are. I would start invest in broadly diversified mut. funds & or ETFS. The Vang. Tot. Stk. Mkt. Index fund meets these points. Investing ea. month into this fund over the long term will be rewarding. Don't day trade. That's gambling. Most day btraders lose all of their money. Also, VTCLX looks good for the long term. Good luck!
Print the post Back To Top