Noob topic: How to buy stocks.

I've decided to put a small bit of extra money each month towards buying stocks ($100 or so). It's not a long term plan at all, but more of a potentially useful application of some extra money that I would otherwise spend on beer and other stupid things. It's more for entertainment purposes than for any other reason.

I'm 23, going to school, and have more income than bills, no debt, enough savings to cover me for a few months, and no real responsibilities. I'm also looking into setting up an IRA, but that's a separate issue.

I literally want to know the best way to physically purchase stocks. Go to E-Trade, set up an account and go from there? Some other way? Is $100 too small of an amount to even do anything?

Most of the traditional brokers (Fidelity, ING, others) will want a minimum balance of $2,500 to start, and ~$8/trade - with is essentially an 8-pct commission on a $100 purchase.

I'd recommend checking out a DRIP site / program, such as www.computershare.com.

My very first stock I purchased was through computershare - it only takes an initial investment of $250 (or $50 for 6 months).

Search for no purchase fee plans.

FWIW - my first stock there was XOM. You also may want to consider MMM or KO for stable stocks with good dividends, and good outlooks. Any of those three are great stocks, and great for new investors (seasoned ones too).

Scottrade and don't look back.

IM me for a referral and we both get three free trades.

This is just my opinion, and I only recently got started so keep that in mind.

With an online broker like ShareBuilder or Zecco, you can open an account with a $0 balance and have no inactivity fees. I still have a sharebuilder account open that I never put a dollar into. I still use their app for my watch list though. There are upsides and downsides to each one, so read the fine print and search for reviews.
A good example: My wife likes Scottrade. They have (I think) a $7 fee per trade. They also have brick and mortar businesses that you can walk into and talk to someone about your account.

I'm with Zecco - only $4.95 a trade, but I've only got online support if I need help. There are also things like outrageous fees for penny stock trading, a yearly IRA fee, etc But I don't use any of that. I do simple buy and hold trades so that low fee per trade drew me in.

$100 is not too little to get started. My first trade was only $160. If a stock goes up 1%, you'll gain 1% just like the guy that invests $25k gains 1%. Of course you need to consider the trading fees. I pay $4.95 whether I buy $100 worth of shares or $1,000 worth. Dripping in $100 at a time instantly puts me at a loss of 4.95%. Saving up and purchasing $1,000 worth drops that to half a percent.

Just get in there and do it, it's fun! (on good market days )

Sharebuilder

+1

This. Scottrade has $7 comissions and a very low account minimum (I think it was $250). They have local branches so you can get in-person service, and the have free seminars all the time.

As someone metioned, paying $7 for a $100 trade means you need to earn 7% just to break even. You will come out better if you build the account up and wait until you can trade in increments of $500+. You don't want comissions to eat into your returns.


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You have a tank so I would assume you could be eligible for USAA. They have a setup similar to E-trade and the other online brokers. Give them a call or look online.

I was in a similar situation about two years ago. I ended up going with a brokerage account thru USAA. It was $250 to open if I recall correctly. Their trades range from $7.95-$12.95 and the support has been adequate for my needs. FWIW I'm a buy and hold type of guy.

Here's another vote for Sharebuilder. If you set up an automatic investment, you can invest every Tuesday (or every other Tuesday, or one Tuesday per month) for a $5 trade fee. If you join the ShareBuilder premium service for $12 per month, that fee is free and you get more detailed stock information.

I joined the premium service and I invest in the S&P 500 index fund (SPY) every two weeks, so I effectively pay $2 per month for the stock info once you calculate the cost of the two trades.

Other good ideas ahead of my post but FWIW my S.O. is your age (aww yeah...) and does $40 per week and makes a buy every time her cash position gets up to $500. She's been at it for over a year now and is getting ready to buy her 5th stock. A commission on a $500 trade is about 2% which is not a killer. You'd get at least a couple buys in every year at $100 per month.

Just another way to look at it. I like the ideas of the posts before this one as well. The big thing is to get started and stay regular. You should be able to make that $100 monthly investment AUTOMATIC by setting up a repeating transfer between your brokerage account and your checking account. Making it automatic is a big key to a successful savings plan in my humble opinion. We are all human so let the machines do some of the thinking for you.

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