Posted: 4/5/2008 4:17:42 PM EDT
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I think I pretty much got the basics covered. I have a 401K at work that is maxed out and I am rolling another 401K from another job into it. My company is one of the few that still offers a zero contribution pension. I have life insurance. I have started an college savings plan through my insurance company for my daughter. I save money out of every pay check and keep it in my savings account. I take a few dollars every week and stick it in the safe for cash on hand. Where do I go from here? I will probably start a Roth IRA to complement my work 401K but how do I start investing by trading stocks? Has anybody used the do it yourself places like E Trade or Scott Trade? Should a newb stick with a broker? Am I just totally off base and sounding like an idiot with little to no idea as to what's going on? 
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go buy some books and do theoretical trades. on paper, find something you like. pretend to buy $1000 dollars worth with some idea of how you will make money on your investment- growth of the stock, dividends, buyout, etc. see how it actually works out without most likely losing most of your money. i'm sure the guy with the fat kid eating will be along soon with better advice
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Buy some bonds and also buy into some mutual funds. Do your research on the mutuals, fund by fund, and look at their component markets and historical yields. I'd start by looking at Vanguard funds and Franklin Templeton funds. There's really a fund for most any desired investment goal in there somewhere, from short term high yield funds (which carry a higher risk, of course) to low risk long term retirement oriented funds that tend to weather the ups and downs of the markets rather well. Diversification is important. I would advise that you carry multiple funds from different fund organizations, not just one. If any single fund tanks, it should not kill you, financially speaking. If you think you have the knack for it, you can also do some direct stock trading, but this is really just a form of gambling. The only real difference is that you can keep your money in play as long as you like, and wait for an opportune moment to buy or sell. CJ |
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I'm not even wasting my time investing in stocks outside a Roth or 401K at this point. Anything I buy and sell and make a profit on gets taxed at about 40% state and federal income taxes, leaving me with a measely 60% of the profit. if I buy and sell in less than a year (short term capital gains). I take all the risk and the gummint swoops in and steals the profit. If I lose more than $3,000 in a year, I have to roll over the additional loss to another tax year. They want all the gains immediately but not all the losses. Fug 'em. Just a rant. |
Rant is spot on. But I'm still trading. 
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It's not that bad, really. State taxes may change the game, but I'm in Florida where there are no state taxes.  Given the generally REASONABLE federal tax rates on capital gains, I see no reason not to play in stocks as long as I can make it worth my while. I'm in a low tax bracket anyway. Under 10 percent. CJ |
Anything by Dr. Alexander Edler, such as Come Into My Trading Room and Trading for a Living Also Millionaire Traders by Lien and Schlossberg for some different perspectives. After these, there are a lot of "in the weeds" technical aspects (and books) you can dive in to, depending on the approach you wish to adopt. |
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let's back up for a second...
a 401k is a tax-advantaged container, just like an IRA (Roth or Traditional) is a tax-advantaged container. what investments do you have inside your 401k's (plural in your case)? what investments do you have in your taxable accounts (money market funds, for example)? do you have an emergency fund?
don't do that. keep reading.
no. a broker is not going to do anything for you.
first, you need to understand your current investments in your tax-advantaged accounts (401k). if you have from $2500 to $5000 sitting around right now, i'd suggest that you immediately (i.e., before tax day) open a "tax year 2007" Roth IRA at Fidelity or Vanguard. deposit the money into it; for the time being it will sit in a money market fund until we help you figure out where to invest it. second, it will be highly advantageous for you to roll your prior employer's 401k into a traditional IRA at a company like Fidelity or Vanguard. this will be a tax-free event. the reason that doing this is to your advantage is that an IRA account will have much broader and much less expensive investment options than a typical company's 401k. you will be able to trade within the IRA across a wide range of investments, including mutual funds, ETFs, and individual stocks. this is almost never the case with company 401k plans, although some more progressive plans do have a brokerage option. third, it is critical that you get as much of your investment monies inside tax advantaged containers. this is why i suggest putting up to $5000 (this year's limit) into a 2007 Roth IRA (assuming you meet the AGI [adjusted gross income] limits. you only have about 10 days to do this, but it can be done. call up Fidelity or Vanguard on monday, or print our and send them the completed application form which you can download from their websites. fourth, it will be immensely beneficial to you to keep your Roth IRA and rolled over 401k at the same company. this will allow you to keep a "big picture" view of your investments, and use on-line portfolio analysis tools to delve into the makeup of your portfolio (e.g., percentage domestic vs international, percentage stocks vs bonds, and so on). moreover, many investment firms allow "account aggregation" for pricing breakpoints. for example, if you have a brokerage account with $5000 in it, and a rolled over 401K with $45,000 in it, you will qualify for trading fees as if you had $50,000 in your brokerage account. this will cut anywhere from $5 to $15 from your trade costs. fifth, put away the idea of trading individual stocks for at least 3 to 6 months. as noted above, you need to understand what you currently own, why you own it, and whether it is benefiting your portfolio as a whole. regards, ar-jedi 
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WOW thanks ar-jedi! I will try to digest that and take your advice. nervermind I reread it. BTW the old 401k is with T. Rowe Price. Is there a reason you suggested the other two? Thanks Again |
no, in fact TR Price is a quality outfit. one VERY NICE feature of TR Price is their integration with Morningstar's analysis tools. my wife's 403b (basically a 401k for educators) is with TR Price, and i *love* the one button portfolio analysis feature. no typing the portfolio info into Morningstar Instant XRay -- the data is automagically sent and it works great. i recommend any one of the following for investments: Fidelity, Vanguard, and TR Price. the differences are minor; in most cases it depends on what type of investing you do. in short... Fidelity has the largest "fund supermarket". you can buy and sell more mutual funds through Fidelity than anywhere else. want to buy a "boutique" fund? Fidelity probably has it on their list. Fidelity also has very competitive pricing for traditional trades (stocks and ETF's). Fidelity has industry-benchmark customer support -- they are that good. if you like flexibility and on-line trading (Fidelities web site and tools are among the best available) along with breadth of products (you can trade stocks, bonds, CDs, ETFs, mutual funds, options, etc), then Fidelity is the way to go. Vanguard has the lowest cost (i.e., lowest expense ratio aka ER) index funds in the entire industry. if you consider that over the long term all index funds have the same total return, the ones with the least expenses will have the best performance. Vanguard does lose points for "annual account fees" if you don't have a certain amount in your account. they also lose some points for less-than-stellar customer support. if you are a buy and hold index fund investor, i doubt you can do better than Vanguard. TR Price has a large fund supermarket, good customer support, and as noted above excellent integration with external analysis tools. i have found that TR Price's educational material, both on their web site and the printed matter sent to you home, is the best of the three. TR Price's once-a-month investment newsletter, for example, is better than Fidelity's equivalent "Stages" newsletter. again, in the end, one of these three may be more convenient for you. in my case, my company 401k is with Fidelity. therefore, i aggregated all of my accounts there. however, i am very satisfied with TR Price as i manage my wife's 403b there. in both cases, i do EVERYTHING via the web. ar-jedi |