Can anyone talk me out of using Scottrade?

So,

With around a thousand dollars sitting in a bank checking account earning around .5% interest, I’ve decided that I’d much rather invest that money into something.

I don’t have much ambition to transform into a day-trader, but I’m planning on moving most of that money into a mix of two or three growth oriented or foreign investment mutual funds.

Is using Scottrade.com a reasonable and cheap way to do this?

I’ve largely made my decision from this:
http://www.scottrade.com/online_broker_comparison/discount_brokerage_comparison.asp

Scottrade seems to have the lowest commissions and I really haven’t shopped around much for other criteria. I don’t need “real-time quotes” or the ability to trade $3 M worth of stock on margin buys, just a way of moving money into and out of mutual funds on a 6 month to 1 year basis and add to the account from savings as I choose to do so.

Eventually I plan on taking money back out of this account as well in the relatively short term (two to three years), so beyond the $7 stock trade commissions and the $17 mutual fund trade commissions, are there going to be any “gotchas” or fees that I’m failing to anticipate? Yes, I certainly realize that my investments could lose money, no reason to read me the red herring.

If you just want a few mutual funds, go to the source, don’t bother with the broker–I’d recommend www.vanguard.com, low fees, generally good funds. Online brokers are more if you want to trade at least a few times a year.

I’ve used Scottrade. They’re nice since they don’t have an account inactivity fee so you don’t have to trade. Customer service has been helpful when I called. One thing I have heard is they don’t do automatic reinvestment of dividends, but that’s more an issue if you plan to buy and hold something like utility stocks. They’re a good online broker, but I don’t think you need a broker for what you want to do.

I’ve used Scottrade and had no issues. When we were deciding on one, we were looking at a company that didn’t just charge us for nothing all the time. But we had more than $1000 in there at the time. (I think at the moment there’s something like $0.03 in the acct.)

With only a thousand bucks, the low balance fees from the mutual fund company might hit you. Many, even Vanguard, have minimum balances of $1,000 to $3,000. Some have low or no minimums. You just have to make sure they will perform for you.

If you are determined to buy stocks, I might actually suggest something like a couple of exchange traded funds, like iShares. Those could give you a pretty broad exposure with lower management fees than many mutual fund companies. Its a really good selection of funds scross many different asset types. I use them to tilt my personal portfolio in one direction or another depending on my market view.

As far as Scottrade, I am a big fan. Most of the guys in my office use it for their personal trading. Its a pretty user friendly website, its cheap, and doesn’t nickel and dime you for fees.

As far as the dividend reinvestment issue that Gaudere brought up, I am not sure if any discount broker does this automatically. Broker shares are held in street name. If you want dividends reinvested, you have to request a stock certificate for which I believe Scottrade charges $25.

Weird, that’s actually exactly what I was planning to buy, probably a mix of Morningstar Mid-Cap Growth and some other fund.

I guess I found out about them from their cycling sponsorship and I know that it’s hard for any fund to “beat the markets” so I figured, what the hell.

Yes, I work for TD Ameritrade now. Many mutual funds are considered no transaction fee.

Here is a list of the funds you can trade on Ameritrade without any transaction fees.

Note that you can get five percent or so in a money fund or bank CD, so depending on your goals, you might want to do that instead.

Considering that the CPI inflation rate is, what, 3%? I think I’ll skip the CD for now.

While I was looking around for a house, I stockpiled my soon-to-be-downpayment money in an ING account. As of last week, they were paying 3.25%, which isn’t going to make you rich, but with 0% risk it was the choice for me.