I have no clue at all how this works. I am thinking (and I hope this doesn’t come off as a callous attempt to cash in on a disaster; sure I want to make money but I am anything but callous about this) that now would be a good time to invest in airlines as they are so low and will surely be built back up again. How do I do this? Do I just call up a stock broker I find in the yellow pages and give him money? Would my bank likely have someone there that would help me with this? How long is the process? How long should it take from now until the time when I actually own the stock? does it happen immediately? does it take a week(s)?
Call a stock broker or establish an online account with etrade etc. http://www.etrade.com
It’s simple and after paying the broker or funding your online account you can buy and sell to your heart and wallet’s content.
But as word of advice don’t think you can time the market, even now. I thought stocks were a deal nine months ago because they had fallen in price substantially. That bit of hubris cost me many, many thousands of dollars.
This is via spouse, who is quite the investor and has a very good record. He calls me a “rich old bag” because I had never owned stock until last year, and am currently worth $800 on a $600 investment.
(Incidentally, I go through Sharebuilder. This is a great way to get started, since you can buy fractional shares of stock, even non-dividend paying stocks. It’s equivalent to a DRIP - Dividend Reinvestment Plan. Currently, I put a set amount aside each month on a couple stocks, at $3 per set purchase each. This is much less than the usual commission that is charged. Spouse says he’s used Suretrade, and it “sucks!” Doesn’t know about Etrade. But from my own experience, do look into Sharebuilder. I think they are on the web at http://www.sharebuilder.com. )
Also try http://www.better/investing.com. (or .org?) This is a great way to do some research – they are non-profit and educational on buying stocks. You can download their software program for a free 30 day trial – I don’t know what it would cost you after that.
Spouse does agree the airlines might be a good buy, but doesn’t think now is the time to invest just yet. Two that come to mind (stock symbols: FRNT and ACAI) are Frontier Airlines and Atlantic Coast Airlines, (he thinks, isn’t sure of the last name).
Don’t put any money into stocks that you will need within a year, especially airlines. This is a long-term thing (5-10 years) if you do it spouse’s way. (And Peter Lynch, Louis Rukeyser and the pros agree.)
Free advice: 1. From Yahoo Profile “current ratio” greater than two. 2. Debt as low as possible. 3. P/E ratio less than 12. 4. Price/book ratio low, no more than three.
And a personal bit of advice: I invest in companies that I use the products/services of. BUY WHAT YOU KNOW.
Well, I guess I can answer the questions about which I have some knowledge.
A “regular way” trade (the standard process) take 3 business days to settle. This means stock due to the buyer and funds due to the seller are completed on day 3. So, if you enter an order to buy stock with your broker on a Monday (for instance), you are the shareholder of record as of Thursday the same week (assuming you have paid for the trade).
The general process is to open a brokerage account with a brokerage firm. You can deposit money in the account the same way you can a savings account. Then you call your broker at the firm and tell him what you want to buy. He uses the money in your account to buy what you want (and subtract a broker’s fee) and the shares will show up on your next account statement.
These days, you’ll probably find it easier to trade online once you’ve established the brokerage account.
I think the Motley Fool generally gives sound advice in plain language with a bit of humor tossed in, though they aren’t infallible authorities. Their bit on choosing a broker:
One thing most broker comparisons seem to miss - the interest rate paid on the cash in your account. Online brokers tend to brag about how low their fees are. The last time I looked, the REALLY low fee online brokers also paid next to nothing in interest on the money in your account, whereas the more established discount brokers like Schwab pay interest comparable to a bank account. If you are going to leave some money sit in there while you decide where you are going to put it, and you aren’t going to be making that many trades, the difference in interest can very well cover higher fees.
Thanks everyone! great stuff! I’m particulary looking forward to sitting down for a few days and reading through motleyfool (because it’s gonna take at least a few days for this stuff to get through my thick, financially unsavvy head).
So am I understanding that I should first go to a broker to set up an account and then go online from there?
OK, so pretending I just stepped off the banana boat from Cuba, break this down for me.
I call up a broker. I meet with a broker. He/she talks to me.
Should I know what I want when I walk in? Will he advise me or is he just there to do legwork of the actual making of the investment? Does he charge me a set fee? Is it based on a percentage of my investment? Does he continue to collect on any profit I make over time on the initial investment?
How do I then switch to handling my account online?
Helpful, but specifics are not absolutely necessary. You should know what your investment goals are (i.e. aggressive growth, risk-taking, conservative growth, etc.) - indeed, it is one of the questions your financial consultant (the current industry term for stockbroker) is required to ask you. Once you have established what your goals are, your broker will be able to help you select which stock(s) you might want to buy.
Varies firm to firm. In general, you’ll get more advice from a live professional than an online service (although there are some very good information sites out there).
Your broker makes a commission on every trade that is a percentage of the total trade amount. I’m not up on my front-office fees, but I think it’s somewhere in the neighborhood of 20-30%.
No - that is, if you continue to hold the stock. Commission is charged per trade. If you buy stock, and the stock increases in value, your broker earns nothing until such time as you decide to sell it, at which time the commission is once again assessed on settlement.
Many brick-and-mortar financial institutions offer online account access and trading. Ask about it when you are looking into opening your account. Obviously, if you go the route of someplace like E-Trade, your account is online from the get-go.
If I may follow up a bit, 20-30% sounds like a lot. Does etrade and the like also charge a comission or do they just require a one-time fee? If I use a broker, can I switch to an online service without having to sell and re-buy? If a stock ends up lower when I sell, do I owe anything to the broker?
I have accounts with Chase. Is it likely that they have someone at my local branch who does this? I have seen a financial advisor there who set up a mutual fund for me, but I never found out if they do personal investments on individual stocks.
Yikes, 20%-30% commission? Sure that isn’t $20-$30?
I deal with ETrade so I’m not sure about the fees of other brokers, but with them, you are charged a transaction fee for each trade you wish to initiate, whether it be buying or selling. The typical fees are in the $0-$30 range per transaction. I was not charged a fee to set up my account.
No clue on whether you’re permitted to transfer stock between brokerages without liquidating and converting to cash.
If you’re doing straight buying/selling of stock, you should never owe the broker anything after a transaction except the transaction fee/commission.
It never hurts to ask your branch representative at Chase to see what their investment options are.
You may have the right idea but one reason that the airline stocks are so low is that some won’t survive. You could make a great long-term investment, or bet on the ones that go bankrupt.
Check the Motley Fool site. You need to learn more before you spend a dime.
Yes, you can transfer stock between accounts without liquidating. The brokers know how to do it.
You need to sit down across a desk with a broker or someone from Chase and ask them these questions. Schwab, spouse is told, is newbie friendly and might be worth checking out. (In person, that is.)
With your present knowledge, DO NOT TOUCH Suretrade or E-trade.
DON’T start with airline stocks. One of the cheap ones just went broke last week, for the same reason you are looking at them.
My opinion now: Start with something much less volitile. My first stock was in a grocery chain, because my feeling was “no matter what the economy, people need to eat.” It’s turned out to be a very good choice, especially with the events of the last couple weeks.
But the choice in the end is yours. Take this advice for what it’s worth.
See, I’m an Operations guy, not Sales or Corporate Communications. What I do doesn’t directly translate to customer service.
So. The commission-per-trade isn’t a topic with which I am intimately familiar, and my figures may be off. I do know the online brokers typically charge less for transactions than conventional brokers (Hell, my firm still doesn’t even offer online trading). The premium you pay for talking to a professional is supposed to be for the more personalaized advice. By all means, shop around.
You can transfer securities holdings between brokerage firms without liquidating. It’s very common, and is automated on the back-office side.
