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Author Topic: Brand new to investing.. need advice!  (Read 1162 times)
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corruptrelic
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« on: November 15, 2008, 11:47:49 AM »

My bank and saving account are with E*Trade Financial and they've always been sending me ads for an investment account so I finally bit the bullet and opened my brokerage account thinking I'd buy some shares in Sprint stock which is around $2 right now.. could be a worth wild investment. I emailed them asking about fees and they called me telling me "Each trade has a $12.99 transaction fee"(!!!) WTF? Not only that, but when you sell, it's another $12.99! I told him I just wanted to buy some stock in Sprint while they are so cheap and am I understanding this right that to buy a $1.98 share it's going to cost me $15?? He said yes, and another $12.99 to sell it because they are my brokerage firm.

Am I missing something here? That just doesn't add up.. how are you supposed to make money off of investments if it cost so much to buy and sell?

For anyone familiar with stocks, for someone like me who is brand new to investments and wants to buy about 20-30 shares of Sprint the easiest and most affordable way, what would you suggest?
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Mithridates
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« Reply #1 on: November 15, 2008, 11:54:14 AM »

Well I think typically someone doesn't invest $50 at a time or sell $50 at a time like you are talking about.  When you invest, you do it in a more serious manner, say maybe $500 or $1000 at a minimum.  That way, the $25 total in fees isn't really a big deal.

I don't buy stocks on my own(I use mutual funds), but I think that's the general idea.
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Crux
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« Reply #2 on: November 15, 2008, 12:08:19 PM »

There are cheaper online trading places out there, but you'll still be paying between $7 and $10 a share. Traders usually buy hundreds or thousands of dollars in shares at a time. You will struggle to make any money if you're only buying $50 or $100 of shares.
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coopasonic
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« Reply #3 on: November 15, 2008, 01:29:28 PM »

Quote from: Crux on November 15, 2008, 12:08:19 PM

There are cheaper online trading places out there, but you'll still be paying between $7 and $10 a share.

Not $7 to $10 a share, 7 to 10 per transaction.

When you are buying $5k in stock, a $13 fee isn't really that bad. If you buy $100 in stock it is pretty bad. It's that simple.
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Crux
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« Reply #4 on: November 15, 2008, 01:45:03 PM »

Quote from: coopasonic on November 15, 2008, 01:29:28 PM

Quote from: Crux on November 15, 2008, 12:08:19 PM

There are cheaper online trading places out there, but you'll still be paying between $7 and $10 a share.

Not $7 to $10 a share, 7 to 10 per transaction.

When you are buying $5k in stock, a $13 fee isn't really that bad. If you buy $100 in stock it is pretty bad. It's that simple.

Boy do I need more sleep. Yes $7 to $10 a transaction Tongue
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corruptrelic
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« Reply #5 on: November 18, 2008, 06:35:47 AM »

E*Trade told me it was "per share" so even if I had the money to buy 1,000 shares of Sprint at $2.00 each, I'd still be paying $12.99 per share.. and another $12.99 to sell each one of those. That would mean sprint stock would have to go up to $29.00 just for me to make a $1.00 profit on each share.
I asked the rep to clarify that twice because it didn't make any sense but he seemed pretty sure of himself.. so either he's gravely misinformed about investing or E*Trade really does charge for each share.

If anyone has any advice on where else I might try to buy some stock more affordably and without so many fees, it'd be appreciated.
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Arkon
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« Reply #6 on: November 18, 2008, 07:02:59 AM »

I am a no risk kind of guy in general, but with open enrollment at Fedex I decided to enroll in the employee stock purchase plan... that is about the limit for me for investing.

In general the whole stock market thing makes me feel like a retard...

 retard
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Crux
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« Reply #7 on: November 18, 2008, 12:15:39 PM »

Quote from: corruptrelic on November 18, 2008, 06:35:47 AM

E*Trade told me it was "per share" so even if I had the money to buy 1,000 shares of Sprint at $2.00 each, I'd still be paying $12.99 per share.. and another $12.99 to sell each one of those. That would mean sprint stock would have to go up to $29.00 just for me to make a $1.00 profit on each share.
I asked the rep to clarify that twice because it didn't make any sense but he seemed pretty sure of himself.. so either he's gravely misinformed about investing or E*Trade really does charge for each share.

If anyone has any advice on where else I might try to buy some stock more affordably and without so many fees, it'd be appreciated.

There is no way they charge you per share. It is per trade.
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raydude
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« Reply #8 on: November 18, 2008, 01:57:41 PM »

Quote from: corruptrelic on November 18, 2008, 06:35:47 AM

E*Trade told me it was "per share" so even if I had the money to buy 1,000 shares of Sprint at $2.00 each, I'd still be paying $12.99 per share.. and another $12.99 to sell each one of those. That would mean sprint stock would have to go up to $29.00 just for me to make a $1.00 profit on each share.
I asked the rep to clarify that twice because it didn't make any sense but he seemed pretty sure of himself.. so either he's gravely misinformed about investing or E*Trade really does charge for each share.

If anyone has any advice on where else I might try to buy some stock more affordably and without so many fees, it'd be appreciated.

I use Etrade. Its always been per transaction, not per share.
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corruptrelic
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« Reply #9 on: November 18, 2008, 02:05:22 PM »

That it is, I just tried it out and bought 30 shares of Sprint @ $2.18 each (could have had them at $1.98 just a few days ago!)  and it was one transaction fee. Don't know why the E*Trade rep told me it was "per share" since that didn't make any sense.. you could never make any money that way.

I know the market sucks right now but I'm sure Sprint will turn around and right now seems like the perfect opportunity to buy stock.
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Crux
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« Reply #10 on: November 18, 2008, 03:24:30 PM »

Quote from: corruptrelic on November 18, 2008, 02:05:22 PM

That it is, I just tried it out and bought 30 shares of Sprint @ $2.18 each (could have had them at $1.98 just a few days ago!)  and it was one transaction fee. Don't know why the E*Trade rep told me it was "per share" since that didn't make any sense.. you could never make any money that way.

I know the market sucks right now but I'm sure Sprint will turn around and right now seems like the perfect opportunity to buy stock.

Eep. I strongly suggest you ask advice before making any more purchases. Not talking about *what* you bought, but rather about how you bought it.

You just paid etrade $12 to buy $60 worth of shares. Remember you'll pay another $12 when you sell. That's $24 to invest $60... think about the kind of return you need to get on your shares now just to cover your purchase cost.

Honestly you need to wait until you can be buying, at a bare minimum, several hundred dollars worth at a time. Otherwise the transaction fees are going to kill your chance to make a profit.
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Boudreaux
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« Reply #11 on: November 18, 2008, 04:08:44 PM »

Quote from: Crux on November 18, 2008, 03:24:30 PM

You just paid etrade $12 to buy $60 worth of shares. Remember you'll pay another $12 when you sell. That's $24 to invest $60... think about the kind of return you need to get on your shares now just to cover your purchase cost.

Crux is absolutely right.  You basically need Sprint stock to increase in value by 40% before you see a dime of profit. 

You're doing the right thing by investing now, this is an absolute gold mine in terms of profit potential.  I saw this same thing after 9/11 and the tech bubble collapse around 2001-2002, I didnt' get into the market then, and have regretted it ever since.  But, if you're going to invest in stocks using something like ETrade you need to be investing much more than $60.  If you had bought 300 shares of Sprint stock @ $2.18, you would have paid the same $12.99 but on a $654 investment.  In that case you make a profit when Sprint goes up only 4%.  The more stock you buy in one transaction, the less impact that transaction fee has on your investment. 
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Isgrimnur
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« Reply #12 on: November 18, 2008, 04:15:37 PM »

The Fool has a lot of good information about investing, even stuff on fees and the like.  They've been around since before AOL had an all-you-can-eat internet plan. 
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raydude
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« Reply #13 on: November 19, 2008, 01:38:29 AM »

Quote from: corruptrelic on November 18, 2008, 02:05:22 PM

That it is, I just tried it out and bought 30 shares of Sprint @ $2.18 each (could have had them at $1.98 just a few days ago!)  and it was one transaction fee. Don't know why the E*Trade rep told me it was "per share" since that didn't make any sense.. you could never make any money that way.

I know the market sucks right now but I'm sure Sprint will turn around and right now seems like the perfect opportunity to buy stock.

I was in the same boat as you about 8 years ago. I was also new to investing and I only had about 200 bucks to start. My co-workers suggested starting a DRIP since I had so little capital. Dividend reinvestment plan: http://www.dripcentral.com/ or http://www.directinvesting.com/ for info. Essentially you enroll in a plan that takes your N shares of initial stock and re-invests the dividends to buy X shares (where X can be a fractional share).

I see Sprint is a DRiP. Since you already bought the shares via Etrade I suggest you set Etrade to put those shares in a DRip plan. They do that for free and show you the fractional shares and % return on them.

Of course, if you come across more limited capital and don't want to wait to plop down $600 on another trade I suggest a direct DRiP plan with another company.
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Eduardo X
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« Reply #14 on: November 19, 2008, 10:01:16 PM »

Not counting transaction fees, you're down $7.20 today.
I'm not sure why you chose Sprint as the company to invest in, but it seems like a bad option. News that it's at its lowest since the 1980s should be a warning that you may be out of luck for the time being.
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Crux
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« Reply #15 on: November 20, 2008, 01:36:59 AM »

Quote from: Eduardo X on November 19, 2008, 10:01:16 PM

Not counting transaction fees, you're down $7.20 today.
I'm not sure why you chose Sprint as the company to invest in, but it seems like a bad option. News that it's at its lowest since the 1980s should be a warning that you may be out of luck for the time being.

Actually IF it is a well-run company with solid economics behind it then now would be the ideal time to buy into it. Unfortunately, it isn't particularly well run, and it is an industry that requires a lot of spenditure on research, development advertising etc etc to stay competitive. Not a good combination.
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