Buying individual stocks

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Wind power
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Buying individual stocks

Post by Wind power »

Ok I realize most folks dont like the idea of buying individual stocks on this forum, but I have to ask, who has low buying fees and zero to no hidden fees?
This not about day trading nonsese, but instead a buy and hold to build my portfolio in another area.

I'm seriously thinking about shifting things around.. I have a 401k which has been beat the heck out of for the last 4-5 years...I pour money into it and the only folks doing good appears to be those fund managers and the investment firms who only seem to be concerned about fees and shaving it off

I honestly think I could go it alone and be just as well off...
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hollowcave2
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stocks

Post by hollowcave2 »

But buying stocks in a separate account won't solve your 401k problems, would it? How can we work on the 401k problem? is there a S&P500 index fund in there with relatively low fees?
Default User BR
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Re: Buying individual stocks

Post by Default User BR »

Wind power wrote:Ok I realize most folks dont like the idea of buying individual stocks on this forum, but I have to ask, who has low buying fees and zero to no hidden fees?
This not about day trading nonsese, but instead a buy and hold to build my portfolio in another area.
If you have a fair amount in assets, it's hard to beat Wells Fargo. 100 free trades per year, per account with no maintenance fees when linked with a PMA checking account. The PMA itself is free if the total of all accounts is $25k or more.
I'm seriously thinking about shifting things around.. I have a 401k which has been beat the heck out of for the last 4-5 years...I pour money into it and the only folks doing good appears to be those fund managers and the investment firms who only seem to be concerned about fees and shaving it off

I honestly think I could go it alone and be just as well off...
You're probably fooling yourself. It's very difficult for the small investor to get anything like proper diversification. Without that, you take on uncompensated risk. You're far better off with low-cost INDEX funds and ETFs. Then you don't have to worry about fund managers and their stock-picking ability.


Brian
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Wind power
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Post by Wind power »

Hi Hollow,
Thanks for the reply...I'm honesty thinking of simply abandoning the 401K and leaving it to rot... simply stop the contributions and leaving it in limbo....and if anything is left when I retire than well, those leeches in fact did leave something behind.
Until then I think I could simply start over on my own terms and do just as well.
If I could pull the plug on it and get it out, I would add it to my IRA...at least I know whats left would grow.
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Scott S
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Post by Scott S »

Before you do anything rash, what options do you have in your 401(k)? Is there a match?

I honestly don't know what the expenses for my 401(k) are, but I know that with the match and tax deferral, I've come out way ahead in the last few years.

- Scott
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Wind power
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Post by Wind power »

Default,
I have an IRA with Wachovia ( just over 100k) ....they were bought out by Wells Fargo.... any idea or chance this might apply too?
Thanks!
Hi Scott thanks for your time, There is no more match the deal is really not that sweet anymore, we were recently bought out and the new company does no feel compelled to invest in our future anymore...tit for tat, nor do I in theirs...so this tool and die maker is gonna' screw'em back as soon as possible. along with much of the other work force there....

However, you have brought up an important issue...taxes (capitial gains)....hummm.... I could open up an investment IRA??? And pour as much into it as possible.
In my ideal retirement situation I want to use up the taxable income first, then withdraw tax deferred money next then....if i had a roth investment IRA ( where I buy stocks) I could then reel that in last....hummmm this I dont know...is there roth IRA's out there which can be used for investing in the market???? ( such as building a portfolio of stocks?)
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hollowcave2
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401k

Post by hollowcave2 »

But how is the money invested in the 401k? What's it in now? What index funds are available in the 401k?

Even without a match, you can still lower your taxable income by contributing. Without the match, perhaps you can fully contribute to an individual IRA first and then when that's full, contribute to the 401k.

If you have one bond index fund and one stock index fund in the 401k, you can proportion the money in those any way you like and get market returns.
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bottlecap
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Post by bottlecap »

As to your quesion, I'd try Charles Schwab.

With respect to unsolicited advice, I think you would be foolish to "go it on your own." First, no matter how bad your 401K is, it is unlikely that it has not done well over the last two years. Second, even if it has, that's no reason to not invest in other index mutual funds. Finally, I think it is unlikely that someone unsure of how an IRA works will be able to beat the professionals, let alone the indexes. It is difficult for professionals to beat the index - what specialized knowledge can the individual investor have?

JT
biasion
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Post by biasion »

It sounds like you are having difficulty constructing a portfolio. I think you need some help here. Usually I don't like financial advisors because I do the same thing myself and avoid paying large fees. However, if you feel challenged in this respect, and it seems like your portofolio is in shambles, I think the money is well spent for you.

Get yourself a good fee-only financial advisor of which there are a few, Vanguard Asset management (if you have a Vanguard 401k which it sounds like you don't), Rick Ferri, Larry Swedroe, etc and let them handle it. Regardless, always, alsways ask them to make a legal tender statement on paper that they sign in front of you that they do not make any money from commissions at all, ever in their line of work.

IF they refuse to sign or tell you they do, run for your life.
1. Do not confuse strategy with outcome | 2. Those who fail to plan plan to fail | 3. Do not assume the unlikely is impossible, and | 4. Be ready to deal with the consequences if you do.
pkcrafter
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Post by pkcrafter »

I don't know why windpower is reluctant to provide information, but this is from an earlier post. The portfolio needs work, AND windpower is RISK AVERSE.
I have a 401k which is in a fedelity account,TRP 2020,currently it is worth about 17,000...not much, however i just bumped up contributions to about 400 dollars a month. The reason it is in the 2020 and not a 2025 is because as I get closer to retirement I want my money more secure....when 2020 rolls around I might do something else a bit more conservative with it.

IRA
$113K CD at maturity ( 2.4 years away)

Fidelity 401K
$17K TRP2020 (T.Rowe Price) Contributions now at $5,200 a year

Taxable
$38K Muni Bond
$400/month to buy Stocks (also at $5200 a year)


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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DiscoBunny1979
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Re: Buying individual stocks

Post by DiscoBunny1979 »

Wind power wrote:Ok I realize most folks dont like the idea of buying individual stocks on this forum, but I have to ask, who has low buying fees and zero to no hidden fees?
This not about day trading nonsese, but instead a buy and hold to build my portfolio in another area.

I'm seriously thinking about shifting things around.. I have a 401k which has been beat the heck out of for the last 4-5 years...I pour money into it and the only folks doing good appears to be those fund managers and the investment firms who only seem to be concerned about fees and shaving it off

I honestly think I could go it alone and be just as well off...
------------------------------------------------

There are two great options when buying individual stocks with low buying fees and zero to no hidden fees . . . they are: Wells Trade (100 free trades a year) with a balance of $25,000 in combined accounts OR DRIPs that offer no transaction fees.

I have been over the past few years paritipcated in COP's DRIP program and the only fees charged are small inconsequencial selling fees. You'd have to go to Mellon Investor to read to prospectus of fees and then compare to other dividend investment programs like Walmart that obviously don't want folks to buy through the transfer agent because of transaction fees for each purchase. While I have been an advocate of COP's DRIP program in the past, I'll make a full disclosure here that on 4/13/2011 I sold my position built up from 2/2009 for a 60% overall gain. I'll probably announce when I've decided to start up again.

The other no fee way of buying stock is to find those companies in which offer direct purchase of shares. When I was researching this, companies such as Disney offered direct purchase for an initial purchase of $1,000 or 10 monthly purchases of $100 each. By buying directly from the company, which is different than buying through a transfer agent, one might not have to pay any fee, except possibly a fee to establish the account (somewhere around $10-$15).

There are ways to buy stocks in companies with no fee, but one has to take the time to research which companies offer this and to read their prospectus concerning the stock purchase plan. You might have to mail in a form, which can take time . . . and the stock might be purchased on dates beyond your control at close of day or after market pricing. You have to be satisfied that the shares purchased if on autopilot are an investment for the future and not worry about daily, weekly or monthly price volatility. You'd also have to decide when to sell - which might not be very boglehead, but IMHO owning invdividual stocks requires an exit strategy, whereas owning Index Funds might just require rebalancing, if that.
Topic Author
Wind power
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Post by Wind power »

Discobunny 1979,
Thank very much for that useful information.....yes I have found some stocks already, in particular utlities which offer direct purchase.
Of course other stocks I'm interested in do not....I dont mind paying a fee for a purchase, but I really hate the idea of getting keel halued with inactivity or "Maintenance" fees.
Once again thanks for the useful info I'm going to explore some of the things you mentioned!! :D
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CABob
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Post by CABob »

Scottrade. Commissions are $7, $500 account minimum, no account fees.
Bob
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DiscoBunny1979
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Post by DiscoBunny1979 »

Wind power wrote:Discobunny 1979,
Thank very much for that useful information.....yes I have found some stocks already, in particular utlities which offer direct purchase.
Of course other stocks I'm interested in do not....I dont mind paying a fee for a purchase, but I really hate the idea of getting keel halued with inactivity or "Maintenance" fees.
Once again thanks for the useful info I'm going to explore some of the things you mentioned!! :D
---------------
Yes, that's one of the frustrating things about trying to buy company shares with no fees - many of the companies one would be interested in purchasing sharesdon't offer direct purchase or transfer agent purchase. To be successful, one has to accept the companies on their made up "short list". And to be honest, that short list can actually be an interesting selection of stocks.

For instance, PG offers direct purchase. Enrollment fee is $2.50 . . . with a minimum initial investment of $250. $50 buck minimum after that with no fees for auto investment. Such a deal. And of course Wells Fargo offers direct purchase as well ($10 enrollment fee/$250 minimum initial investment). So, with COP, DIS, WFC and PG all offering direct purchase inexpensively, it's a pretty diverse small grouping right there. However, do you really want to own them individually? That's a personal decision based on one's investment plan or philosophy.
Default User BR
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Post by Default User BR »

Wind power wrote:Default,
I have an IRA with Wachovia ( just over 100k) ....they were bought out by Wells Fargo.... any idea or chance this might apply too?
You will have to contact them to see. If nothing else, they should be able to convert the account.


Brian
jmbkb4
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Re: Buying individual stocks

Post by jmbkb4 »

Wind power wrote:Ok I realize most folks dont like the idea of buying individual stocks on this forum, but I have to ask, who has low buying fees and zero to no hidden fees?
This not about day trading nonsese, but instead a buy and hold to build my portfolio in another area.

I'm seriously thinking about shifting things around.. I have a 401k which has been beat the heck out of for the last 4-5 years...I pour money into it and the only folks doing good appears to be those fund managers and the investment firms who only seem to be concerned about fees and shaving it off

I honestly think I could go it alone and be just as well off...
Gosh, I wish you could have done this on March 8th 2009. You could have made a fortune!
YDNAL
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Re: Buying individual stocks

Post by YDNAL »

Wind power,

I must apologize because you answered my previous questions in your other thread, but I went away offline for a while.
http://www.bogleheads.org/forum/viewtop ... t=#1035600
Previously, Wind power wrote:Ok, good idea I will list it as a portfolio with corrections:

IRA
$113K CD at maturity ( 2.4 years away)

Fidelity 401K
$17K TRP2020 (T.Rowe Price)
Contributions now at $5,200 a year

Taxable
$38K Muni Bond
$400/month to buy Stocks (also at $5200 a year) <- should be $4,800

$168K Total (current)

Likewise, I hate taking a beating on the market, however I do realize in order to see some decent returns, you have to play the market....so I'm thinking of of personally investing about another 100 bucks a week religiously for the next 15 years in various stocks such as utilities and pharms... I will stay the couse come hell or high water and hope this portion of my "plan" works out in the end.
Wind power wrote:Ok I realize most folks dont like the idea of buying individual stocks on this forum, but I have to ask, who has low buying fees and zero to no hidden fees?
This not about day trading nonsese, but instead a buy and hold to build my portfolio in another area.

I'm seriously thinking about shifting things around.. I have a 401k which has been beat the heck out of for the last 4-5 years...I pour money into it and the only folks doing good appears to be those fund managers and the investment firms who only seem to be concerned about fees and shaving it off

I honestly think I could go it alone and be just as well off...
Two questions and I promise to return this time and give you input:
1) Are we now talking about the $500/month investment in Taxable ($400 + $100 (utilities and pharms)?
2) Will you continue with $5,200 annual investment in 401K?
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
bogle_graham
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Post by bogle_graham »

If you don't like your 401k choices, but your account will allow you to buy and sell individual stocks, why not just choose

VOO

This is the Vanguard ETF that represents the S&P 500 index. Very low expense ratio. Buy it once a year to keep trading costs down.
statsguy
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Post by statsguy »

We buy individual dividend stocks. Partly, I limit most of our purchases to dividend stocks because I find it impossible to place a value on a stock that does not pay a dividend. Here is our individual stock portfolio.

Buying stocks is not like buying mutual funds. Mutual funds are generally diversified and often contain hundreds of stocks. This means that the share price of mutual funds is pretty stable; typically behaving like the market as a whole (changing by less than 1% a day most of the time). Since mutual funds hold stocks that are currently hot and some that are currently going down... the best time to buy a mutual fund once you have decided to add it is today.

Individual stocks on the other hand tend to go up and down a bunch more. A particular stock may over the years track the market pretty well, but when you look at it in the short-term it may drop 30% or gain 30% in the course a just a few weeks or months. In my opinion, when buying stocks you should be very cognizant of price. Maybe that is because I am a value investor (like Buffet and Graham)... but I think the most important consideration when buying a stock is to buy with a margin of safety. That means figuring out how much you think the company is worth and if it is substantially more than the current price... then buy the stock. Otherwise, you wait.

We currently are waiting on several stocks to drop into our price zone for those stocks. There is no point in buying something overpriced and hoping it will be higher in five years... think of all those people who bought tech companies in 2000. They knew the price was high but "also knew" the price would be higher in a few years so why wait for a good price.

The other cost to worry about is transaction costs. I would not buy a stock unless the transaction cost is under 0.5%. With a $7 commission I would be not buy less than, say $1500 worth of shares in a stock. Our typical holding period is on the order of a decade or more... if you plan on trading more often than that then I would be buying in even larger lots.

Best of Luck
Stats
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Wind power
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Post by Wind power »

Landy,
Thanks for the reply here's the answer to your two questions:
1. Is $400 a month total, after some suggestions by other to avoid pharms for good reasons, I will probably invest in blue chip companies and continue to invest in utilities

2. I'm not sure if I should invest in the 401K anymore, it gains are not much better than holding something which rolls over 5% interest each year and when I couple this with the fees of .71 it looks to be an overall net gain of 4% (at its very best) each year....heck I can do that on bonds!....see my dilemma? Why continue pouring money into a lukewarm ( at best) 401k when I can put it in something far more secure which is equal too if not better than my 401K returns?????
As to being risk adverse as one poster mentioned...My 113k IRA was built with a 401k, but that was when the market was something other than a continuous train wreck....one poster said I was risk adverse, I would argue that point if I'm still willing to go it alone in the market....I honestly feel I could do an equal to if not better job than some fund manager who appears to be in the wrong profession!....Risk adverse no, a realist yes!
So in the end folks, should I just stop the contribution to the 401K? And simply use those 5200 dollars a year I'm putting in the 401K for something else?

Hi Bogle, thanks for the suggestion, but my 401k does not have that option
Stats, thanks that some good ideas there!
YDNAL
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Re: Buying individual stocks

Post by YDNAL »

Wind power wrote:Landy,
Thanks for the reply here's the answer to your two questions:
1. Is $400 a month total, after some suggestions by other to avoid pharms for good reasons, I will probably invest in blue chip companies and continue to invest in utilities

2. I'm not sure if I should invest in the 401K anymore, it gains are not much better than holding something which rolls over 5% interest each year and when I couple this with the fees of .71 it looks to be an overall net gain of 4% (at its very best) each year....heck I can do that on bonds!....see my dilemma? Why continue pouring money into a lukewarm ( at best) 401k when I can put it in something far more secure which is equal too if not better than my 401K returns?????
As to being risk adverse as one poster mentioned...My 113k IRA was built with a 401k, but that was when the market was something other than a continuous train wreck....one poster said I was risk adverse, I would argue that point if I'm still willing to go it alone in the market....I honestly feel I could do an equal to if not better job than some fund manager who appears to be in the wrong profession!....Risk adverse no, a realist yes!
So in the end folks, should I just stop the contribution to the 401K? And simply use those 5200 dollars a year I'm putting in the 401K for something else?

Hi Bogle, thanks for the suggestion, but my 401k does not have that option
Stats, thanks that some good ideas there!
Wind power,

The issue here is exposure to Equity risk.
  1. We don't know what you owned in the IRA before the $113K CD.
  2. If it was anything like T.Rowe 2020 in the 401K, Equity risk is 74% and you can expect to drop 37% or more during a Market environment like 2008-9.
  3. Even the bluest of "blue chips" dropped equally during this market.
  4. What to do:
    a) Individual Stocks - undiversified Equity risk - are not going to insulate the portfolio from such Markets.
    b) Choose the Equity risk that matches the ability and need for risk.
    c) Invest in globally diversified Index funds to match your Equity risk (b).
Sorry, there's no magic bullet!
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
JW-Retired
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Post by JW-Retired »

Wind Power wrote: I have a 401k which has been beat the heck out of for the last 4-5 years...I pour money into it and the only folks doing good appears to be those fund managers and the investment firms who only seem to be concerned about fees and shaving it off
Wind Power,
If this is true you must have been doing foolish things like selling stock funds at the bottom. The TRP 2020 fund made money after expenses and unless your 401k expenses are stratospheric you did too.
TRRBX Load Adjusted Returns
1-Year: 14.79%
3-Year: 5.00%
5-Year: 4.57%
You really need to give us some facts about what funds are available in your 401k and their expenses if you expect to get any sensible advice.
JW

Oops, I see a couple of post above you already said you don't consider 5% a year through the gigantic crash years good enough. Nothing much to say to that except many would be happy to just be even over the last 5 years.
pkcrafter
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Post by pkcrafter »

Windpower wrote:
one poster said I was risk adverse, I would argue that point if I'm still willing to go it alone in the market....I honestly feel I could do an equal to if not better job than some fund manager who appears to be in the wrong profession!....Risk adverse no, a realist yes!
Windpower, I said you are risk averse because of these statements:
Likewise, I hate taking a beating on the market

I have the CD IRA which will be about 113,000 when it matures in just under two years. Then I will probably start laddering the CD IRA.

The reason it is in the 2020 and not a 2025 is because as I get closer to retirement I want my money more secure....when 2020 rolls around I might do something else a bit more conservative with it.

Overall, this is probably pretty conservative to mid risk investing, but I dont want to be trying to recover through a 5-7 year slump with all my money in the market at the point in which I retire. So my CD IRA will something of a "buffer"

Your portfolio:

IRA
$113K CD at maturity ( 2.4 years away)

Fidelity 401K
$17K TRP2020 (T.Rowe Price) Contributions now at $5,200 a year

Taxable
$38K Muni Bond
$400/month to buy Stocks (also at $5200 a year)
These statements and your portfolio indicate you are risk averse; however, it may simply be that you don't know how to construct a good portfolio and you don't understand how the market works. You have a very low equity allocation, but 38k in a single muni bond. That is risky because it's undiversified. If you go into individual stocks you are again adding undiversified risk. The problem is your portfolio is very poorly constructed and adding individual stocks will make it worse by adding risk without proportionally increasing expected returns. What you have said and what you are doing are in conflict, so you need to get that resolved before implementing any changes. The good news is all this can be fixed. Posters here can help if you are willing to do a little background work.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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