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What to do with the money – square 1

Posted by on 28. May 2012

Starting out, there is this relatively small amount of money that I want to invest in the stock market. So what do I do? How do I go about it? Which stocks do I pick? Do I pick stocks or bonds, or ETFs (what are those?), or mutual funds.

One thing at a time…

For discussion sake, we’ll be using the fictitious amount of $1000 USD for our handy portfolio; easy to work with, easy math, a fairly good amount to start with.

Scouring the Internet for ideas and starting pointers, I discover I need a strategy. Well, what is that? And why do I need that? I know that I want to make as much money as possible from the initial investment I have. I also know that I would like to try my hand at this myself and not just hand it over to someone else to manage for me.

OK, so I need an investment account. I have heard about the big names out there, Fidelity, Schwab, TDAmerica, etc. Looking them up, I don’t get a warm and fuzzy about their individual investor accounts. I am a small fish and I really don’t want my money eaten up by minimum account fees or transaction fees. Plus, as I have a little bit of money, I would like to keep adding to my account ongoing, preferably automatically with low re-occurring fees.

Went to Costco. If you are a member there as well, you know they have a number of nifty value add services that can be found on the way out. One of them being a stock market account with ING Sharebuilder (now Capital One). Interesting, worth spending a couple minutes looking at.

Here is the scoop:

Sharebuilder seems to be geared toward the smaller scale investor like me. Come on, the name says it all. They offer an automatic investment plan at $4 a pop, nice! No other fees. And I can choose between a Roth, a traditional IRA and a regular investment account. Plus, I can link my financial institution to it for no cost automatic fund transfers. Starting to like what I am seeing.

If I sign up and mention in the signup process that I am a Costco member, I get an extra little bonus: depending on my membership status, up to $60 (at least at the time of my sign up).

So, I haven’t spent a dime yet and my initial $1000 has already grown between 4% and 6%. Looks like a really good start.

Now that I have an investment account, linked to my bank account to wire my initial seed money and any subsequent contributions at my own pace at no cost, a welcome bonus, all combined with easy yet secure online access, I can divert my attention to the finer things of investing – still need that strategy.

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