Image via Wikipedia

Exchange traded funds, or ETFs, combine the benefits of mutual funds with the benefits of individual stocks. Like mutual funds, ETF shares represent ownership in many different securities. But unlike mutual funds, ETF shares trade in real time throughout the day, instead of being priced only once at the end of the trading day. If you are looking for a simple and easy to manage portfolio, you can build one with as few as three widely diversified ETFs.

Total Stock Market

Many investors choose to make the ETF that tracks the total U.S. stock market the core of their stock portfolios. It trades under the ticker symbol VTI, and like all ETFs investors can buy and sell it in real time throughout the trading day. That makes it easy for investors to get in and out at the price they choose, providing an important advantage over mutual funds.

Total Bond Market

Investors who need to derive current income from their portfolios can use the total bond market index for exposure to these income producing securities. One of the most widely used bond index ETFs trades under the ticker symbol BND. Keeping your bond market money in an ETF can reduce your expenses while helping you diversify your holdings. If you plan to make periodic investments in this fund, look for a broker that provides commission-free trades for ETFs. A growing number of online brokerage firms now provide commission-free trading for select ETFs.

World Index Fund

International exposure is an important part of any portfolio, and ETF investors can get exposure to the world markets with the ETF trading under the ticker symbol VEU. It represents the FTSE All World ex-US index; which provides broad exposure and wide diversification across both the developed and the developing world. That helps investors build a portfolio that provides a hedge against problems in the United States market while still providing growth opportunities through international exposure.

Balancing Your Portfolio

The percentage you put into each ETF in your portfolio depends on a number of factors including your risk tolerance, how long you can keep the money invested, what you need the money to do and your outlook for the U.S. and world markets. An investor who needs to derive current income from a portfolio might lean more heavily toward the total bond market index; while an investor looking for growth might focus more on the domestic and international ETFs in the portfolio. Keep in mind that your investment needs change over time, so checking and rebalancing the portfolio on an annual basis is always a smart idea.

ETFs provide a lot of advantages over regular traded funds, and if you want to make a quick profit and get out at any time this is the best choice for you.

Image via Wikipedia

Have you laughed at the idea of investing in stocks assuming that it’s much too complicated for someone like you? Think again. Learning the ins and outs of investing in the stock market is not as challenging as it might initially appear to you. If you take it one small step at a time, you can easily learn how to invest in the stock market, master the basics of investing, and make some extra money. An important key to succeeding with stock market investing is to find a stock broker who suits your needs and works well on your behalf.

What is a Stock Broker?

Your stock broker is the one who handles the purchasing and selling of your stock market shares. After you’ve selected a stock broker, you’ll open an account. Anytime you buy shares of a company, money will be withdrawn from this account and changed over to company shares. When you sell shares, the opposite happens: shares will be taken from your account and the money is then deposited.

All the details of any buying and selling transactions are handled by your stock broker. You simply let them know how many shares you want to purchase and name your price. This is why it’s so important to have a good stock broker. Although there any many aspects to choosing a good stock broker, the first thing to decide is whether to choose a full service stock broker or a discount stock broker. Here is a brief explanation of each type of stock broker.

Full Service Stock Brokers

Pro: Detailed portfolio advice, personalized services and specific investment recommendations.

Con: High trade commission fees.

A full service stock broker is a good match for you if you have a large amount of capital to invest and plan on making fewer trades.

Discount Stock Brokers

Pro: Low trade commission fees.

Con: Fewer personalized services.

A discount broker is a good match for you if you have a smaller amount of cash on hand and prefer to make more trades.

The Next Step: Choosing a Stock Broker

Now that you understand the difference between a full service stock broker and a discount broker, making the choice between them should be a snap. Your next step now is to choose the specific stock broker with whom you want to work. Ask friends and family for recommendations or compare several online brokers. A good stock broker will have a solid reputation, a transparent fee schedule, and a responsive customer service.

Make sure that you are comfortable with your stock broker before initializing any trades. When you open an account with the stock broker you’ve selected, you’ll first need to deposit cash into your account and fill out some forms. Within a few days, your account should be up and running and you’ll be ready to start trading. It’s as simple as that!

Image via Wikipedia

Trading on the stock market may seem like a task suited only for those Wall Street magicians, but if you take your time you’ll see that it’s nothing difficult and you can make a good profit yourself. If you are fascinated by technology, you might want to invest part of your stock market portfolio in the companies that make the products you use and love every day. Investing in technology can be a wise move, but as with any type of investing, it is a good idea to do your homework first. Understanding your investment choices will help you make the best decisions.

Invest in What You Know

Investing in what you know and understand is a good rule of thumb for all stock market investors, but it can be particularly important for technology stock investors. Warren Buffett has famously advised investing in companies you like, and few can argue with his success. Investing in the companies that make the products you use every day is one of the best ways to get started with technology investing.

Mutual Funds

Technology shares can be volatile, and choosing individual tech stocks can be risky. As an investor, you might want to choose a few individual stocks based on your personal knowledge and consumer preferences, while keeping the bulk of your tech investments in a mutual fund that invests in a basket of technology stocks instead of just a few.

This diversification can spread the risk in your portfolio and give you an investment that is considerably less volatile than those individual stocks. One way to gauge the volatility of a tech mutual fund is to look at its beta coefficient. The beta coefficient is a measure of a fund’s volatility. The stock market as a whole has a beta of 1, so a fund with a beta of 1.5 would be 50 percent more volatile than the overall stock market.

Exchange Traded Funds

An exchange traded fund combines the advantages of an individual stock with the advantages of a mutual fund. Like a stock, an exchange traded fund can be bought and sold during the trading day, allowing investors to set the price at which they buy and sell the security.

As you can see, there is nothing difficult in stocks – just take some time, use the above tips to get started and go on. Technology funds are a great example to start with, as they are the most popular and some of them are pretty cheap nowadays.

Image via Wikipedia

One of the advantages of setting up a self-directed IRA is the added flexibility it provides. While your 401k or 403b plan might provide only a handful of choices, rolling over that account to a self-directed IRA gives you a host of new investment options.

Individual Stocks

If you set up a self-directed rollover IRA, you can use that fund to buy and sell individual stocks. If you do plan to include individual stocks in your rollover IRA, you might want to choose a low cost online broker to administer your plan. Once the plan is set up, you can buy and sell stocks as you see fit. And since those stocks are held within a tax-deferred account, you will not incur capital gains taxes when you sell stocks at a profit.

Exchange Traded Funds

Exchange traded funds can give you many of the benefits of a mutual fund, combined with the ability to buy and share the shares on the open market. Many of the most popular exchange traded funds track widely used indexes, including the Standard and Poor’s 500 and the total stock market index. If you have a self-directed IRA you can use your account to buy and sell exchange traded funds as you see.

Mutual Funds

If you roll your 401(k) or 403(b) fund into a self-directed IRA with a mutual fund company, you gain access to all of the mutual funds that company offers. Some mutual fund companies also provide access to funds offered by other companies, giving you a wider universe of kinds to choose from.

Certificates of Deposit

If you want to limit the risk in your retirement portfolio, you can invest part of your self-directed rollover IRA in a certificate of deposit. The money you invest in a CD is insured by the FDIC, protecting your principal while you earn a bit of interest. Of course the interest rates on certificates of deposit tend to be quite low, so you might not want to invest your entire IRA rollover that way. But if you are nearing retirement and need to keep the money you need for the first couple years of retirement safe, a CD can be a good choice.

As you can see, a self-directed IRA gives you a lot of choices, but it’s important to know how to make the right decisions. Start with the above tips and work your way up!

Image via Wikipedia

No matter how you choose to invest your money, investment costs count. The more you spend on commissions and costs, the less you will have left to invest, so it is important to choose your brokerage firm with care. There are a number of large online discount brokerage firms, but not all of those firms will be right for everyone. In order to get the biggest bang for your buck, it is important to do your homework and understand your own priorities.

Keep Your Costs Low

One of the most important considerations, of course, is the cost of each trade you make. When you make the right choice you can keep your costs as low as possible, so it is important to look at the costs you will face each time you make a trade. When evaluating the costs of each trade, it is important to look at the entire cost of trading. Some firms will charge a flat fee for up to 1000 shares of stock, with an additional charge for each share above that level. Others will charge a flat fee no matter how many shares you transact. It is important to look at these costs and make a decision based on your own trading needs.

Research Minimum Balances

If you are new to investing, you may not have a great deal of money to invest. If that is the case, you will need to choose a fund that has a low minimum balance requirement. Some online discount brokers will charge a maintenance fee if your balance is below a certain threshold, so it is important to ask about those fees if your initial balance will be a low one. In some cases the brokerage firm may waive fees for investors who set up an automatic investment program, so be sure to ask about that as well.

Real World vs. Online Only

Even though investing online is easy and convenient, there may be times when you want to actually sit down and talk to a real live person. If the ability to consult in person with an investment advisor is important to you, it is a good idea to seek out an online discount broker that also has a presence in the real world. A number of large online brokers, including Scottrade, TD Ameritrade and Charles Schwab, also have a presence in the brick and mortar world. If this is important to you, be sure to research the location of these real world offices before you make your final decision.

If you plan everything correctly and follow the above tips, you can easily trade in stock markets without spending huge amounts of money on the operations themselves.

Image via Wikipedia

Dollar cost averaging is one of the most effective ways to build long-term wealth in mutual funds. While it may seem complicated, dollar cost averaging simply means that you invest the same amount of money on a constant plan, regardless of what the stock market is doing. Making those regular investments on a weekly instead of a monthly basis can help you build your mutual fund holdings even faster. You can use this weekly investment strategy to build a portfolio in a number of different mutual fund categories. Each of those categories is described in greater detail in the sections listed below.

Index Funds

Index mutual funds hold all of the stocks in a given index, such as the Standard and Poor’s 500 or the NASDAQ 100. When you buy such a fund, you become part owner of all those companies giving you a greater level of diversification than you could achieve on your own. Making weekly investments into your favorite index mutual fund allows you to build up a greater number of shares more quickly, helping you grow your portfolio for the future.

Growth Stock Funds

Investing money weekly in a growth stock fund allows you to profit from the inherent volatility of the stock market. The net asset value of a growth stock fund can bounce around quite a bit in response to the daily gyrations of the stock market. By making weekly purchases, you can accumulate more shares during periods of stock market weakness, and that can give you a good profit when stocks pick back up again.

Bond Funds

If you need to beef up your bond portfolio, you can do so with weekly transfers from your bank account to the bond mutual fund of your choice. You can choose from a variety of bond funds, from safe government bond funds to corporate and high-yield funds. The type of bond fund you should choose depends on a number of factors, including your risk tolerance and your need for current income.

Exchange Traded Funds

While exchange traded funds are not technically mutual funds, they do have a lot in common with those financial instruments. For instance, the ETF that trades under ticker symbol SPY tracks the performance of the Standard and Poor’s 500 index, just like an index fund does. Many brokerage firms now allow customers to make commission-free trades in the ETFs they offer, and that allows investors to buy ETFs as often as they would like. You can set up a weekly transfer from the cash account at your brokerage firm, or your bank account, into the ETF of your choice.

Investing consistently over time is one of the best ways to build long-term wealth for the future. By implementing a weekly strategy of saving and investing, you can reach your financial goals that much more quickly.

Image via CrunchBase

When choosing a discount stock broker, you probably compare commission fees and opt for a broker who offers low-cost trades. But commission fees aren’t all there is to choosing a discount stock broker. In addition to low-cost trades it’s worthwhile to compare the perks offered by various discount brokers. If all else is equal, then choosing a discount stock broker who offers tempting perks can help make trading a cinch and save you money. Here are a few cool perks to look for.

Sign-up Perks. Some discount brokers will fully or partially refund your transfer charges when you switch your account from another broker. Others will offer a certain number of free trades for new accounts. If no sign-up promotions are currently running, tell the broker you’re considering giving them some business but are reluctant to switch. They just might make you a special offer.

Online Tools and Calculators. Some discount stock brokers offer nifty tools to help you calculate your target prices for your trades. These types of tools are useful and can save you loads of time and energy.

Multiple Customer Service Gateways. All discount brokers offer some form of customer service, but those that provide several options can make your life a whole lot easier. Look for instant live chat, onsite email, 1M, and easy 800 numbers with no long delays. Also check the working hours—it’s frustrating to call customer service only to find that they closed the doors at 4pm.

Referral Bonuses. If you like your discount brokers, you’re going to want to refer your friends and family to them anyway, right? Getting paid for doing so is a nice touch and makes you more motivated to keep sending along referrals.

Free Trades. Free trades are sometimes hard to come by unless you’re opening an account with a good-sized chunk of money. Look around for a discount broker who offers free trades at a minimum you can handle. If you have limited financial resources to start with, you can also look for a broker who offers free trades as a reward for being a frequent trader. For example, some discount brokers offer 10 free trades for every 25 trades you make each month.

Help with Taxes. April 15 can be the most stressful day of the year for some people. If you are one of them, you’ll be glad to know that some discount brokers offer extra help with your taxes. They provide all the information you need to accurately include your stock trading information in your tax return.

No Sneaky Charges. This isn’t really a perk, but it’s worth mentioning because the additional charges and invisible fees that some brokers tack on can be a real headache. Look for a discount broker who promises not to smack you with a hefty commission fee every time you need extra help, and who doesn’t charge inactivity fees if you don’t trade regularly.

Does your current discount stock broker offer any of the above perks? If not, it might be time to explore other options.