well i just migrated over. starting to build cash in a new trading account separate from retirement. hope to learn a bunch before i scrape together enough to start investing.
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well i just migrated over. starting to build cash in a new trading account separate from retirement. hope to learn a bunch before i scrape together enough to start investing.
Howdy burrocrat! Glad you found us over here.
short recap, i have a tsp and was doing 10% plus match, but have lost faith in the system a bit, i cant believe taxes are going to be lower in the foreseeable future, and don't like being held back by trade limits. so the original plan was to diversy tax exposure and start a roth ira with the extra 5% going to tsp. i have also opened a regular brokerage account and began additional 5% regular contributions. i plan on treating retirement funds a little more conservatively, and using the brokerage account very aggressively.
at my current salary it will take a bit of time to reach an economy of scale. i am very interested in ETF's for the brokerage trading account but at $12.95 per trade on both ends it is not cost-effective just yet, no way i will be doing 120 trades per year to get a discount, even at $8.95 that's expensive and that's alot of fees relative to my balance. also for the roth ira i like mutual funds unavailable in my other retirement account, but the 180 day or incur fees hold requirement doesn't do much for the trading frequency freedom i am looking for. so i'm basically in a cash building mode at first here.
the brokerage i'm using (schwab) does offer a few very new very basic broad index ETF's with no transaction fees, so i may put my balances there short term rather than stay in cash. i'm still getting a feel for the tools on the site and checking out what's available.
I use Scottrade - $7 per trade. Still adds up, but so will saving $2 to $6 a trade.
11/09/09 Bought SCHA at $25.65, filled 9:30 am, brokerage account.
11/09/09 Bought SCHX at $25.52, filled 9:30 am, roth ira acount.
I placed market orders before the open looking at 11/06/09 closing prices, SCHA $25.00 and SCHX $25.12, looks like they both opened up significantly when my orders got filled.
Schwab currently offers 4 funds with plans for 4 more in December:
SCHB: 2,500 stocks of the DJ US Broad Stock Market Index, 0.08% expense ratio.
SCHX: 750 stocks of the DJ US Large-Cap Total Stock Market Index, 0.08% expense ratio.
SCHA: 1,750 stocks of the DJ US Small-Cap Total Stock Market Index, 0.15% expense ratio.
SCHF: 1,400 stock of the TFSE Developed ex US Index, 0.15% expense ratio.
I assume these ETF's are not the best offerings in their respective categories, or do not have enough historical data to confirm. But with no transcation fees, low expense ratio's, and no trading limits they look like a pretty attractive option vs. cash money market for my meager balances.
Good luck Burrocrat. I start a Burrocrat Account for you in the member's area... http://www.etftalk.com/forum/showthread.php?t=473
I am going to play with these funds to get used to the brokerage interface and trading process.
I hope that they tend to move similar to CSI funds available in TSP. That would allow me to trade them pretty comfortably, without limits, and not have to adjust my research/decision making process much that is already in place.
Ultimately, I plan to identify and select some more focused/sophisticated funds, but for now this is an econimical way to learn and make mistakes.