Brokerage account

[Marjimmy]

Hello all,

I was looking for some future insight. I currently am 21 and have a Roth Ira opened up with Vanguard. I plan on maxing that out every year. However, I have a good 20-25 thousand just sitting in a Money Management Savings account that I'd want to invest. I was wondering if anyone had recommendations on a good a brokerage account? I won't touch this money for at least 5-10 years so it'll have time to grow. (Already leaning towards stocks). Thanks for all your responses in advance mustachians.

Marjimmy

[shadowmoss]

I was waiting on answers to the OP to see if my questions would be answered.  I'm ready to start investing again on a small scale, $100/mo to start.  I have an ING banking account and was looking at Sharebuilder.  However, I don't seem to see my questions answered.  Back in the Day I had a small account with a place that had cheap trade prices, but when I no longer had any money to make trades, they had a monthly fee that appeared and ate up my investments fairly quickly.  Do most brokerages have those monthly fees if you don't actively trade?  Also, if I start with Sharebuilder and decide to move to a different brokerage, do I have to sell my investments and re-buy them at the new brokerage, or can I transfer them?  Any monthly brokerage fees would come into play here as well.  This is the main reason I haven't started back in, it hurt to watch my (small) investments get gouged when I didn't have the money to save them, nor the knowlege to be able to just sell them off (kept thinking I'd have the money next month).  To be clear, this was about 15 years ago.

[jpo]

Why not a regular brokerage account with Vanguard?

Also, lots of brokerage firms have commission-free ETFs these days.

[Marjimmy]

That's a possibility I've considered I'm still researching the perks between them and Etrade and others.

[shadowmoss]

ETrade was the brokerage who had the fees that ate up my account when I was no longer actively trading...

[madage]

I have an ING banking account and was looking at Sharebuilder.  However, I don't seem to see my questions answered.  Back in the Day I had a small account with a place that had cheap trade prices, but when I no longer had any money to make trades, they had a monthly fee that appeared and ate up my investments fairly quickly.  Do most brokerages have those monthly fees if you don't actively trade?

I have a ShareBuilder account that has had a $0.00 balance for at least the last two years. They've never tried to charge me a fee for inactivity. I also have a Fidelity brokerage account that rarely has any money in it and again I've never been charged for inactivity.

Also, if I start with Sharebuilder and decide to move to a different brokerage, do I have to sell my investments and re-buy them at the new brokerage, or can I transfer them?

Most brokerages make it free and easy to transfer assets existing elsewhere into you account. I've transferred from ShareBuilder to Fidelity before without any hassle. Fractional shares (if any) are usually converted to cash and transferred separately. I've also transferred several times from my company's various ESPP custodian to Fidelity and have never been charged a fee. The transfers usually take about a week to complete.

[shadowmoss]

Thanks, madage.  I plan on opening my Sharebuilder account tonight and putting $100 in to start.  Probably go with 3M, just as a place to start.  Than again, I haven't really looked at them lately to see what the price is.  I just feel like I should jump on the post-election dip since I've been planning this for awhile anyway.  Debt-free looks to happen around the 1st of the year which is when I'll get serious about this.

[grantmeaname]

Marjimmy, do you have a need for it to be a brokerage account specifically? If you're happy holding index funds in your Vanguard IRA, would you be happy holding more Vanguard index funds in a regular taxable Vanguard investment account?

[Marjimmy]

Grantmeaname, there is no need for it to be a brokerage account at all. I wouldn't mind holding more index funds with them because you can't go wrong that way, and also I don't have the time at the moment to be researching individual stocks. However, I believe there were a few annual fee's I was reading about compared to some of the other companies that offer investable accounts. I could be wrong tho?

[LowER]

I  highly recommend that you check out www.bogleheads.com. It's a very mustachian method (s)  of investing. I also recommend the book "A Random Walk Down Wallstreet."  Strong work on getting started so early!

[madage]

However, I believe there were a few annual fee's I was reading about compared to some of the other companies that offer investable accounts. I could be wrong tho?

You're correct that Vanguard will charge you a $20 annual fee for each account with a balance less than $10,000. However, this fee is waived if you sign up for e-delivery of account statements and notices. I established my Vanguard account with only $1,000 a long time ago, signed up for e-delivery and have never been charged any account fees.

[Marjimmy]

Thanks, I just bought "The Intelligent Investor" so I'll take a look at A random walk down wall street afterwards. I also have the account setup for e-delivery. So then if I were to setup a taxable account.... is it better off than a Discount broker? And are the taxable rates the same?

[madage]

So then if I were to setup a taxable account.... is it better off than a Discount broker?

If you're happy staying with Vanguard mutual funds, there's no reason at all for a brokerage account (which Vanguard does provide, though I remember their price per trade is rather steep). The discount broker is nice if you have individual stocks to trade.

And are the taxable rates the same?

"Taxable" means the account is not tax-advantaged like a 401(k) or an IRA. You will owe tax on any dividends and capital gains generated by the funds or stocks in the account. You will be sent a statement around tax time with details on taxable gains. The tax rate is same everywhere - it's determined by your earnings and is your responsibility to pay.

[Marjimmy]

Thanks for clearing that up Madage!