Need help with short term brokerage account

[haggard]

I am new to this so FYI. 

I am opening a brokerage account for short term trading.  This is basically a savings account like but taking a slight more risk.  I am looking for some help in selecting what I should be looking for to purchase for this brokerage account.  I am playing with some of the money as I want, funding it hopefully monthly, but want to be able to access this money within a few business days without penalty.  Am looking at some funds, example FOCPX.  I am looking at allocating this brokerage account with 20% International, 20% my stock picks, 50% safe recommendations like funds/etfs/etc, and 10% cash to move quickly or purchase something on a whim. 

It appears as I am learning that some funds have short term redemption cost, so definitely want to stay away from that.  Am doing this through Fidelity if that matters. 

This could be completely a dumb thought or idea and if it is you won't hurt my feelings by saying so.  But I am tired of sitting on this cash and it doing nothing but sitting in a. savings along with my other savings and short term cash.  Figured I would try to make a slightly better return on it or give it a shot. 

Thanks for any insight,

[2Birds1Stone]

If you don't need the money right away, 12 month CD's are paying ~2% these days.

If you don't need the money for 10+ years, invest it based on your desired LONG TERM asset allocation.

If you want to gamble, just save some time and go to the casino.

[haggard]

I understand the casino analogies, but that is not my attempt here. 

I ride cash flows as a self employed business person.  I have my retirement/ira taken care of.  I have been for the last few years just saving the high months cash in a business savings.  Try to budget and live off the bad months income level.  What I am looking to do is as the year goes on, unload the cash from the high months in something that is potentially making more money than parked at the bank, however I may need access to it at anytime if my business were to hit a short sighted slow spurt and didn't want to use my LOC. 

I understand the risk of the stock market, I get that.  However I "assumed" with as little knowledge as I have I could still do something along these lines and have better returns (as long as I watch my trading expenses) than the bank with the economy like it is. 

[Scandium]

However I "assumed" with as little knowledge as I have I could still do something along these lines and have better returns (as long as I watch my trading expenses) than the bank with the economy like it is.

No you wont. Maybe for a short time, but people who devote vastly more time to it don't over the long term.

Anyway, why are the options either a savings account, or large amount in "short term trading" (whatever that means; daytrading?)? Short term penalties is usually a month, if you trade funds that often you're doing it wrong!

[Rob_bob]

Hi, I'm new here too.

You said you have an IRA, have you/are you contributing the max amount to it?  If not you should do that first.  Once that is done and you have funded an emergency cash fund then you can invest in a taxable account.

As mentioned mutual funds can have short term trading costs.  I believe ETF's also may have short term trading cost too if you are using the brokers commission free ETF's.  If you pay a trading commission then you can trade as often as you like.

You can invest in a total U.S. stock fund like VTI or the S&P 500, SPY,  actually the iShares transportation index, IYT, has outperformed both for the last 5 years but with a bad streak in 2016 but came back strong.

[haggard]

retirement accounts are maxed, so that option is taken care of for the time being. 

My intention by short term is not day by day.  It is in like 90 day plus increments.  I have the short term cash and emergency fund along with a LOC at my bank for the business.  However, say my business tanked or needed to move fast and needed some capital for something (large equipment purchase, this happens more often than not), then I want to be able to grab this.  30 days is fine by me. I have cash on hand to suffice for most oh crap situations to last 30 days and what not. 

Also, I am very young in my investing life. I am ok with risk but not looking to be stupid.  As mentioned earlier, of this brokerage account I dream up something like this;

20% international- say HJSIX
20% in stocks I like, play fund -Say Wally World for example
10% left in cash- to buy a stock I think may hit an uptick or something
50% in some sort of 30 + day but yet short sighted investment fund.  This is something I am investing with yet it is not penalized if I need to pull it out in 5 months to make an equipment purchase at work, buy a partner out, what ever the case may be. 

Am I still looking like an idiot?  haha.

[jjcamembert]

How much of this money can you afford to lose? What worries me is that you say you may need the money to cover business expenses or slow periods. I don't know what industry you're in but if any recession hits you'll be hit double: in business and investments. Remember 2008?

If you're looking for cash alternatives you could consider SHY (short-term bonds) and/or TIP (inflation protection).

I would keep business money as business and personal money personal. Businesses typically don't invest in the stock market, even the ones with billions in cash. If they do it might be a hedge.

If you, as an employee of your business, have some extra cash to invest, go ahead! I actively trade but I can't endorse picking "stocks you like" or "stocks that might hit an uptick." This is a recipe for disaster and you will lose money. You need a strategy and a plan, and even then, you'll still probably still lose money.

[Rob_bob]

"50% in some sort of 30 + day but yet short sighted investment fund."

For something like this where you might need the money without loss of principle you are looking at cash.  Ally Bank online has an 11 month with no early withdrawal penalty CD paying 1.75% apr.

HJSIX is small cap Japan, it's done well recently, will it continue?  The broad Japan market has been going sideways for many years so who knows what will happen in the next few years.

I would avoid individual stocks because you not only have market risk but individual company risk too.  Single companies do go out of business, I wouldn't be buying Sears.

Look at long term charts and read up on countries and markets then decide what your risk tolerance is.

[2Birds1Stone]

No one here is suggesting you are an idiot.

But when you are talking about funds you may need to live off or use for business on moments notice, and then talk about investing 20% in wally world stock....it begs the question of whether this is business capital or play money.

[haggard]

How much of this money can you afford to lose? What worries me is that you say you may need the money to cover business expenses or slow periods. I don't know what industry you're in but if any recession hits you'll be hit double: in business and investments. Remember 2008?

If you're looking for cash alternatives you could consider SHY (short-term bonds) and/or TIP (inflation protection).

I would keep business money as business and personal money personal. Businesses typically don't invest in the stock market, even the ones with billions in cash. If they do it might be a hedge.

If you, as an employee of your business, have some extra cash to invest, go ahead! I actively trade but I can't endorse picking "stocks you like" or "stocks that might hit an uptick." This is a recipe for disaster and you will lose money. You need a strategy and a plan, and even then, you'll still probably still lose money.

I'm a single employee S-corp, my business income and profits are also my personal. 

Afford is a strong word, I can't afford to lose anything.  How much am I willing to lose?  Well, if 2008 were to happen again I'm still covered. 

Business ordinary expenses are not what this money would need to be pulled from.  I have the opportunity often to broker items that are not a part of my ordinary business.  When doing so I usually purchase something from one customer for x and sell it to customer 2 for Y while clearing a minimum of 5% which usually equals 4-6,000.  If that deal were to pop up and is a rich deal, I may have to grab it.  Other instances are buying a partner out, and also just the unthinkable.  I also could have to tap it for taxes some years if I kill it in a year, this is a good problem though but if budgeted properly wouldn't be needed.  Good example would be like 2017 where the tax laws changed and I had the ability to pre pay a lot of expenses in 17 to take them as a 17 deduction that may not be able to be deducted in 18.  Prepaid all personal prop taxes, state income taxes, and some other things. 

[haggard]

No one here is suggesting you are an idiot.

But when you are talking about funds you may need to live off or use for business on moments notice, and then talk about investing 20% in wally world stock....it begs the question of whether this is business capital or play money.

It's not business capital and its a little more than play money in the way that I want to try and make a little more than it just sitting in my bank account.  Wally World was just used as an example of a single individual stock, could put GE, Boeing, or anything in that slot. 

What I am considering with the 20% stock are multiple companies, no company over probably 5% to start and try to get that down considerably. 

[Rob_bob]

"What I am considering with the 20% stock are multiple companies, no company over probably 5% to start and try to get that down considerably."

Why individual stocks?  You need to spend time researching them, then you still combine individual company risk with market risk.  Why not just put it in the DOW or S&P 500, or if you want you could try a sector fund and still be more diverse than single stocks?

[haggard]

"What I am considering with the 20% stock are multiple companies, no company over probably 5% to start and try to get that down considerably."

Why individual stocks?  You need to spend time researching them, then you still combine individual company risk with market risk.  Why not just put it in the DOW or S&P 500, or if you want you could try a sector fund and still be more diverse than single stocks?

Well first off, I don't even know how to put money in DOW directly without picking a fund that is in the dow?  I guess I don't understand what you are saying here. 

[TomTX]

"What I am considering with the 20% stock are multiple companies, no company over probably 5% to start and try to get that down considerably."

Why individual stocks?  You need to spend time researching them, then you still combine individual company risk with market risk.  Why not just put it in the DOW or S&P 500, or if you want you could try a sector fund and still be more diverse than single stocks?

Well first off, I don't even know how to put money in DOW directly without picking a fund that is in the dow?  I guess I don't understand what you are saying here.

Okay, I think the Dow was a bad example. But if you want to buy stocks - I would just put it in VTI. Basically you are buying the entire US market, it's available from any major brokerage, and the fund expenses are very low.

And stop trying to outsmart the market and/or guess when to buy in or not. That is one of the major reasons the average individual investor SIGNIFICANTLY underperforms the market as a whole.

I would divide up the money - what is a reasonable "emergency fund" for the business? Put that much into the Ally Bank CD mentioned above, dump the rest into VTI.

Then go do some reading. There are lots of references to be found in this forum.

[katsiki]

Depending on the amount of money you are talking about, you may want to look into reward checking accounts.  You can easily get 3-5% depending on state and national options.

Check out Kasa cash for one example.

There are other threads on here about various credit unions with good accounts.  Lake Michigan CU comes up a lot.

[Rob_bob]

"What I am considering with the 20% stock are multiple companies, no company over probably 5% to start and try to get that down considerably."

Why individual stocks?  You need to spend time researching them, then you still combine individual company risk with market risk.  Why not just put it in the DOW or S&P 500, or if you want you could try a sector fund and still be more diverse than single stocks?

Well first off, I don't even know how to put money in DOW directly without picking a fund that is in the dow?  I guess I don't understand what you are saying here.

Okay, instead of investing in individual stocks you buy a fund of stocks, more diversification less risk.  An Exchange Traded Fund, ETF, is a basket of stocks.  The ticker symbol for a DOW 30 ETF is DIA, a symbol for the S&P 500 is SPY.  VTI is the Vanguard Total Stock Market for the USA market.

Go to Yahoo Finance and put the symbols in their stock chart for information about them.

[haggard]

"What I am considering with the 20% stock are multiple companies, no company over probably 5% to start and try to get that down considerably."

Why individual stocks?  You need to spend time researching them, then you still combine individual company risk with market risk.  Why not just put it in the DOW or S&P 500, or if you want you could try a sector fund and still be more diverse than single stocks?

Well first off, I don't even know how to put money in DOW directly without picking a fund that is in the dow?  I guess I don't understand what you are saying here.

Okay, instead of investing in individual stocks you buy a fund of stocks, more diversification less risk.  An Exchange Traded Fund, ETF, is a basket of stocks.  The ticker symbol for a DOW 30 ETF is DIA, a symbol for the S&P 500 is SPY.  VTI is the Vanguard Total Stock Market for the USA market.

Go to Yahoo Finance and put the symbols in their stock chart for information about them.

I am just now seeing this, today I purchased a nice portion of DIA from my own research.  I took the VTI given earlier and researching it and found what appeared better to me.  I chose DIA based off of its returns, Expense ratio, lower trade cost (compared to VTI), morning star rating (5 star over SPY which was a 4), I liked it over FDIS based on efficiency rating that Fidelit gave it, then I also looked at FIDU but can't remember why I liked DIA over FIDU.  FIDU and FDIS were commission free trades but didn't pull the trigger on them.

May have made a mistake, but I did like DIA in it's appearance today.