Vanguard Brokerage Account Question

[cbr shadow]

I have a 401k and RothIRA with Vanguard right now, but I want to open a taxable account that I can use for investing seperately.  Just a couple of questions..
1) Do I open a brokerage account?  It looks like I have to fund a money market account and from there I can purchase the stocks I want to buy.
2) $3000 is the minimum amount to fund a money market account - if I use that money to buy stocks, then sell my stocks in 6 months and "cash out", does that close my money market account?  Is there a problem with doing this?

Really what's happening is a friend of mine and I were discussing investing in a single company and I mentioned that I have a $3,000 minimum.  He said he's willing to put $1500 towards that and we both invest in this single company just as a gamble.  We'd split fees, taxes, or losses, and sell in 6 months.  Obviously some here are going to think this is not a good idea to do with a friend, but what's the best way to go about doing it?

Thanks,
Ryan

[Another Reader]

If you want to speculate in stocks, you are better off with a standard discount broker.  I believe Scottrade might have the lowest commissions of the crowd at $7.00.  The account minimum is $500.  You can open an account at your local office, if you are in an urban area.  I personally prefer Fidelity and Schwab for research, customer support and easy of website use, but it sounds like you don't need any of that.  No $3,000 minimum required and you won't have to get your friend involved.

Having said that, I would never speculate in the manner you describe.  If this is the company that employs you and you have "insider" knowledge of something that is likely to make the stock go up, that's a very big no no.

[cbr shadow]

Thanks for all of the information.  This is my company and I know about a big change coming that will drive up the stock price.  Just kidding..  I posted recently about investing around the financial cliff and I asked about Safe Bulkers (SB).  I was talked out of it but I've been watching the price go up (20% since I posted about it) so I thought I'd buy a bunch of shares. 
No insider trading here :)

Thanks for the suggestion about Scottrade - I might do that.

[Will]

Doesn't ShareBuilder let you buy stocks for $4/trade?

[SunshineGirl]

You definitely don't need to have $3000 minimum to buy stocks, and you DEFINITELY don't want to "share the shares" with your friend. It could create tax problems and friendship problems.

Plenty of online brokerages let you buy for $4-10 per transaction in any amount. If you and your friend both want to buy the same stock at the same time for some (dumb) reason, you can each just buy whatever amount you want in your own account. A Vanguard brokerage, if it really has this minimum, isn't necessary. I have money with Vanguard for their funds, and buy stock through Schwab and Sharebuilder.

It sounds like you're new to purchasing stocks, so while keeping most of your money in Vanguard index funds, you might want to try out sharebuilder.com, which lets you automatically invest in stocks every month, with small fees. Whatever company it is you're looking at, you could set up so you buy $50 or $100 every single month. You could then follow the stocks ups and downs, see what your risk tolerance is, etc.

But seriously, buying with a friend is just silly. You should each buy your own in your own accounts.

[FiveSigmas]

You definitely don't need to have $3000 minimum to buy stocks, and you DEFINITELY don't want to "share the shares" with your friend. It could create tax problems and friendship problems.

I totally agree. Sharing a stock investment doesn't seem to offer any upside, and has pretty big downsides.

It sounds like you're new to purchasing stocks, so while keeping most of your money in Vanguard index funds, you might want to try out sharebuilder.com, which lets you automatically invest in stocks every month, with small fees. Whatever company it is you're looking at, you could set up so you buy $50 or $100 every single month. You could then follow the stocks ups and downs, see what your risk tolerance is, etc.

It looks like Sharebuilder charges $4 per "automatic" trade (or $12 for 12 trades a month). If you're only contributing $100 a month, you're losing 4% right off the bat. I do like Vanguard index funds, though. Plus, if you buy them from the source (e.g. Vanguard.com), there're generally no trading fees.