A friend of mine asked for advice, and since I have little idea about it, so I’d just put it up here and hope some wise-guy here will give practical tips.
Which brokerage firm will you guys recommend? Online only and please give URL and also the reason you are recommending. He is debating between Charles Schwabb, TD Waterhouse, E*Trade and Scottrade. Any ideas?
He says he wants to buy some stocks directly and also wants to buy some mutual funds, money market bonds and REIT. The guy says he wants to go for a broker/mutual fund which keeps the commission and operating expenses to a minimum and has a good rating. He also says he is probably only going to invest $1,000 to $8,000 at this point but will expand it as time goes on.
Charles Schwabb, TD Waterhouse, E*Trade and Scottrade are all good. I trade using Fidelity even though they are a bit pricy, 19.95 USD per trade -v- Scottrade $7USD. I went with Fidelity because it is a multi-billion dollar institution and there are less chances they will take your money and run. For investment like $10K Scottrade is as good as any.
Arent all Stock and Mutual Fund purchases covered up to 100K by the government? I believe options arent but asset purchases are considered to be the same as cash, arent they?
Oh.. I forgot one more.. (I know he had mentioned five, and I just couldn't remember the fifth one when I posted). The fifth option he is looking at is Ameritrade.
So, for small investors, I guess the first step is to make an account with these guys and then pick what you want to buy. I think he mentioned that one of them (I totally forgot which one) gives 25 internet trades free as a bonus or something.
Do any of you about REIT's.. and how to buy their shares? Or will these brokerage houses also have REIT trading too?
well what I meant was brokers such as ameritrade and TD are covered for 100K cause they are just holders of your shares/stocks. I am not sure about it. And if you have cash in the account then that is covered under FDIC. What isnt covered is what happens to the stocks or the companies.
My advise to your friend would be to invest in global economy mutual funds. There are pacific funds, south-east asian market funds, far east and manufacturing funds that cover not only tech but the roaring manufacturing sector of China, Taiwan, Thiland, Malaysia and likes. Look at the list available at TDWH and Manulife Financials. There are thousands of funds for high risk to low risk level. Bottom line is do not jump into North American stocks other than natural resources and pharma sectors. The current boom in market will not last for more than few months. The economy on the other part of the world has strong basis on true numbers, not just hype like here. Even numbers on official papers are unreliable now. I hope you catch what I hint at.