I am not currently purchasing stock, instead I'm focusing any additional money in the family budget on paying back some pesky private student loans. These pesky things have such a high interest rate that it makes little sense for me to invest my money at the moment. There was a time when I was in college and found myself with a little extra money (savvy readers will condemn me for taking out too much in loans, leading to the surplus). Having read entirely too many articles on how good of a company Dell is and how high many Dell investors saw their stocks rise, I bought Dell stock as well. This was the bad stock decision. A good decision would have been made on the basis of their financial statements, market share and unique business idea. The direct-to-consumer is actually an easy method for other companies to copy, so Dell had little uniqueness there. I took the decision to buy Dell stock entirely too lightly, but how to invest was a decision I thought much more about.
There is a good rule of thumb about investing that is akin to cutting out the middle man like Dell has tried to do. The rule is that no more than 2% of the money you choose to invest should go in someone else's pockets. Yearly maintenance fees, and stock broker fees can take a sizable chunk from many portfolios.
I finally went with Sharebuilder because they offer $4 trades and no fees for inactivity. You can buy as much stock as you want (at one time and only one company) and your fee is only $4. Fees to sell are greater, but if you're like me you only want to sell once you made money on your stocks. I would suggest you make sure to buy stock in at least $200 increments so your fees amount to less than 2% of your trades. It's been several years since I bought my Dell stock and the good thing is as long as I keep the basic plan, I don't pay unless I buy or sell stock.
As I stated already, I'm no longer actively buying stock, but that doesn't mean my Sharebuilder account is useless. Quite to the contrary, I've built an emergency fund consisting of three months of expenses which I'm keeping in the under-advertised Sharebuilder Money Market Account. This account was currently earning 4.45% interest, all of which gets credited back to my account without any fees. When and if I need the money, all I need to do is request a Electronic Fund Transfer to my checking account and I have full access to the funds. If you want to buy and hold, Sharebuilder is the way to do it.
