Fidelity - Stocks by the slice?

[Oaktree]

If a stock has a low risk like one of the perennial standards like ATT there is not much risk but not much to gain either. For the lowest risk possible just buy a CD at the bank with 1% interest.

Lotsa luck finding a CD that pays even 1%...maybe some of the online banks, but local ones not so much.

The advantage to the blue chip stocks is that they pay a pretty solid dividend, often in the 3-4% range, maybe more. Their price may not go up much but you're still ahead, even more so if you have your dividends reinvested.

 

[Jstpssng]

Lotsa luck finding a CD that pays even 1%...maybe some of the online banks, but local ones not so much.

The advantage to the blue chip stocks is that they pay a pretty solid dividend, often in the 3-4% range, maybe more. Their price may not go up much but you're still ahead, even more so if you have your dividends reinvested.

My CU pays 1.11%, but only on 24 month or longer terms. I will occasionally buy one for a lesser time period if I"m saving for a purchase... it earns a little interest and keeps the money from disappearing to one of the day to day emergencies... like a new grapple or snowsled.

 

[BoylermanCT]

My online savings account pays 1% with no minimums, no fees, no restrictions. Capital One 360 which used to be ING Direct. Oh for the days when CD's paid 7-8%!

 

[Richard]

What are the requirements to get those free trades?

.

There should be no requirement. There are a number of places now that allow you to buy equities (stocks) and maybe ETF's (Exchange Traded Funds) with zero commissions.

Schwab evidently does, TD-Ameritrade does.... I've not paid attention to know who else does but the trend is certainly heading there for those who are not doing it.


Side comment.... about buying when stocks are down.

Pretend for a moment, you are an avid hunter (not you per se', but anyone reading). Tomorrow is first day of open season, you have prepared and are ready to go when you realize, I don't have any ammo!!!

So you go to the store to buy a box of ammo that is $20 per box (I don't know the price of ammo so roll with that number).

You walk into the store to buy a box when you see your exact ammo is on an endcap....it's on sale for $5.00/box....

"What might you do??" (answer should be "I'd LOAD UP on it!!")

Perfect, so you are busy loading your cart when you hear a voice behind you....the voice (me) says "Hey, great, there's the ammo I need and been looking for.... oh, wait....WHAT??? It's on SALE???......nope!!! I'm not going to buy any on sale, I think I'll wait until the sale goes OFF before I buy my ammo"

Your there (loading your cart still) thinking "what is up with this dude???"

Then, you hear me say "As a matter of fact, I think I have some of this ammo in my safe.....I paid $20 for it and not it's on sale for $5.00....I think I'm going to go home and throw it all away!!!"


About now, you are hopefully thinking that someone needs to take me behind the woodshed....


Full Disclosure: I've been in the investment business for over 30 years (worked at Ameritrade prior to getting downsized). Anyway, if you look over my last 30 years and exchange the word "Ammo" for "Stocks".....I have had that exact conversation with people.

I'll let you decide the merit of that point of view.

 

[Richard]

That's why I said you have better odds with stocks than you do at the casino. At the casino the odds are ALWAYS in the casino's favor. Not so with stocks.

The error of your logic is.... if you go to the casino and make a bad bet, you lose 100% and it's immediate. With stocks, if you make a bad bet, it MIGHT go bankrupt "immediately" but that is far from normal.... instead, it will grind down 10%, 20%, 80% and you typically still have some residual value there.

Also, in the stock market, YOU can "be the house" by selling covered calls and or covered puts. Now YOU make the rules.... what underlying asset are YOU going to deal with.....what strike price do YOU choose, what expiration date do YOU want.... the market gives you the value. YOU decide if you want to do it or not. If you do, and you are "wrong" you will end up with a cash asset either way.

Covered call and you're wrong? You end up selling the stock you wanted to sell at the price YOU picked AND you keep the option premium.
Covered call and you're "right" (not called), you keep your stock and you keep the premium

Covered put and you're wrong? You buy the stock you wanted to buy at the price you wanted to pay AND you keep the premium
Covered put and you're "right" (not assigned) you keep the premium free & clear.

 

[JasperFrank]

"Spiders and Diamonds....." he says, whispering in your ear.....

 

[Oaktree]

My online savings account pays 1% with no minimums, no fees, no restrictions. Capital One 360 which used to be ING Direct. Oh for the days when CD's paid 7-8%!

Not familiar with that particular one, but most of the "high" yield savings accounts have strings attached...usually you need to have direct deposit, and make a certain number of debit card transactions a month. I don't do debit cards.

There should be no requirement. There are a number of places now that allow you to buy equities (stocks) and maybe ETF's (Exchange Traded Funds) with zero commissions.

Schwab evidently does, TD-Ameritrade does.... I've not paid attention to know who else does but the trend is certainly heading there for those who are not doing it.

I'm suspicious of "free" trades, they need to make money somehow. I get how they may not charge fees for mutual funds, since they have expense fees that are built into the fund, but it costs them money to do stock trades, why would they give that away?

Side comment.... about buying when stocks are down.

Pretend for a moment, you are an avid hunter (not you per se', but anyone reading). Tomorrow is first day of open season, you have prepared and are ready to go when you realize, I don't have any ammo!!!

So you go to the store to buy a box of ammo that is $20 per box (I don't know the price of ammo so roll with that number).

You walk into the store to buy a box when you see your exact ammo is on an endcap....it's on sale for $5.00/box....

"What might you do??" (answer should be "I'd LOAD UP on it!!")

Perfect, so you are busy loading your cart when you hear a voice behind you....the voice (me) says "Hey, great, there's the ammo I need and been looking for.... oh, wait....WHAT??? It's on SALE???......nope!!! I'm not going to buy any on sale, I think I'll wait until the sale goes OFF before I buy my ammo"

Your there (loading your cart still) thinking "what is up with this dude???"

Then, you hear me say "As a matter of fact, I think I have some of this ammo in my safe.....I paid $20 for it and not it's on sale for $5.00....I think I'm going to go home and throw it all away!!!"

I think that's a bogus analogy (though I've heard lots of people supposedly "in the know" who've used it).
Buying a distressed stock isn't necessarily buying it "on sale". You don't know if it's going to bounce back or not. Yes, if the market in general is down, and it's a good solid company then it could very well be a good buy. But you've gotta do your homework...that stock could be in the tank for a good reason too. It's not the same thing as a sweater, box of ammo, tool or other physical item.

Buyer beware!

 

[Richard]

Stolen/copied from a wise one...


There are only 2 rules in life:
1. Don't tell everyone everything you know.

I agree!!

 

[tallyho8]

My online savings account pays 1% with no minimums, no fees, no restrictions. Capital One 360 which used to be ING Direct. Oh for the days when CD's paid 7-8%!

You better go back and check your rates because Capital One 360 savings accounts went down to .5% a while back and their checking accounts went down to .1%.

 

[BoylermanCT]

Just checked, still getting 1%.