Want to buy company stock but not through company

[Mouse]

I have a question and need some opinions, pointed in right direction if anyone can help.

quick info... I am reading up on the stock market/investing. I have always had a large interest in it and do plan on getting involved. I also have been playing virtual stock market games as well

however,

I started working part time at a auto parts retail store a few months ago while I am finishing up my last few months of college. They mentioned I have the option to buy company stock which i am really interested in because I personally think this stock is going to do well and want to get my hands on some before it is too late.

the issue..

I am unable to participate in this through the company because I am only a part time employee and some weeks i don't reach the required amount of hours needed to participate in the company stock plan.

Which is fine because I dont plan on staying with this company for a long time (maybe only a few more months) because once i graduate I want to start my career.

But even though I cant participate in the company stock plan I still want to purchase some stock.


and this is where I am stuck at. I want to do it myself with an online broker like TD Ameritrade (I have done a lot of research and they seem like the best all around especially for beginners and i like the paper money idea).

I am just unsure on how to go about that because I dont have a lot of money to invest right now maybe a few hundred dollars at the moment but i plan to eventually be an active trader is it okay to start now with just buying some stock from this one company and then slowly add money to my account as i learn.

I just want to buy in before the prices get higher.( if they rise and I think they will)

So would it be worth it to open a account on like TD ameritrade (Will gladly like to hear other opinions or options) just to buy say 1 stock right now.

I have an emergency fund and I am also doing other ways to save money and since I have always wanted to get into the stock market what better way to start than to start with owning a part a company i am familiar with and work at.

so I hope this all makes sense somewhat and people are able to help me or get me on the right track..I am just so confused because I have so many options and paths to take and I dont know anyone personally who does this who can help me so I am resorting to the internet and Google. I have done a lot of research but I would like answers to my direct situation and not a broad range


Thank you

[Mouse]

also, for another broker option, I heard Tradeking was good too and easy.

[97guns]

the great thing about buying direct is a discount, company plans that i have been in have had up to a 20% discount. i worked at home depot for only 4 years during the dot com run up, went through 3 splits and walked out of there with over 80K in stock

[Mouse]

the great thing about buying direct is a discount, company plans that i have been in have had up to a 20% discount. i worked at home depot for only 4 years during the dot com run up, went through 3 splits and walked out of there with over 80K in stock

Thank you for response

The thing is I don't qualify for the company plan because I don't reach the required minimum hours a week to be able to participate. Some weeks I am over but others I am not so I am worried if i sign up I will get disqualified because of the lack of hours..

and i plan to only be with company for a few more months so that might limit the amount I am allowed to buy since they only do weekly deductions from my paycheck.

That is why I want to start a personal account with an online broker but I dont know which would be best or where to start.

[disneysteve]

I have an emergency fund and I am also doing other ways to save money and since I have always wanted to get into the stock market what better way to start than to start with owning a part a company i am familiar with and work at.

It's good that you have an emergency fund in place. When you say you are doing other things to save, what does that mean exactly? Are you funding a retirement account like Roth IRA? Do you have any debt like credit cards, car loan, student loans?

There is nothing inherently wrong with investing in stock. I'm just trying to help you determine if you are ready to do that.

The one problem with investing in stock with only a small amount of money is that the commission becomes a significant expense. Let's say the stock is $25/share and the commission is $10. If you only invest $500, the commission is 2%. If you were investing $5,000, the commission would still be $10 but would only be 0.2%, a much smaller cut. So with the $500 investment, you need the stock to go up by 2% just to break even and another 2% really because you'll pay another $10 when you sell it.

For small investments, it is much better generally to use mutual funds. Lower costs and broad diversification across dozens or hundreds of companies which helps spread your risk.

[Mouse]

It's good that you have an emergency fund in place. When you say you are doing other things to save, what does that mean exactly? Are you funding a retirement account like Roth IRA? Do you have any debt like credit cards, car loan, student loans?

There is nothing inherently wrong with investing in stock. I'm just trying to help you determine if you are ready to do that.

The one problem with investing in stock with only a small amount of money is that the commission becomes a significant expense. Let's say the stock is $25/share and the commission is $10. If you only invest $500, the commission is 2%. If you were investing $5,000, the commission would still be $10 but would only be 0.2%, a much smaller cut. So with the $500 investment, you need the stock to go up by 2% just to break even and another 2% really because you'll pay another $10 when you sell it.

For small investments, it is much better generally to use mutual funds. Lower costs and broad diversification across dozens or hundreds of companies which helps spread your risk.

Thank you for response.

Every week I put a small % away into my savings account. Normally between 10%-15% (Which is not a lot at a part time close to minimum wage job) just commuting to school in a non fuel friendly jeep kills my paycheck every week . but other savings I started the 52 week challenge, I try to use cash a lot to get change and I have a change bucket I am not touching until it gets really large.. and I collect a good amount of scrap metal like copper I go and cash in and add to my savings when I get a large amount.

I do not have a Roth IRA or a 401k (company offers one but do not plan on being with company much longer since I graduate soon).

I have done a lot of research on Roth IRA's and plan to start one soon as well. I am currently 22 and I always hear the sooner I start the better. I plan to do this once my emergency fund gets to a certain amount and all my current bills are paid off.

I do not have ant credit cards and the only expenses I have really are bills like vehicle insurance, vehicle maintenance, phone bill, food, and gas when commuting to school and whatever I need for school (benefits of being a college student and living at home).

I have also looked at mutual funds a lot and know some info about them the only thing that scares me away from them with online brokers is that some places charge like $50 for a mutual fund and what not.

- I do have a trust fund account that was given to me when I was a lot younger and that I still am not allowed to have access to for a few more years. all of that money is handled by professionals and is all in mutual funds. I will eventually take this over when I am allowed too but i want to be able to handle all my investments myself and not have to rely on accountants or brokers

my ideal goal/plan is to start and focus on just investing now. slowly. get the hang of the account and features and then when I start to fund an account more I plan to be more active with buying and selling and who knows maybe I will become good and turn my investments into a main source of income.

[disneysteve]

i plan to eventually be an active trader

when I start to fund an account more I plan to be more active with buying and selling

This is a really bad plan. The last thing you want to do with your investments is become an active trader. That is an almost certain recipe for failure. Jumping in and out, trying to time the market is destined for failure. What you want to do is invest steadily over time, buying and holding long term.

I have also looked at mutual funds a lot and know some info about them the only thing that scares me away from them with online brokers is that some places charge like $50 for a mutual fund and what not.

With some exceptions, you shouldn't buy mutual funds from a broker. You should buy mutual funds directly from the fund company like Vanguard or T. Rowe Price or Fidelity. Buying direct you will pay no commission on your transactions. If you invest $500, all $500 goes into the investment.

[Mouse]

This is a really bad plan. The last thing you want to do with your investments is become an active trader. That is an almost certain recipe for failure. Jumping in and out, trying to time the market is destined for failure. What you want to do is invest steadily over time, buying and holding long term.

What I meant to say was do this along with investments.. some investments I make I plan to be long term holdings. like when I make more money I want to get into some real estate, raw land and things like that. but since I don't have that kind of money I want to start somewhere.
I didn't mean to say I want to gamble all my investments by buying and selling.

With some exceptions, you shouldn't buy mutual funds from a broker. You should buy mutual funds directly from the fund company like Vanguard or T. Rowe Price or Fidelity. Buying direct you will pay no commission on your transactions. If you invest $500, all $500 goes into the investment.

oh okay thank you I was not aware of this..I guess I need to do more research on how to buy mutual funds

is it normal to have multiple portfolios/accounts with different companies/brokers? or is it best to try to stay close to as least as possible

[disneysteve]

is it normal to have multiple portfolios/accounts with different companies/brokers? or is it best to try to stay close to as least as possible

Some people have their entire portfolio with one company. Most probably have at least a few accounts, especially when you include employer retirement plans. If you are married and you and your partner each have a 401k, for example, that's 2 accounts right there. Add a couple of bank accounts, a Roth IRA for each of you and you're probably up to 5 or more companies right there.

Personally, the bulk of my money is with Vanguard but I also invest with several other companies, have a brokerage account with Scottrade, my wife has a 401k with Lincoln Financial and a 403b with Oppenheimer, etc. Our money is definitely spread amongst numerous companies.

[Mouse]

Some people have their entire portfolio with one company. Most probably have at least a few accounts, especially when you include employer retirement plans. If you are married and you and your partner each have a 401k, for example, that's 2 accounts right there. Add a couple of bank accounts, a Roth IRA for each of you and you're probably up to 5 or more companies right there.

Personally, the bulk of my money is with Vanguard but I also invest with several other companies, have a brokerage account with Scottrade, my wife has a 401k with Lincoln Financial and a 403b with Oppenheimer, etc. Our money is definitely spread amongst numerous companies.

Thank you again for all your help and info.

I should probably start with a Roth IRA and then start buying some stocks/mutual funds. and then once I land a job I plan on being with a while I can start a 401K

[KTP]

If you just want to play a bit you can open a Roth at Optionshouse and get 100 free trades. It can be fun buying and selling stocks for a few dollars profit when you know you are paying no commissions. This would be about the only way I would suggest trading with a small amount (like $3,000) because otherwise commissions are going to eat you alive. After 99 of the free trades are done, if you have any money left, you can buy a ETF with the last trade.

[Mouse]

If you just want to play a bit you can open a Roth at Optionshouse and get 100 free trades. It can be fun buying and selling stocks for a few dollars profit when you know you are paying no commissions. This would be about the only way I would suggest trading with a small amount (like $3,000) because otherwise commissions are going to eat you alive. After 99 of the free trades are done, if you have any money left, you can buy a ETF with the last trade.

Thank you for response and input. I am most likely going to start with a Roth IRA first. I have not read much about optionshouse I will do some research on them.

But after seeing all my other savings options I think starting a Roth IRA is my best bet right now.

[Dsquared513]

A Roth IRA is a good idea, but you likely don't have enough starting money. There are some Roth plans that will let you start with a very small amount but they require automatic monthly deposits. Optionshouse is great for small stock purchases since there starting comissions are like $3.99, but I agree that starting off buying individual stocks is a practically guaranteed way to lose money, and early losses could put you off investing altogether. Even if you don't want all of your money socked away in boring old mutual funds, there are a lot of composite ETF's that you can buy through an online brokerage that can give you exposure to broader sectors of the market, like tech, health, metals, energy, etc., instead of individual companies. People go to school for years and are paid huge sums of money to analyze markets and they only get it right half the time if they are lucky, so your attempts are a game of financial roulette at best. Even buying and holding established companies can be risky if you don't pay close attention and know what you are doing, just look at GM. My personal advice would be to save enough for an initial payment into a Fidelity or Vanguard Roth IRA (since you only work part-time now Roth is a must since you will almost surely be in a higher tax bracket in the future) and contribute whatever you can as you go along. Since you are so young you will enjoy the amazing benefits of compounding interest. If you are hellbent on owning an individual stock just make sure that the money you invest will not be needed anytime soon, since you are buying into the market at historic highs there could be a dip at anytime and it could take years for you to regain losses from one bad stock pick.

[disneysteve]

A Roth IRA is a good idea, but you likely don't have enough starting money.

You can open a Roth with $500 at a discount brokerage like Scottrade. You do need $1,000 minimum for Vanguard.

[Petunia 100]

You can start at Schwab with $100, and they have a select group of ETFs which you can trade for free, including a total market etf with an ER of just .04%.

So, it is possible to get started with not a whole lot.