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No-load no minimum amount investment fund?


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Hello all,

 

Looking to finally throw my savings into the market. I'm looking for a no-load no minimum amount investment fund. Looking for something adequately diversified (stocks, bonds, international) that has a long track record for stable returns. I want to be able to beat out inflation after taxes so the fund needs to have at least a 5% annual dividend. Also, I am looking for the cheapest online broker that will do this for me. I have only $1,000 to invest so trading fees need to be pretty low. Anyone have some great funds out there? Looking for input from long time share holders. Thanks  :)

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For that amount PXH is probably the best.  It has a dividend of about 3% and is available as an ETF via any discount brokerage.  The fees are modest 50bps and its gets you exposure to some undervalued EM names.  The track record of the index has been pretty good but the fund has only recently been around.

 

Packer

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5% dividend is unrealistic, even for all-bond funds.  Maybe consider a brokerage account with TDAmeritrade, which has some commission-free ETFs, including some Vanguard ETFs.  VIG might be a fairly good choice, about 2% yield, and low-fee of 0.10%.

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5% dividend is unrealistic, even for all-bond funds.  Maybe consider a brokerage account with TDAmeritrade, which has some commission-free ETFs, including some Vanguard ETFs.  VIG might be a fairly good choice, about 2% yield, and low-fee of 0.10%.

 

did the poster say he wouldn't tolerate risk?  not so hard to get 5% with riskier assets/no growth assets.  might need to create the diversity himself.

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At this stage (having about $1,000 to invest) the more important focus should be growing your investing capital and gaining understanding of value investing.  In other words, I would be more focused on trying to save additional funds.  The difference between 8 and 10% return is only $20 so focusing on saving more money is more important.

 

Why the focus on dividends ("at least a 5% dividend") versus capital appreciation?

 

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I am willing to tolerate risk if the price is right. These $1,000 are the bulk of my savings which I want to worry the least about. I have a couple of hundred that I will definitely invest on different ideas of mine to get more experience with capital appreciation. I'm cool with losing the couple of hundred but I still need the bulk of the $1,000 in case I need cash. Also, what's the absolute cheapest online broker you guys know of? If the trading fees are low enough I might consider using some of the $1,000 on my own ideas as well because otherwise the brokerage fees are too much. I'm not cool with paying $10 to buy and another $10 to sell a $100 position. My capital needs to appreciate by 20% just to break even.

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I am willing to tolerate risk if the price is right. These $1,000 are the bulk of my savings which I want to worry the least about. I have a couple of hundred that I will definitely invest on different ideas of mine to get more experience with capital appreciation. I'm cool with losing the couple of hundred but I still need the bulk of the $1,000 in case I need cash. Also, what's the absolute cheapest online broker you guys know of? If the trading fees are low enough I might consider using some of the $1,000 on my own ideas as well because otherwise the brokerage fees are too much. I'm not cool with paying $10 to buy and another $10 to sell a $100 position. My capital needs to appreciate by 20% just to break even.

 

I think with a 1000$ you should aim to have one or two positions so that frictions costs are tolerable.

 

I would suggest 50% index fund (S&P 500) and another stock. Aim to keep the S&P500 long term (10Y) and the stock medium term (3-5Y). The good news is that a 1000$ any major mistakes will be offset by your new savings. As your nest egg gets bigger you increase the amount of positions to your desired level (10 maybe?).

 

As for the broker choice, take a broker that does not charge monthly fees. With that amount the fees would eat into your savings quite fast. One thing that is important is to no be trigger happy, friction fees will be running in the 1-2% for each transaction which will kill any outperformance.

 

Forget dividends, and focus on capital appreciation, do you really care about those 30$ in dividends? It's not like you need it to live on right.

 

Ah yes, don't forget that your risk tolerance is whatever does not make you lose sleep at night!

 

BeerBaron

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I am willing to tolerate risk if the price is right. These $1,000 are the bulk of my savings which I want to worry the least about. I have a couple of hundred that I will definitely invest on different ideas of mine to get more experience with capital appreciation. I'm cool with losing the couple of hundred but I still need the bulk of the $1,000 in case I need cash. Also, what's the absolute cheapest online broker you guys know of? If the trading fees are low enough I might consider using some of the $1,000 on my own ideas as well because otherwise the brokerage fees are too much. I'm not cool with paying $10 to buy and another $10 to sell a $100 position. My capital needs to appreciate by 20% just to break even.

 

I think with a 1000$ you should aim to have one or two positions so that frictions costs are tolerable.

 

I would suggest 50% index fund (S&P 500) and another stock. Aim to keep the S&P500 long term (10Y) and the stock medium term (3-5Y). The good news is that a 1000$ any major mistakes will be offset by your new savings. As your nest egg gets bigger you increase the amount of positions to your desired level (10 maybe?).

 

As for the broker choice, take a broker that does not charge monthly fees. With that amount the fees would eat into your savings quite fast. One thing that is important is to no be trigger happy, friction fees will be running in the 1-2% for each transaction which will kill any outperformance.

 

Forget dividends, and focus on capital appreciation, do you really care about those 30$ in dividends? It's not like you need it to live on right.

 

Ah yes, don't forget that your risk tolerance is whatever does not make you lose sleep at night!

 

BeerBaron

 

Thanks! Sounds like a good idea. Just curious, what broker do you use? Anyone have specific cheap ones that they've used for a while?

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Thanks! Sounds like a good idea. Just curious, what broker do you use? Anyone have specific cheap ones that they've used for a while?

 

I'm in Canada, so my brokers are not available to you. Just shop around, I'm sure there is one that fits your needs.

 

BeerBaron

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These $1,000 are the bulk of my savings which I want to worry the least about. . . .  I'm cool with losing the couple of hundred but I still need the bulk of the $1,000 in case I need cash.

 

To me this sounds like the $1,000 is what financial planners call an emergency fund, in which case this should stay in cash.

 

Also, what's the absolute cheapest online broker you guys know of? If the trading fees are low enough I might consider using some of the $1,000 on my own ideas as well because otherwise the brokerage fees are too much. I'm not cool with paying $10 to buy and another $10 to sell a $100 position. My capital needs to appreciate by 20% just to break even.

 

If it's not emergency cash, I think you'll find the starting amount of $1,000 is a major limiting factor.  I use TDAmeritrade ($9.99/trade), E-trade ($9.99/trade), and Fidelity ($7.99/trade).  You can open an account with the first two with any amount, but Fidelity has a minimum opening amount of $2,500.  They all have a selection of commission-free ETFs, but only TDAmeritrade has some of the Vanguard ETFs which are known for their low (0.10% or so) expense ratios.

 

TimEriksen and beer baron make an excellent point about focusing on capital appreciation.  Theoretically, if you really needed the dividends, you could sell off 5% of your funds and generate your own "dividend income," assuming your capital has appreciated more than 5% in a year.  You could do this with commission-free index ETFs.

 

I wouldn't get too hung up about differences in discount brokerage commissions, e.g., $2.50 vs $9.99.  There are some arcane back office practices at these discounters that are largely hidden from the public.  They can make up the difference by steering your orders to trading platforms that execute your orders at non-advantageous prices to you, and then send a rebate to the discount broker.  These "fees" are embedded in their reported executed price, thus undisclosed to you the customer.

 

http://www.usatoday.com/story/money/markets/2014/06/17/senate-high-frequency-trading-hearing/10624737/

 

So at your $1,000 capital level, I would avoid individual stock trades and stick with commission-free index ETFs with one of the larger discount brokers.

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Guest longinvestor

Without knowing the timeframe, I'd suggest putting all of the $ 1000 minus trading fees in BRK-B. It is obviously not a "fund", but is no-load, no minimum.:-) Besides thinking about dividends or capital appreciation, I'd consider the likelihood of permanent capital loss over the chosen timeframe as the primary risk. Expect modest returns, perhaps nothing like the returns of stalwarts around here. Perhaps very modest, like that of an index fund, like some have concluded. Who knows after all, but I like to put my $1000 in someone's hands who has a 50 year track record of permanent capital loss avoidance. You have to get comfortable that that instinct is ingrained in the succession plan because the Chairman is getting old. You can always put it in an index fund, I personally wouldn't give my money to 100's of unknown faces in the crowd.

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I wouldn't get too hung up about differences in discount brokerage commissions, e.g., $2.50 vs $9.99.  There are some arcane back office practices at these discounters that are largely hidden from the public.  They can make up the difference by steering your orders to trading platforms that execute your orders at non-advantageous prices to you, and then send a rebate to the discount broker.  These "fees" are embedded in their reported executed price, thus undisclosed to you the customer.

 

+1 on the arcane back office and non-advantageous prices.

 

I just moved from TDAmeritrade to MerrillEdge. MerrillEdge's executions suck and I know my options trades do not get the best price. I'll put a limit price on TDAmeritrade outside of the bid and ask, and it'll get executed.

 

At MEdge, you'll wait for hours, they'll take the order, if it's beneficial to them. Their nickel and dime-ing more than compensates them for their lower commissions.

 

Sadly, debating about moving back to TDAmeritrade, Scottrade, or Fidelity.

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