So, I got this credit card that deposits 2% cash back into a brokerage account. I started using it for all my daily purchases, paying off the statement balance each month. At the end of January, my points on the card were redeemed for the first time, and a few impatient days later, I had $38 dollars to start investing.
I could just set up a transfer from the brokerage account to my regular checking account and use this free money for other purposes, but I’ve always wanted to try investing in the market, and because it’s free money, I’m allowing myself to do so.
I figured that I could buy 3 shares of an ETF called PBW, which is a collection of companies specializing in renewable energy, which seemed like a good fit because:
- I didn’t feel like I have the time needed to do the right amount of research to buy shares in only one company
- I’m an aspiring hippie
- I knew that the American Recovery and Reinvestment Act of 2009 was in the works, and it set aside a serious amount of money for renewable energy projects
Here’s the funny part: that $38 dollars that Charles Schwab gave me for free? It was double the amount that they should have given me. So a few days later, I noticed in my portfolio that $19 was missing. It took me three tries to get the credit card and the free brokerage account linked in the first place, so this was extremely frustrating. I assume it was an honest mistake on Schwab’s part, but I had gotten myself in the position where I was investing with my own money, and not with free money, anymore.
I still think that this card/brokerage setup is a good idea, but if you’re setting this up for the first time, keep a close eye on the amounts being moved around.
Incidentally, I’ve only lost $17.66 on my investment so far, including the $12.95 commission. I can laugh about it, because it’s free money.
I don’t think “market timing” is a good investment strategy — in fact, it’s not a strategy at all — but it can be a worthwhile experiment if played with money you don’t mind losing.
One way to time the market is to buy low-cost exchange-traded funds (ETFs). These investments act as mutual funds — a portfolio of a number of stocks — that can be purchased through the stock market like any other stock. Using ETFs rather than individual stocks for market timing allows the investor to mitigate the risk of investing in just one company. Powershares Dynamic Banking (PJB) is one such ETF, designed to track the retail banking industry.
Are banks ready for a rebound? PJB is down 23% over the past 12 months. If it’s the right time, banking stocks might be able to provide not only a short-term gain, but a long-term gain if the market believes that this sector is deeply discounted due to all the various market conditions that have affected banks over the past year.
Some experts are saying that now is a good time to buy into the banking sector, but others believe that there will be more bad news ahead, trending stock prices further downward.
I’m investing for the long-term, but I wouldn’t mind finding bargains that might provide a significant increase over the next few years. Is banking the right industry for a fast recovery, and is now the right time?
Last month, ING Direct acquired ShareBuilder, a discount online brokerage. The two companies seem to make a good pair, so I think it was a good move for the company.
ShareBuilder has now lowered the commission charged for real-time trades to $9.95. Automatic investments, orders which are grouped together with many customers and executed as many as 7 days later, are still $4. Low prices make dabbling in the stock market more appealing to novices. Lower prices are always welcome, but is this a good thing? Personally, I’ll stick with my buy-and-hold strategy and wide diversification among stocks.
A few years ago, ShareBuilder was offering sign-up bonuses, so I used some free money to buy an ETF and two stocks, IYZ, MSFT, and AKAM. I can’t say that any one of these options has shown stellar performance since I placed the orders. This “play money” is only a small fraction of my investments.
Email this article
Print this article
