This post is for those who aren’t investing regularly for their retirement yet. Not just saving, investing. In order to retire right, you’re gonna have to beat inflation. That means no savings accounts! I wrote previously about IRA Options For Those Starting Out, with various options for those who with limited funds.

How this? In addition to TIAA-CREF which was already mentioned, T. Rowe Price will let you open an account and invest in their funds for only $50 a month if you sign up for their Automatic Asset Builder program. There may be a $10 annual low balance fee, but don’t let ten bucks stand in your way. Start! Here’s a little secret: $50 a month is nothing.
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After reading about how micro-cap stocks are a great way to improve your risk-adjusted return, I decided to read up more on BRSIX – Bridgeway Ultra-Small Company Market Fund. I thought Bridgeway was just another boutique mutual fund company, with sexy funds chasing hot sectors. Well, I was a bit right, but also found a lot more.

After reading some more , it appears Bridgeway Funds are known for their brutal honesty and their ethics. From this Statesman article, they were voted the most reputable company by financial advisors, even over Vanguard and Calvert. This is displayed by their code of ethics and the following (also from the article):
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Catching up on e-mails, I see that that Jack Bogle, index fund pioneer and founder of Vanguard, has a blog now called the Bogle eBlog. It doesn’t look like it’s going to have many personal anecdotes, more like a ‘Recent News’ type of thing. Too bad. Thanks Jonathan for the tip.

If you have all your domestic stock allocation invested in an S&P 500 or Total Stock Market Index Fund like VFINX or VTSMX, here’s some interesting food for thought that I picked up from All About Asset Allocation by Richard Ferri.

Based on historical data from 1975-2004, compared to a portfolio containing 100% of a Total Market index fund (specifically the Wilshire 5000 here), a “mix of 70% in the total market and 30% in the small value index would have increased U.S. equity returns by 2.7% with no increase in portfolio volatility.” In layman’s terms, by adding a small exposure to Small-Cap Value stocks, you would have gotten more reward for the same amount of risk. Here’s a simple sketch that illustrates this:
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A while ago I set aside $5,000 to buy and trade stocks. I call it my ‘play money’, as the rest of my portfolio is painstakinly allocated into index funds. But I really don’t do much ‘playing’ anymore. I just check the stock prices every few days, say silly things to myself like “Hmm… I guess that was a smart buy” (RIN) or “I wonder why nobody likes that stock anymore?” (PFE). Then I log off, forget about it for a while, and then the process repeats itself a few days later.

Exciting story huh? Yeah, I thought so. Anyways, for posterity and the voyeurs out there here is a snapshot of my current stock holdings. Feel free to make suggestions as to what I should do with it.
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Another nice feature of my Scottrade account that I noticed recently is that they offer GainsKeeper free with every account. GainsKeeper is an add-on program available for all brokers that offers a lot of useful tax-related features such as:

• Track your cost basis and realized and unrealized gains/losses
• Tax lot accounting
• Generate your IRS Schedule D
• Export data into tax software, Excel or text file
• Tracks stock splits, mergers, and wash sales

You can do all this stuff manually pretty easily, but it’s definitely a nice time saver if you trade regularly. I plan on dollar-cost-averaging into ETFs and then harvesting tax losses, so keeping track of tax lots would probably get to be a pain in the butt after a while. Retail cost is $49/year (<100 trades).

I’m currently finishing up All About Asset Allocation by Richard Ferri and I think I’ve had my fill of books about index funds. Now that my primary portfolio is set up (I’m fighting the urge to tinker already), I’m considering splashing around with individual stocks again! So I’m looking for some book suggestions. Here are some I’ve heard good things about:

• The Little Book That Beats the Market by Joel Greenblatt
• One Up On Wall Street and Beating The Street by Peter Lynch, John Rothchild
• The Essays of Warren Buffett : Lessons for Corporate America by Warren Buffett
• The Intelligent Investor by Benjamin Graham

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While checking in on my IVV order, I noticed Ford is having a bad day. Check out these market caps:

Ford (F): $13 Billion
General Motors (GM): $12 Billion
Google (GOOG): $130 Billion

Ouch. Google could buy both Ford and GM and not break a sweat. Hmm… Google + Cars = ?? Isn’t it weird how GM and Ford used to represent America’s economy, and now Google does instead. I mean, indirectly they employ me and millions of others!

I am usually very skeptical when people try to time the market. But I must confess, I have been trying to do it this week. As part of my new portfolio, I need to buy $11,000 of IVV (an S&P 500 ETF). That’s a big order for me. On Monday I saw the market going south, with IVV going below 128.5, and made a limit order for 128. I figured, if I could just catch the market on a 1% dip, I’d save over $100!

Fast forward to market close on Thursday, and IVV is at 131.30 (a 2% increase) after the Federal Reserved hinted at an end to interest rate hikes. Oops. Oh well, the trade is good-til-cancelled, so maybe tomorrow I’ll still catch it. Or not. See, this is why I need to just stick with mutual funds! =)

I recently opened a stock trading account at Scottrade. Here were my reasons:

• $7 limit trades. Not the best, but good enough for me.
• Local broker. It’s nice to have somewhere I can drive to in 10 minutes and be face-to-face with a human. Much easier to resolve things that way.
• No inactivity or maintenance fees.
• No transfer-out fee. If I am dissatisfied, I can just move all my holdings over to another broker with no charge.
• Free Gainskeeper. This service tracks your stock lots and helps you file your taxes at end of year. It usually costs extra at other brokers.
• Good reviews both offline and from online comments.
• Just $500 to open, but if you have $5,000 in account equity, you get free checkwriting, which you can then link up with other accounts.

The only thing that really made me think twice is that they pull a hard credit check when you apply. I decided it was worth it for the chance at finding a nice long-term broker.

Here is my opening process review, it was a bit of a whirlwind.

1. I applied online, and they asked me the usual ID verification questions. But there was no way to fund online. You had to fund via check, account transfer, or wire transfer. They also asked you to fill out an optional signature form so they have your signature on file in case you do any requests by mail.
2. I figured, hmm, maybe it’s time to try out my free outgoing wire transfer from WaMu Checking. But I wanted to make sure the funds would post right way, so I gave the local branch a call.
3. They said, yes, if it is received by the end of the market close, it should post the same day, but otherwise it would be the next day. But hey, did I live near the branch? If I dropped off a personal check by the afternoon, the funds would also be available the next day. Since this would also give me a chance to hand in the signature form, I said sure.
4. The branch was only 10 minutes away, but it was also in downtown, which meant parking was horrible. I called him up again and asked if they had a specific lot (blind hope), but they said that if I parked in the nearby City garage, they would validate me. Excellent!
5. I dropped off the check and the signature card without much issue. I also requested checkwriting while I was there. I also get a Check Card.

Overall, not bad at all. I figured out where the branch was, and I can visit anytime and not worry about parking. The branch was pretty sparse, like 6 desks and 2 people, but since there are 4 branches in my city I’m not too concerned. It was actually nice, as when I call I always speak to the same person, and I got to meet him at the branch.

The website is simple and logical, which is what I like to see. If you are logged in to the Scottrade site and click on the ‘Contact Us’ link, you always get your local branch’s telephone number instead of some overseas call center.

After some more research, I jotted down some thoughts on each of the six brokers I narrowed it down to last time. Again, these are all from my own admittedly-biased perspective and personal needs.

TradeKing
I have an account with TradeKing, and they seem ok. Online chat help is alright. The site runs slow as if it is on a 56k modem, but my trade executed promptly. $4.95 trades with no inactivity fees is nice. The founders of TradeKing also founded SureTrade, which themselves merged and are now part of Bank of America. Thus, they seem to be a likely future merger target, which I am trying to avoid.
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