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Investment Firms Are Handing Out Freebies

Investment Firms Are Handing Out Freebies

Excellent Free Investment Resources

"Save more, spend less" is the fourth most popular resolution for 2016 according to, trailing health, happiness and weight loss. Fortunately, saving more can take far less effort, discipline and ingenuity than the top three New Year's resolutions. If you devote a few hours to research and education about investing, you'll be able to confidently select an investment firm that meets your needs and open an auto-deposit account. Even if you don't know anything about investing beyond the Dow Jones Investment Average, you can get an investment program started, obtain professional guidance and learn the basics for successful saving and investing.​

Painless Monthly Auto-Withdrawals 

I have accounts at Fidelity, Schwab and Vanguard. I'm familiar with plans at Fidelity and Schwab that will allow you to open an account and make a regular auto-deposit from your paycheck or checking account1. If you're mostly running from paycheck-to-paycheck, start with $50/month. You can easily cover that with a few homemade lunches and fewer lattes. At Fidelity, you can open a Roth IRA2 with no substantial minimum investment, so long as you make arrangements for monthly deposits. Schwab has checking and savings accounts that can be funded through auto-withdrawals from your paycheck. Their Roth IRA program has a $1000 minimum deposit unless you set up a $100/month auto-transfer.

Get an Overview
You can easily learn a great deal about savings and investment on the websites for these and other investment firms. Schedule a couple of 30 minutes sessions to educate yourself by clicking around the investment guidance and retirement planning pages. Jot down your questions. When you're ready to open an account, call – don't open an account on-line. You'll learn a great deal in your initial conversation with the company representative. These sales reps aren't brokers or snake oil salesmen. I've called the customer support lines for Fidelity, Schwab and Vanguard plenty of times and have always found the reps to be extremely helpful and well informed.

Consider the Freebies 

Before you select an on-line investment firm, you should know what investment information resources are available. Vanguard, Fidelity and Schwab all have free investment information for account holders. But you can't really kick the tires or investigate these resources until after you've opened an account. Vanguard's free toolbox is the lightest, focusing on professional advice and market news augmented by basic mutual fund and ETF data comparisons. I've used Fidelity's tools for over 10 years to research stocks. The firm offers excellent systems for screening stocks, bonds, ETFs, mutual funds and they have great market and sector data. I've also used their stock price alert system extensively. For equity research opinions and some Wall Street estimate consensus data, I often check the S&P Capital IQ and Thomson Reuters/Verus reports. The only information I've found wanting is the Morningstar ratings and research. Fortunately, I have a Schwab account. 

If I could only open one investment account, it would be at Schwab. Schwab's asset allocation analysis system is very good, integrating both risk aversion/acceptance preferences and the investment horizon profile. (An asset allocation system recommends what percentage of a portfolio should be allocated to stocks, bonds, international investments, etc., based on the investor's age, retirement plans, risk profile and other factors.) The research toolbox is easily as heavy as Fidelity's with more bells and whistles. For example, Schwab's alert and stock screen systems are substantially more flexible and useful than Fidelity's. Schwab's only shortcoming is it doesn't offer the Thomson Reuters/Verus reports. The benefits of the S&P Capital IQ and Morningstar research easily outweigh this deficit.

Get Started!

Don't put this off. Do your research, pick a firm and start an auto-withdrawal program. Even if you're only making a very small return on your initial investment, your account will start growing and before you know it, you'll have a few hundred tucked away. Talk with the sales reps about different options for investing. You may need to meet certain investment minimums before you can invest in mutual funds. When you have enough saved ($1,500-$2,000), diversify your holdings and understand the risks of your investments. Be sure to compare and minimize the expense ratios and fees. Never buy a fund that charges a 12b-1 fee . 

On your next lunch break, sit down at the computer and look at,, and any other investment firm that interests you. After a couple of sessions researching the firms and gaining some knowledge about saving, you'll be ready to go for it and open an account. With a relatively small time commitment, you'll be able to mark this to-do off your New Year's list and move on to the next resolution! (Or not.)

1Vanguard probably has an auto-investment plan for a Roth IRA or savings account. I'm just not familiar with it. 

2A Roth IRA is funded with after-tax earnings, as opposed to a conventional IRA which is funded with pre-tax earnings.

3A 12b-1 fee is an expense charged to mutual fund holders for marketing and distribution. It's not difficult to find good mutual funds that don't charge a 12b-1 fee.

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Monday, 16 September 2019