As a big supporter of DRIP investing because of limited
capital to invest I am always looking for ways to accumulate more shares. I like to acquire shares that are either undervalued
or reasonably valued. This in
return provides me with a ever increasing amount of dividends and more shares
in mostly well known companies that have proven to stand long periods of time and
thrive in different economic times. Last
year I became interested when Scottrade came out with the FRIP plan. Up until now I have not really been able to
participate or open another account.
Recently I have been starting to get frustrated with E*Trade’s $9.99 commission
because it is higher than just about every competitor. I have been an E*Trade customer for a long
time and am comfortable with the tools and platform though. I have not had too many major problems with
them when contacting customer service.
I also am interested in all these newer brokerage firms and
innovative ideas, but not sure if they are worth the risk. The one I am leaning most towards is Scottrade
with $2.99 less commission and the ability to FRIP the percentages I want
towards any stock I want to without paying commissions and keep excess cash if I want to
as well. This would be a significant
cost savings over time for someone who can only afford small purchases. I would have to make 1500 at E*Trade trades a
quarter just to get about that same rate that is already offered. This is probably a lot easier to keep track
of for records and tax treatment as well since you can only acquire full whole number amount of shares.
Once I clear out some of my current expenses I might look into opening a
Scottrade account because have to start with $500 I believe. I am a couple months away from finishing my
car payments and owning it. The unknown is
how I am going to go about paying for school.
I am making the transfer to a higher cost school, but am 15 classes away
from getting my Bachelor’s of Business Administration in Finance.
Anyone out there have any issues with Scottrade? Do you participate and/or like or dislike the FRIP program?
DS,
ReplyDeleteYou should take a look at Loyal3. I really like the platform and the best part is the free trading. Let's say I wanted to buy a house next year and needed a little capital, I can sell 10 holdings for $0 in commission fees. Elsewhere I would be paying $70-$100 in fees. I have also heard of other bloggers using Motif but I am not familiar with it. Good luck!
DM,
DeleteI have been reading about both Motif and Loyal3 for a little bit of time. Not sure I totally understand everything about both platforms. I know Loyal3 is commission free on select stocks that are available, but not sure how secure that is since they are relatively new. The idea is good if they can sustain that by just making money off of IPO's. Is there an option to receive a dividend check or do you have to choose DRIP or electronic deposit. I assume with electronic deposit you would have the choice to do what you want with that income to withdraw it, hold it, or invest it.
Glad you are enjoying commission free trading
Thanks for commenting!
I received a dividend from MDLZ and it was in cash. You can choose to withdraw it,buy more shares of whatever stock, or keep it as cash in your account. I used it to buy more shares of PEP. So when. I bought $50 worth of shares on my credit card I was only charged 49.78 because the dividend was 22 cents in my cash account. Hope this makes sense. Good Luck
DeleteDividend Mongrel,
DeleteIt does sound like a cool feature. New ideas that save money, but I read A few drawbacks others have experienced too. Glad it is working it well for you! Keep buying those high quality dividend stocks.
DS,
ReplyDeleteI have a scottrade account. The $7 per trade and sell is great compared to other people. I love their flip option because it allows me to invest in other industries that I normally wouldn't be able to. You can set a date and allocate how much money you want in each stock. I set my date as far out as possible and build up my war chest. When the stock i want reaches a my price point, i set the FLIp date to the next day. Automatic buy without the cost. I just bought 5 shares of YORW this morning doing this process.
As for Loyal3, I'm not sure how safe it is for long term investments
The Broke Dividend Investor,
DeleteNice job! I really should probably average down on YORW myself. I typically don't like to sell very much and just watch dividends reinvest. I do know Scottrade and the other big brokerages that have been around a long time seem to be a safer bet long term. FRIP definitely sounds like a great program for most people. Thanks for letting me know what you think of it
Best regards
DS,
DeleteDitto. I rarely if ever sell any of my stocks but I would hate calculating all those derivatives to determine my capital gain tax. The best thing about flip is it allows me to invest in other sectors with the little amount of money that I have. I could buy 500 shares of KO and drip it but if KO has a bad quarter report like this week, I'm basically screwed. Whereas Flip allows me to enter GE, GIS, Kft, ARCP, etc. I see it less of a dividend machine where I could drip fractions of a stock and receive its fractional dividends and more of a way to diversify my risk.
I hope this answer your OT question. i would love to get into loyal3 and get me some blue chip stocks but I'm terrified of giving my SSN to new companies.
The broke dividend investor,
DeleteThank you! FRIP sounds like a good option even if don't need to use it now or have a desire to. One day it could be an appealing option when some big names like KO drop like this. It could increase shares and diversify by averaging down at the same time. That's a win all the way around. Also increases future dividend income. I share your concern very much on not giving out personal info especially a SSN. That is the main reason I have not figured out how to monetize this blog yet. I don't trust everyone with something like that. I am still looking at different avenues though to write and figure out some ways to further my career more in the Financial direction.
Personally I use Scottrade and Sharebuilder. Ever since Scottrade introduced the FRIP it really went up a few notches in my eyes. Traditional brokerages only allow dividends as cash but now with FRIP you can reinvest those dividends in any other company you wish. That's a lot of flexibility and $7 commish isn't so bad. Sharebuilder has $4 commish for auto trades and $1 commish if you subscribe to their monthly plan. Both are great in my opinion. I never used Loyal3, but from all the reviews I read it looks great and at $0 commish you can literally build with just a few dollars a month and even use a credit card to buy stock.
ReplyDeleteDivHut,
DeleteNice! I think I might join you with Scottrade because I like the FRIP idea. sharebuilder also sounds great, but I am afraid of complicating my taxes any extra since I already have a ton of DRIP's and fractional shares. Hopefully I don't have to sell too many stocks to figure out all the cost basis stuff. It is nice that brokerages have to track some of it for you too now though.
Thanks for stopping by!
I have been sticking with ShareBuilder for now. Just like you it keeps my taxes simplified.
ReplyDeleteDFG
DFG,
DeleteDoes Sharebuilder do a good job of keeping cost basis? Do you reinvest dividends? Usually buy whole or fractional shares. If you don't have to sell then it usually is not a problem, but it worries me that if record keeping is not very good several years down the road people have to sell and it can become a mess to figure out.