tibidip

Anybody familiar with this type of investing? If so what are the strong/weak points and what company do you use?

Raheel

wrong forum, and I have no clue about that stuff

dpakman91

what exactly do you mean?

dollar-based investing could mean any of the following things:

1) any investment made with dollars (bonds, stocks, currency, etc -- i assume this isn't t what you mean?)

2) dollar-cost-averaging - this is a method of investing in stock...maybe you mean this?

3) investing in the dollar vs. other currencies, known as currency exchange/trading.

4) something else?

if you tell me what you mean, i can tell you what i know about it.

tibidip

Take a look at this site www.sharebuilder.com and you'll get an idea of what I mean. I'm looking to do some investing and I was wondering if anybody's used this service or something similar. Thanks.

jdone

Clearly you mean the dollar cost average method of investing. If you are young enough, this method is almost assured of producing good returns. Since, if you invest the same amount every month no matter what, you will always buy more shares when they are cheap and fewer when they are dear. I wouldn't fool with sharebuilder though, it needlessly complicates things for tax purposes. Just do the same thing with ishares, vipers, or a low-cost fund from Vanguard, Fidelity, or TR Price. The fund company computer will give you appropriate gain/loss/expense prints whenever needed.

tibidip

Thanks for the reply. Could you be more specific as far as it "complicating things for tax purposes". I'd like to begin investing and to be quiet honest I'm looking for a little "hand-holding" to begin and sharebuilder seemed simple enough. I'll look into the companies you mentioned.

dpakman91

alright there's clearly a lot of confusion here, let me see if i can clear up a few things.

1) tibidip - sharebuilder is no different than any other online broker, so by "dollar-based" investing, you must just mean regular investing in stocks. sharebuilder is the same as etrade is the same as ameritrade, etc etc etc.

2) jdone - dollar-cost averaging by no means is "almost assured of producing good returns." using dollar cost averaging does not have any bearing on the likeliness that a stock will go up or down. the point of dollar-cost averaging is to limit risk, but of course, anything that limits risk limits the potential fo return.

in short, dollar cost averaging is instead of buying 1000 shares on one day if that's what you plan to own, you buy 100 shares every monday for 10 weeks for example. what this does it make you own the stock at the average price for those 10 weeks. if the stock had been on a downtrend during the 10 weeks,, or part of the 10 weeks, you wouldn't have lost nearly as much as if you had bought all of the stock on day 1. however, if the stock was on its way up those 10 weeks, you wouldn't have MADE as up as if you had bought 1000 shares in one shot either.

jdone

I guess I wasn't clear enough. To limit risk one needs time and diversification. That is why I rec. he use a diversified investment such as ishares or a broadbased fund from a low-cost provider. "Good return" does NOT mean the best possible return. Investing in a single stock or small number of stocks has a FAR BETTER chance of producing a great return than what I said. It also has a FAR BETTER chance of producing poverty.

jdone

Read this book before you put a dollar into anything:




Read this book

dpakman91

agreed.

TL260power

i have been with mutual funds for a long time and its been the same ever since. I would like to invest in something else can anybody help?

SK2003TypeS

Some of you younger guyz might want to look into DRIP Accounts. DRIP stands for Dividend Re-Investment Plan. This allows you to invest with barely any money. I think something that makes a lot of younger people shy away from getting started in investing is the lack of cash to go to the table. But DRIPs allow you to basically "drip" a small portion of your paycheck into a stock for a given company. You can invest like $100, $50 or even as low as $10 a month into a company(sound like a commercial?). The first few years you're like "wow, big deal", but the key is that this grows exponentially over time.
This takes the dividends you receive and automatically goes out and buys more shares. Again in the begining, you might pick up like .03 of one share, but in time it starts to pay off. In the long run, it is a proven investment vehicle.
I'm smiling a lot these days because Exxon has been doing pretty well, but I'm planning on holding onto this company for another 20 or 30 years.

dpakman91

there's DRIPS, bonds, money market accounts, individual stocks, etc etc etc...limitless possibilities, just have to asses your risk tolerance and the goal for a precentage return.

jt24yo

a systematic approach to investment over a long period of time ALWAYS pay off, especially w/ a well diversified mutual fund. Speaking from experience, and also as a former stock broker, go w/ Vanguard S&P 500 index. HIGHLY recommended. Since I don't work for commission anymore, I'd like to give people decent, honest advise about investment,

The link below should give you a rough estimate of your investments over time. Just an FYI here, if you choose to invest in S&P500 index fund, regardless of whom you choose to go w/, if your investment timeframe is more than 5 yrs, 9.5% average annual rate of return is very conservative.

http://www.wellsfargo.com/retirement...RE45QKBRKUMUM0

NYZGREATST

so what your saying is every week or so put some more money invested in the S&P500 ? and over the loong haul the returns would be good?

jt24yo

ABSOLUTELY my friend, personally, I try to max out my contribution limit to my Roth IRA, which is currently at $3000/annum. I get paid 2x a month, so every paycheck I have Vanguard group take out $125 ($125x24 = $3000). Also FYI here, with your Roth IRA contribution, you can take out your contribution at anytime w/out penalty, in other words you don't have to wait until 59 1/2 to do so. But ONLY contribution amount will be penalty free. For example, after 18 months of putting money into your Roth IRA, you currently have a balance of $2200, out of which $1600 was the money that you actually put in, and $600 was the capital gain/dividend reinvestments. If you withdraw only the $1600 part, you won't be taxed or penalized in anyway, shape or form. But I don't recommend withdrawing money from your IRA, except for making first time home purchase or somthing with that kind of magnitude. Hope that answer it. For more info on Roth IRA, refer to the link above or go to Vanguard, they have alot useful stuffs on the website.

SK2003TypeS

I agree with jt24yo here about the Roth. Max out or get as close to it as possible. I think it goes up to $4000 for 2005 and then $5000 in 2008. The earlier you start the better off you'll be as your gains will be compounded over the years (hopefully 20-30 years).