Overwhelmed by Investment Options – entry 004

(This post is part of a series of posts about being an investor newbie)

Now that I have an account on TD Ameritrade I should be able to begin investing right? Not so fast. As it turns out I was given some bad advice. On the day I filled out the paperwork and wanted to setup the account I couldn’t find a way to deposit the money. Since there was no way to set up an ACH (Automatic deposit from my checking account into my trade account) I asked the person in the online chat what I should do. They suggested sending in a check with our Tax-ID. So we did. That was on Monday… of last week! There is still no money in the account and nobody can seem to find the check. Here is the worst part. As it turns out, once the account is actually open, then you can set up the ACH and I could have been trading within 30 minutes! Instead, all of my research last week has gone to waste and I still don’t have an account with any money in it (although the account is open).

This is not a terrible thing other than the fact that I could have made about 5% return just since last week! At least I know my stock picking was working (in the short term). The bad news is that my research is now pretty useless since the strategy I am using says not to buy the stock once it reaches 5% past the buy point. I will have to start over with new stocks and I still don’t have any money in the account. If it was my personal account I would just have put a stop payment on the check and deposited directly, but it is a company account. Again, all of these issues would have been avoided for an individual account – but similar issues could exist with an investment club account, so be warned and be patient.

Not all is lost however. As it turns out there is a ton of stuff you can do while waiting to trade. TDA has a tremendous amount of educational tools available. They have videos, overviews that you can read, etc. They explain their website and the tools available to you. If I could change one thing about their website, I would get rid of 90% of the stuff. I need a page for people who want to buy stocks, let them sit for  awhile and then sell. That is it. Instead, there are hundreds of combinations of possibilities and I guess this is what makes investing so intimidating and overwhelming. There is stuff all over the screen and if you have ADD, it can be a nightmare. When you click on TRADE (assuming you had money in your account) you get a dropdown with lost of options: Stocks a& ETFS, Options, Mutual Funds, Bonds & CDs, Futures & Forex, Trading Platforms. But wait, there’s more…. Under each of those are more options such as under Options (trading): Single Order, Covered Call, Spread, Straddle, Strangle… sounds more like 50 Shades of Grey.

Once you click on Stocks & ETFs the screen is a little easier. It seems so sterile however, and I am about to risk money in the stockmarket. While it may seem to be no big deal to them (just one small part of their overall world) it IS a big deal to me! Oh well, moving on…

You select whether you want to buy or sell. Finally an easy question. You select the Quantity and then the symbol of the company. When you do, it lists the company as well as some other info such as volume, price, bid and ask prices, etc. This way if you mistype the symbol you wont buy the wrong stock. Remember there is a $9.99 fee to trade so you don’t want to waste $20 buying the wring stock and then selling it immediately to get your money back.

Next you choose the Order Type. This is fun: Limit, Market, Stop market, Stop limit, Trailing stop %, Trailing stop $. Fortunately they offer a tool on the page called ‘Ask Ted’. This feature will explain each type if you click on it.

Once you make it through this screen you can basically buy stock. When you do, you are the proud owner of about 0.0001% of some company. Congratulations! You have officially started the investing process.

(Disclosure: Stocks listed in this post are based on the research of the author but DO NOT constitute investment advice. They are simply the personal opinions of the author based on independent research. Some of the stocks listed may be owned by the author and by The Money Professors. Neither The Money Professors or the individual author of this post are licensed security advisors or brokers.)

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The three authors, Bill Pratt, Mark C. Weitzel, and Len Rhodes, are industry leaders in personal financial education. Together, they have a combined 75 years of experience in banking, economics, and entrepreneurship. Now, they teach thousands of students personal finance concepts and decision making skills, author textbooks and public press books on personal finance, and help schools develop innovative personal finance literacy programs. Recently, they were instrumental in developing a personal financial management certification program for leaders in higher education. The other books in The Money Professor series include The Graduate’s Guide to Life and Money and Extra Credit: The 7 Things Every College Student Needs to Know about Credit, Debt & Ca$h. Their books, lectures, and programs give students, parents, and educators the tools and knowledge to make good financial decisions all their lives.