There is another type of brokerage which may initially appear to be a discount brokerage, but is in reality something fairly different. For lack of another term I will coin “prosumer brokerage” by analogy to prosumer electronics – electronics that straddle the gap between professional tools and consumer electronics. These brokerages have a look and feel more or less like discount brokerages, but have features and pricing that mimic professional trading environments. Interactive Brokers is by far the most popular of these prosumer brokerages. Depending on your level of expertise and trading activity, they could be a very good or very poor choice for your needs.

Commissions and Fees

Discount brokers typically employ a flat fee model for stock transactions. This is a little strange, since exchanges charge the brokers a variable fee based on the number of shares traded. What this means is that the typical discount broker overcharges for small trades and under-charges for big trades. To give you an idea, executing a market order on the NYSE costs a broker $0.002 per share. So with a $5 order fee, any market order for a NYSE stock over 25 lots (2500 shares) actually causes a discount broker to lose money. In contrast, a market order for 100 shares only costs the broker $0.20 to execute, but they charge $5 anyways and thus make a tidy profit.

Interactive Brokers uses a different pricing model – for stocks they charge $0.005 per share regardless of the number of shares traded, with a $1 minimum per trade. This makes small trades much less expensive than
with a discount broker ($1 vs. $5). However, certain large trades which would be loss leaders at a discount brokerage will cost more at Interactive Brokers. Interactive Brokers also charges a $10 per month
data fee for basic US market data which is waived if you generate at least $30 in commissions.

Based on your trading pattern, you should be able to determine if this fee structure is better or worse for you than competing brokers.

Interactive brokers also offers an alternate pricing model called “cost plus” which more directly tracks exchange costs, and allows traders to at least partially capture liquidity-adding rebates that some exchanges offer.

You can read Interactive Broker’s full cost information here.

Available Products

Interactive Brokers offers the widest product range I’ve ever see for any retail broker. They’ve got US stocks, futures, bonds, options on all of the above, as well as nearly every popular foreign stock, bond and futures market. When products are traded on numerous markets (such as with many US stocks) Interactive Brokers will hold memberships on multiple markets and offer “smart” routing to direct your order to the most advantageous market. Alternately, if you have a preference for one exchange (perhaps due to cost+ pricing) you can bypass smart routing and direct your order to your preferred exchange yourself.

Margin & Limits on Accounts

There is a minimum deposit of $10,000 (or foreign currency equivalent) to open an account at Interactive Brokers.

Interactive Brokers Account Types

• cash accounts that can only enter long securities positions, long option positions, and covered short option positions (if that makes no sense to you, don’t worry)
• margin accounts which allow the purchase of securities on margin, short security positions, futures positions and naked options positions
• portfolio margin accounts which allow the same positions as “regular” margin accounts, but use a different method for calculating margin requirements that is typically far more favorable for the customer in the sense of allowing more leverage. Portfolio margin accounts. A minimum account balance of $100,000 is required for portfolio margin and foreign accounts may not be eligible.

Margin accounts require you to pass a credit check I think, or at least to answer some question about net worth. It’s been a while since I signed up for mine.

Before enabling futures and options trading, IB asks the account holder some questions about trading experience. If you answer you have no experience, I’m not sure they will enable these features.

Trading Platform

Interactive Brokers’ trading platform is Trader Workstation, TWS for short. It is Java based and will run on any computer system with a modern JAVA environment (Windows, Mac, Linux, most UNIX-likes). I have personal experience running it on Windows and Linux, and both worked fine. TWS is a very complicated piece of software – its basic functions are order entry, book keeping and charting. In addition it contains a kitchen sink of other features – news feeds, trading assistants for specific types of
trading (especially options stuff), algorithm support for unusual order types etc. If some of this stuff causes
your eyes to glaze over, that’s OK – you don’t have to use it (and I don’t).

Overall, TWS is somewhat clunky (its appearance hasn’t changed in 10 years) but it is usable.

Security

The security features built into TWS seem to be better than most. Account login requires a physical token (a credit card sized card with lots of numbers) which they mail to your house and which must be activated and used every time you login. Connections are encrypted with standard SSL encryption if you so desire.

The physical token is a bit of a pain, but it would serve to keep random hackers (even one who somehow intercepted a login/password pair) out of your account. There are also fund transfer restrictions that should help prevent someone from transferring money out of your account without your authorization.

3rd Party Connectivity

While TWS has a lot of functionality, it’s not the best available software for many applications. For my bread and butter futures trading I use NinjaTrader, which is an add-on charting, trading and automation package that includes several features I like. Third party packages like NinjaTrader connect to Interactive Brokers indirectly via the application programming interface or “API” feature of trader workstation. The API also allows you to program your own automated strategies that run in conjunction with the TWS software if you so desire – obviously you need to know exactly what you’re doing before diving into something like that. There are large numbers of 3rd party packages available that do all sorts
of things, and I’m not going to dig into what all’s available here.

For most users, the API just means that TWS and 3rd party products will probably work together OK. Since Interactive Brokers is the most popular prosumer brokerage, tools vendors pretty much have to support them. There will likely be some minor wrinkles – for example certain tools may only
work with certain TWS versions. But in general you can get everything to play together.

Trade Execution

Issues around trade execution (how quickly your trades execute, on what exchange, and at what price) are very complicated. In general my experience has been that IB offers good execution for most things – better in general than discount brokerages. But they are generally not quite as good as other firms specifically designed for the best execution on one or a small number of exchanges. So if, for example, you only trade stocks you might get slightly better execution via a stock-only prop desk with dark pool access, exchange co-location, cost+ pricing etc. But in general IB is pretty good, and is very good considering the huge number of exchanges they operate on.

Demo Account

Interactive Brokers offers a very functional “demo” account feature along with each real account. This account has $1M of fake money, and instead of executing trades in the market executes them against Interactive Brokers’ simulation engine. Compared to most other paper trading environments the Interactive Brokers demo account is very realistic in terms of the price trades execute at and things like that.
This allows you to learn the features of TWS and test out trading strategies in a more realistic environment without risking any real money.

Customer Service

Interactive Brokers customer service has been consistently professional and helpful in the five I’ve had to deal with them. Deposits and withdrawals have gone smoothly. I have heard this same positive sentiment
echoed by other customers.

On the negative side I have heard a few inexperienced traders say they got a hint of “your ignorance isn’t our problem” attitude from Interactive Brokers. I don’t know the details of any of those incidents or who was in the right.

Financial Stability

Brokerage stability is a very complicated topic. History shows that it’s easy for apparently healthy financial firms to blow up in a startlingly short period of time – rather than go into the details here
I suggest you read my comments on the MF Global fiasco. Brokerage customers, especially those who exceed SIPC limits (or equivilent outside the US), are wise to be cautious. My general perception is the Interactive
Brokers is less likely to take your money than most brokerages based on the following reasons:

1. They have a fairly substantial amount of firm capital “protecting” the customer accounts (about $4.5B last time I checked).
2. Interactive Brokers carries substantial supplemental insurance beyond SIPC via Lloyds of London.
3. Interactive Brokers has survived several negative market events without imploding or showing imprudent losses – 2008 crash, the “flash crash” etc.

One contrary piece of evidence is that Interactive Brokers’ stock price (IBKR)has not fared particularly well the last few years. This is a traditional warning sign of broker financial distress, but in this case I think they’re still well outside the danger zone. I am keeping my eyes on the stock price though,and if it breaks $10 or so I’ll start investigating why.

Overall

If you have an appropriate level of expertise to use the Interactive Brokers software, and their pricing model is attractive for the type of trading you do then they are frequently the best available brokerage
choice. There’s a good reason Interactive Brokers is the most popular prosumer brokerage – in an industry full of cranks and the professionally unsatisfied, Interactive Brokers has mostly happy customers.

That said, new traders will likely have a fairly negative experience with them due to the platform complexity and general “know what you’re doing” attitude.

Full disclosure: I have been an Interactive Brokers customer for about 10 years and have overall had a positive experience. I have no other financial relationship with them.

This review written by W from Off-Road Finance.

• TD Ameritrade Review – The Perfect Online Broker?
• SogoTrade Review
• Scottrade Review
• Fidelity Review – Opening an Online Brokerage Account
• TradeKing Review

Interactive Brokers Review is from Investor Junkie Copyright © Empowering Media, Inc.

“Rich Dad, Poor Dad”, should be viewed as a general starting point, rather than a list of specific items to do as an entrepreneur. Robert Kiyosaki emphasizes on six key points through out the book. It’s the differentiator between his “poor” dad (his real dad), and the “rich” dad that helped him understand business and become wealthy.

1. The rich don’t work for money
2. The importance of financial literacy
3. Minding your own business
4. Taxes and corporations
5. The rich invent money
6. The need to work to learn and not to work for money

The Good

Flawed Educational System

As Robert mentions many times in the book, our traditional educational system is flawed. Our education system is designed primarily to create employees, and could be a negative influence for an entrepreneur. As Kiyosaki mentions, he’s not suggesting don’t go for higher education, he’s suggesting higher education does not assist with “street smarts”. Financial literacy is something that is rarely discussed in school, and if it is discussed only at basic levels. Based upon my personal background, I’ve made this a personal focus, and will make sure my children are well educated in this subject.

The cost of education continues to increase much faster than the rate of inflation. It’s becoming more clear our education system is broken. Robert’s statements about this topic are accurate.

Being An Entrepreneur Is Less Risky

It’s typically stated: owning a business is more risky, than working for someone else. In my opinion, owning a business gives you all sorts of self-reliance skills you will not get when working for someone else. If anything with today’s “cradle to grave” mentality, we are creating more dependent individuals.

Owning a business has given me much more independence, and invaluable skills I could still use if I were to work for someone else. Things I used to consider risky, or could never imagine doing before owning a business, I now do on a weekly basis.

Your Primary Residence Is NOT An Asset

Over the years it was generally accepted that your primary residence was an asset. Robert flat out states (and I believe correctly), your home is not an asset, since it does not generate positive cash flow. The housing bubble and collapse proved this correct.

“Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets”

While rental properties have also gone down in value, if you focused on positive cash flow, you still are bringing in money every month. Robert even states in his book, home values do not always go up.

Pretty much all consumable goods are liabilities, and something even I got tripped up with. He states you should buy investments that generate cash flow to help pay for your “doodads”. I think this is a great way to look at how to purchase your toys.

What is an Asset or Liability?

“An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket.”

A load of naysayers of Robert’s books point out this statement doesn’t follow general accounting standards. This is true, and Robert acknowledges this. The point, which many miss, with this statement is you should be focusing on cash flow get wealthy.

“Wealth is a person’s ability to survive so many number of days forward… or if I stopped working today, how long could I survive?”

This statement I still use today, and devoted few posts about this topic on my web site:

• How Wealthy Are You?
• Does Net Worth Matter?
• How to Become Wealthy

The Bad

There are many reports that Robert’s “Rich Dad” does not exist and was made up. This is more than likely true, but there have been many personal finance books that are works of fiction. The book “Wealthy Barber” comes to mind. The issue some people have with Robert is he makes his book work of non-fiction when it’s not, and I agree with this issue. I do find it interesting on John Reed’s site while he puts down Robert’s work, he’s also selling his own work.

Robert does somewhat downplay the role of risk in the investment suggestions. This is somewhat true, but he does suggest you fully understand your investments before diving in. Robert states investing is only risky if you don’t fully understand what you are investing in.

Summary

While I still recommend this book, especially for starting entrepreneurs, the book has some flaws. Take some of what Robert Kiyosaki says with a grain of salt. It should be read, if not for the motivation, just to get you to think differently than a salaried employee. I don’t love it, or hate and hence the reason why I give this book a 3 out of 5 stars. In my opinion, many topics he discusses hold the test of time.

If you do decide to read Robert’s books, I only recommend reading “Rich Dad, Poor Dad“, and “Rich Dad’s Cashflow Quadrant“. Most of the other books are simply a rehash of these two books. I DO NOT recommend attending any local seminars.

I will keep his book on my list of best personal finance books, for the primary reason to get you to think outside the box.

• The Poor Transfer Wealth to The Rich Via Credit Cards
• “Stop Acting Rich” by Thomas J. Stanley – Book Review
• The Best Self Help Books
• Atlas Shrugged Review
• Review of “The Investor’s Manifesto” by William Bernstein

Rich Dad, Poor Dad Review – Revisited Ten Years Later is from Investor Junkie Copyright © Empowering Media, Inc.

They offer a higher rate of return (over 9.6%) than many other traditional fixed income investments. Compared to other types of investments, you have some ability to manage risk. It’s similar in class to bonds, but is more like if you owned a bank and were the loan officer. You determine which loans you want to approve, and which ones to pass on. Sounds interesting? Keep reading for more details.

Lending Club Loan

Some background on borrowing from Lending Club first. Applicants apply for a Lending Club loan online. They must have a FICO score above 660, which is above subprime. Over two-thirds of the loan applications get rejected by Lending Club. Only a small sub-set of individuals get approved, and is part of the risk management they perform.

Borrowers can apply for a loan from $1,000 to a maximum of $35,000. The interest rate is determined by Lending Club, and based upon the applicant’s credit rating. Rates are very competitive to traditional banks, and currently start as low as 6.78% APR.

The interest rate, and term is a fixed 3 or 5 year loan. All loans are unsecured lines of credit, and no different than credit card loans. Also like credit cards, any defaults are reported to the three credit rating agencies (Equifax, TransUnion, and Experian).

Lending Club Investing

Since this is a blog about investing, lets discuss how to get started. The sign up process as an investor is simple, and takes a few minutes. You can fund your account either via an electronic transfer from your bank, mail in a check, or for instant availability use PayPal.

In my case, I choose PayPal to fund my account, so I also get credit card points. Once setup, Lending Club has the requirement you must invest at least $25 per note. Notes are graded from A1 (lowest risk/lowest rate) to G5 (highest risk/highest rate), with sub grade per rate.

Lending Club Investing Requirements

Unfortunately not everyone can invest in Lending Club, and isn’t available in every state. The requirements are:

• Income Level – In most states, you must have a gross annual income of $70,000 or more and have a net worth of $70,000 or more.  In the state of California, investors must have a gross annual income of $85,000 and a net worth of $85,000.
• Approved States – You can invest if you are you a resident of: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Minnesota, Missouri, Mississippi, Montana, New Hampshire, Nevada, New York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming.
• Net Worth – If your total net worth is great than $250,000, there is no annual income requirement  In the state of Kentucky, investors must qualify as an “accredited investor” under the securities act.
• Asset Allocation – Lending Club investors must not deposit more than 10% of their net worth in Lending Club notes.
• $25 To Start – Only $25 is needed to start.

Lending Club Investing Strategy

Scott Langmack, of Peer Lending Wealth, has an interesting perspective on how to maximize your return, yet minimize your risk. To summarize his info:

• Job Tenure – Look for someone who has a job for a long time (10 years+ being ideal)
• Government Job – Hold some sort of government position in local, state or federal.
• Low Debt to Income ratio – Make sure it is low (sub 30%)
• Debt refinance – Go for primarily people looking to pay off higher interest rates, than the more riskier types of loans (like new business).
• Many small loans – Build up a portfolio of at least 200 notes. The more notes, the more even your portfolio’s performance.  This helps spread the risk out to many loans, should one default. This then means a recommended minimum of $5,000 to invest.

Let me add to Scott’s recommendations. First of all, like Scott, I do not use Lending Club’s automated investment tool. I manually select every note I wish to fund. I filter my selection based upon the following:

• Loan Term – 36 months only. The additional 2%+/- return for 5 year notes in my opinion isn’t worth the additional risk.
• Loan Purpose – I tend to focus customers looking to get a better rate and reducing their debt
• Minimum Length of Employment – greater than 1 year. The longer the employment the better
• Maximum Debt-to-Income Ratio – 30%
• Credit Score – greater than 678
• Interest Rate – All. Though I trend towards selecting the higher rates. You should own a mixture of loan grades to help increase returns.
• Delinquencies (Last 2 yrs) – none
• Reviewed by Lending Club – Yes. I preferred Lending Club has checked them over. It gives a better chance the loan will complete and information is legit.
• Verified Income – Yes. At least as the initial search filter I perform. I also look at unverified income applications.

While I do make exceptions to the filtering, I tend to look at the big picture. The question you should always ask, “Will the individual pay back the loan?” and “Are they a good credit risk?”. If you have any doubt in an application, skip it and find a better one. 

If currently no good applications exist, wait a few days and check again. There is no need to rush the process. Take your time picking what you consider the cream of the crop, then getting stuck with a bad note. Once you purchase a note, it’s not so easy to unload it though there is a secondary market. In most cases, the goal of buying the note is to hold it for the life of the loan.

Lending Club themselves has plenty of statistical information, and so does LendingClubStats.com. Analyzing borrowing trends is something I recommend.

Secondary Market

Should you want to unload a loan, there is a secondary market from Lending Club called FOLIOfn. This is great if you have an bad performing loan, or need cash for other investments. It’s also a great way to pick up notes from others selling.

In my opinion though, this section of the Lending Club site is not to usable in it’s current form, and needs drastic improvement. The searching options are simplistic at best, and unlike their new loan search. If this section was improved, it could definitely increase the liquidity of Lending Club notes.

Lending Club Risks

With any investment, even “secure” ones, you have risk. In summary here are some possible risks when investing with Lending Club:

• Default Risk – Investments are not FDIC insured, and not equivalent to bank CDs or treasury notes.
• Inflation Risk – Similar to bonds since it’s a fixed rate, you have the risk of inflation eating at your returns. Though at the high rate of return of investments, this possible risk is minimized.
• Management Risk – Lending Club’s annual fee is 1%, this rate has already increased from I believe an initial 0.5% fee. This fee could increase in the future.
• Callable Risk – Loans can be paid in full early and affect your return. The downside is you will need to find another loan to replace it.
• Company Risk – The SEC filing shows Lending Club invested $2.4 million from October 2008 to March 2009 to co-fund loans. This represents 24% of loans funded during that period.  What happens to new loans if Lending Club does not invest?
• Diversification Risk – If you have a small amount of loans, (under 100) one default can dramatically affect your overall return. Ideally you should have over 300 notes (otherwise $7,500 or more) invested with Lending Club.
• Liquidity Risk – Loans can be sold on the secondary market, but can take some time to unwind every single note. Lending Club is a long term investment.
• Pricing Risk – Lending Club will properly price the borrower’s risk to default.

With the last issue, you can minimize this risk by specifically picking the loans you want to fund. You don’t think it’s a good loan? Don’t invest in that note.

Lending Club Taxes

Lending Club investments are not considered passive investments by the U.S. Government. This means you cannot lock in the long term capital gains tax rate. Therefore the IRS taxes any profit as ordinary income (unlike stocks).

Lending Club investments might be best suited in a Roth IRA retirement account. It is much more tax efficient than in a taxable account like I currently have. Lending Club does offer IRA investment accounts. To open a no fee IRA, a $5,000 minimum deposit is required.

My Investing Returns

I started with Lending Club in May 2009 with just $1,000 ($925 deposited, $75 in sign-up bonus) in my account. As of today, I have over $7,000 invested and my current NAR is 11.19%. I have over 360 loans, and only 4 have defaulted.

Believe it or not, my performance from my peers in Lending Club is in the 59 percentile, not great and I hope to increase in the next year, with better note selection. The average return is 9.67%, and I’m in that most common statistical grouping.

Peer To Peer Lending Resources

I recommend visting the following web sites to help increase your Lending Club returns:

• Social Lending Network – Peter’s is a great resource for the latest happenings in the P2P lending/investment space.
• Lendingstats.com – Great resource to maximize your Lending Club returns. You can create various filter models to increase your returns. Unfortunately the web site isn’t the easiest to navigate.
• Nickel Steamroller – Has many useful tools such as: portfolio analyzer – get your real APR return, and Secondary Market Portal – makes Lending Club’s FolioFN useable.

Disclosure: I have over $7,000 invested in Lending Club notes.

• Lending Club (July 2011 Update)
• Lending Club (July 2010 Update)
• Lending Club vs. Prosper
• Lending Club (April 2011 Update)
• Lending Club (October 2010 Update)

Lending Club Review. How to Become a Bank. is from Investor Junkie Copyright © Empowering Media, Inc.

I currently manage my personal finances with Quicken 2011 (see Quicken 2011 review). I’ve been an Intuit Quicken user since the MS DOS days. For the youngsters reading this blog, that’s for over 18 years. I unfortunately lost most of my backups from that period (it would be neat to see my savings in 1993 when I graduated college).

From MS DOS, I’ve since moved up the evolutionary operating system food chain to Quicken for Windows. I now run it in a VMware Fusion instance on my Apple OS X computer.

For the non-geeks out there, I do this because Intuit’s Macintosh version isn’t worth using. Let me be clear about this, Quicken for OS X has always been the bastard child. I won’t even consider it an option for managing my finances, for the many reasons mentioned by commentators on Amazon’s site.

Using Mint

Mint was a breeze to initially sign up, and add accounts. I picked 10 accounts, a mixture of banking, credit cards, loans, and investing. All accounts seamlessly downloaded my online data. Every time I revisit their web site my financial data gets updated automatically.

Using Mint on Mobile Devices

Mint offers access to your financial data via their web site, but by your favorite mobile device. They have mobile apps for Apple’s iPhone, Google’s Android, and recently added iPad support. This allow for quick and easy access to your finances on the go. You’ll need to sign up for an account on mint.com first, before you can use the app.

mint.com Apple iPad screenshot

How Does Mint.com Make Money?

The service is free to use, and there are no hidden fees. You might be asking, “How does Mint make money from this free service?” Mint makes their money by offering ways to help save, or make you money by recommending various financial services.

Mint.com service seems to be more focused on catering to the masses. It appears very strong on the budgeting, and tracking expenses. Its investing area, seems somewhat simplistic. Like most of Mint, it is much simpler than Quicken and lacks its many features. 

With the acquisition of Mint by Intuit, it’s obvious this is the future of the Quicken product line. Intuit’s current online version of Quicken was not much of a success, and I assume it’s the reason why they purchased Mint. In addition, Microsoft discontinued Money so there aren’t many other games in town.

Great Features in Mint

• Weekly summaries via Email
• Alerts via Email or SMS page. Mint will alert on pending bills, and ways to save money on transaction fees.
• Mobile access via the FREE iPod Touch, iPhone and iPad version. It provides you with a great snapshot of your finances.
• Automatic download of account transactions

Issues with Mint

• Lack of advanced features (though they are catering more to lower end users). Their investing section is OK at best.
• Security. I understand their security setup. What concerns me is the centralization of so much data by itself. This can be very useful for a hacker. You can’t write checks or purchase stock, but that’s not the issue I’m concerned about. It’s the disclosure of any financial information in one central location.
• Backups. With many web 2.0 services, you are relying on them to perform proper backups. While in this case no critical data can be lost (account data is stored with the bank), but setup of categories, alerts are stored with Mint.
• Assignments to income/expense categories are not always correct, and sometimes-manual intervention is needed.

Is Mint Secure?

I think locally installed applications like Quicken are going the way of the Dodo bird. I know, call me old fashion, but I like having all of my data locally within Quicken. I do think a hybrid, of local and remote application (cloud based) like Mint.com is the future of this industry.

Since I’m in the technology industry and deal with security all the time, I know the risks of leaving security to a third party. Mind you, I’m not saying Mint is insecure. In many cases an individual’s desktop computer is much less secure. Of course for Mint the perception of security is their biggest adoption road block.

While I use Quicken as our primary method to manage our finances, I have also outgrown Quicken. Recently, I’ve been creating Microsoft Excel spreadsheets for managing parts of my portfolio. Specifically I manage our precious metals, and security bucket (which is primarily fixed income). Quicken, or any other application for that matter, do not seem to have tools to help manage these areas of your finance. To manage these assets, I wind up transferring the total amount into a Quicken account.

Summary

Mint is great for creating, and tracking your budget. It’s great you can get alerts via Email to ensure timely bill payments. It’s unfortunate that Mint’s investing area is very weak for all of but the basic investors. Mint unfortunately does not have many of the great features Morningstar has tools create a balanced portfolio. While Morningstar’s service is great (I use the service myself), it charges a yearly subscription fee. It might be possible for Mint to figure out a way to offer the same services for FREE. For me, I’ll continue to use Mint for its basic budgeting features. Since Mint.com does not cost anything to use, you might as well signup and give it a spin.

• Quicken 2011 Review. Win a FREE Copy.
• Morningstar Review – Premium Membership
• Fidelity Review – Opening an Online Brokerage Account
• TurboTax Review
• My 2010 Year In Review

Mint.com Review – Should I Use Mint? is from Investor Junkie Copyright © Empowering Media, Inc.

The signup process to TradeKing was easy, but unfortunately funding can take up to seven days. I wish their funding process was easier. Once funded though, the rest of their service was great. I’ve been a TradeKing customer for over one year, and this is an update to my original review.

TradeKing’s Commissions and Fees

As of January 1st, 2012 TradeKing requires at least some annual activity with any account. If not they have an annual charge of $50. The requirements are minimal:

• The combined account value of the household account(s) is less than $2,500
• No commission-charged trades have been executed in the account(s) during the last 12 months

If you have less than $2,500 to invest, my suggestion is you shouldn’t investing yet anyways.

Security

Their login process via a web browser (not by a mobile device mind you), is somewhat security conscious, but also somewhat of a pain. You must use a mouse and click on a screen keyboard to enter your password.

I understand the purpose of this security process (it prevents hackers from gathering your password from what you type), but it’s not fool proof. There are reports of viruses that grab your entire screen session, and unlike Treasury Direct with the keyboard is random; the virtual keyboard is the standard ‘qwerty’ format. At minimum they need to grab your mouse x and y coordinates. For the utmost in security you should do your financial transactions in a dedicated virtual machine.

So while they are slightly more secure than some of the other discount brokers, the best type of security would be RSA based key fob like E*Trade offers.

Customer Service

Smart Money rated TradeKing #1 in customer service in 2010, and gave them a 5 out of 5 rating. For those who want to talk online, they offer an online chat option from 8 AM – 6 PM Monday through Friday. Every time I’ve contacted TradeKing’s customer service, they were quick to respond, and able to resolve my issue quickly.

Trading Tools

TradeKing has a wide range of tools available to long term investors and active traders. It has:

• Options Pricing Calculator
• Probability Calculator
• Profit + Loss Calculator
• Options and Strategy Scanners
• Stock, ETF + Mutual Fund Screeners
• Maxit Tax Manager
• Technical Analysis
• TradeKing LIVE

From 2008-2011 Barron’s rated TradeKing best for options traders. TradeKing has some of the lowest options pricing available.

TradeKing recently introduced TradeKing LIVE which is their new streaming platform. You can stay on top of the latest market changes, and your investments. It is completely browser-based so there is no software to download and install. TradeKing LIVE is only supported in the Safari, Google Chrome, Firefox 4+ web browsers. They unfortunately do not support Internet Explorer, which is odd since it’s still the most popular browser.

Unlike others TradeKing does not offer research reports, or access to Morningstar analysis. Though the rates are so cheap you can easily afford a membership to Morningstar Premium Membership .

Education

TradeKing’s education center is comprehensive. It covers all of the investments they offer: stocks, options, bonds, mutual funds and ETFs. They have an especially great options section named “The Options Playbook”. It’s not uncommon they have 3 to 4 live webinars every month on various investments subjects. This is a much different experience I’ve had with some of the other brokers. In a way it’s smart of them to do this, so you are using their trading platform more often.

Social Network Investing – Trader Network

Another aspect that makes them unique is their social network named “Trader Network”. This is what makes them different than other discount brokers. TradeKing has over 200,000 members in their network. It’s where investors can connect with one another, share experiences, ideas and strategies; see what others are trading and how they are performing. You can see what other investments are popular, and what other insights other investors can offer. For those interested, you can see my trades on TradeKing’s network.

Mobile Trading

TradeKing has two smartphone apps: Blackberry and iPhone. I previously discussed the iPhone app, and unfortunately no longer own a Blackberry to do an adequate review. They will soon be offering an iPad, and Android version in the near future.

If you don’t have any of these mobile devices, they do offer a simpler mobile edition of their web site. The mobile features are somewhat limited, but you have enough features to do basic trading. I suspect their iPad edition, similar to other discount brokers, will have more features.

TradeKing Summary

TradeKing has great pricing, great customer service, helpful online training, and adequate mobile integration. For a trader who needs low cost, and no hidden fees – TradeKing is hard to beat.

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TradeKing Review is from Investor Junkie Copyright © Empowering Media, Inc.

Investment Options

TradeMONSTER offers a variety of investment options all with strategy in mind. Whether you are looking to invest aggressively or prefer a more conservative investing approach, tradeMONSTER offers investing options to help you create a diversified portfolio. Investment options include stocks, bonds, futures, options, mutual funds and ETF’s.

The Trading Platform

TradeMONSTER offers an easy to use and customizable trading platform.
Trading Tools:
TradeMONSTER has a variety of tools available to assist customers in making the best investment possible in order to meet personal needs. Available tools allow investors to easily make an exit plan with each trade, research their options thoroughly before investing and keep tabs on personal trades. The technology behind their sites tools rivals many of their competitors. Here is a closer look at some of the tools tradeMONSTER investors have available to them.

• The Basics – Real time quotes, charts and more.
• Performance Track – This advanced tool allows investors to create their own trade tags to easily see their current and past positions, evaluate performance of each trade and more.
• liveACTION – This trading tool is a scanner that searches for the best trading opportunities available personally for you on the market. It does the work for you, searching through databases to find exactly what you are looking for.
• strategySEEK – This tool takes users through three simple steps to determine a trading strategy that is right for them. It looks at the users risk priorities and uses inputted data to find matching investment strategies.
• Snapshot Analyses – This trading tool allows platform users the ability to assess their risk vs. reward before making the investment. Investors will be able to see what the probability of profiting on the trade, what the risk is and more.
• Trade Simulation – This tool allows users to take their current portfolio and hypothetically add in a stock or option position in order to practice and develop stronger strategy skills.

Education And Resources

TradeMONSTER offers a vast menu of educational resources for their traders. Beginner traders will find numerous articles and other educational tools to help them understand all the basics to get started. Whether you are a beginner trader or have years of experience you will find webinars and other live events along with a trading glossary and a blog to help you learn all you need to know to become an expert in the trading market.
TradeMONSTER’s learning center also offers a virtual trading account called paperTRADE that allows customers to test their skills, develop new strategies and get a better understanding of the ins and outs of trading.

Pricing

TradeMONSTER offers customers competitive straight forward pricing that is easy to understand with no hidden fees. The minimum amount required to open your account is just $2000.00 in cash or securities. Additionally, there are no platform or maintenance fees and no charges for inactivity or a low balance for you to worry about.

Customer Service and Support

Customer service is provided by a trained staff that has vast knowledge and experience and is there to answer all of your questions. They can be reached during the week M-F by either phone, email or through live help.

Awards And Recognitions

Even though tradeMONSTER is fairly new to the industry, they have made themselves well known in a short period of time and have been recognized for their accomplishments. Two years in a row the company has been recognized by Barron’s with a four star review and named best for options traders.

Summary

TradeMONSTER is usually most noted for its competitive, discount pricing. The variety of products and high tech tools also bring notoriety to tradeMONSTER. The $2000.00 minimum account start up deposit may keep some beginner traders away, but for seasoned investors it is a company to highly consider.

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tradeMONSTER Review is from Investor Junkie Copyright © Empowering Media, Inc.

Investment Options

OptionsXpress offers customers a large array of investing options. It is a one stop shop for most investors offering stocks, bonds, options, futures, mutual funds, EFT’s and more. As an added bonus, no matter what your investment choice is, your trades are all made from the convenience of one account.

Features

OptionsXpress has numerous features and benefits available to their customers. To start with they offer an easy to navigate on line trading platform, a variety of trading tools to help traders choose investment options that are right for them and an advanced educational center offering a library of resources not found anywhere else. Additionally, customers have the ability to make trades from the comfort of their own home or on the go no matter where they are from most cell phones.

Trading Tools

OptionsXpress offers some of the best and easiest to use trading tools in the business.
Navigating Tools: The easy to navigate menu makes it simple even for the novice to get their account up and running. Easy access to thousands of investment opportunities are right at your fingertips. Depending on your investment needs you will be able to choose the options that best suit your lifestyle. The Dragon Tool allows customers to enter their trading criteria and will then search for the top 50 investments based on what is entered.

• Strategy Tools – Additionally, you will find strategy tools including detailed pricing tools to help you calculate costs as well as basic and advanced charts, trader calculators and more to help with market analysis and to help guide your trades. Traders are able to use a comprehensive trading approach to assist them in finding the best investment options on the market.
• Personalization Tools – Traders are also able to create a personalized list of all of their investments made through optionsXpress. The list can be customized to trigger market alerts, give updates in your position, and more.

Customer Service

Customer service is available to all traders whenever they are in need of some assistance. Both online support and phone support are offered.

Education And Resources

Whether you are a beginner or a seasoned trader, OptionsXpress account holders have access to a free Educational Center offering a variety of training opportunities. Customers will find everything from live events in the form of on line webinars to on demand training with countless videos, charts and more to help the beginner to the most advanced trader learn the ins and outs of trading strategies and more. Traders also have access to a daily newsletter so they can keep up to date at all times on everything from changes in the market to new tools, account features and more. You will also find a virtual training program that can be used to brush up your skills before you risk your hard earned cash.

OptionsXpress Trading Fees and Commissions

Competitive pricing is what optionsXpress is all about. Pricing is straight forward and offers:

• No account minimums when you open an account or to keep your account open
• Free streamlining quotes
• No platform fees
• No broker assistance fees
• No inactivity fees
• Free paper statements
• No maintenance fees

optionsXpress Awards

OptionsXpress receives ongoing industry recognition and high ratings. Barron’s annual broker survey has given them a 4 star rating for 10 years in a row. In 2011, Kiplinger’s gave them a 5 star rating for their competitive pricing and Options named them the broker of the year for 2010. They have also been recognized in the past by Smart Money and Forbes.

Summary

OptionsXpress offers a user friendly one stop shop for investors who are looking for a simple way to invest in multiple funds. Selling points include no account minimum, low fees, one account for all trading, a straightforward and easy to navigate trading platform and more. Additionally OptionsXpress offers an extensive education and training center free to their customers. Beginner and seasoned traders will be impressed with the ease and low cost of trading with optionsXpress.

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optionsXpress Review is from Investor Junkie Copyright © Empowering Media, Inc.

How Does Betterment Work?

Betterment operates like other typical brokerage accounts, similar to the popular TD Ameritrade or E*Trade. Stocks and bonds are held in the form of an exchange traded fund, or ETF. The way Betterment is designed, you have access to a lot of automated options, and the process is streamlined so that it requires little day-to-day involvement. It’s kind of set it and forget it, compared to traditional investing.

You visit the website, and respond to a series of short questions about their investment needs. There is also a slide bar that allows users to set the allocation of their assets (ie: 60% stocks with 40% bonds). Once the choices are selected, you must then link their personal checking accounts to your Betterment account. Money can be transferred into the Betterment account whenever you desire.

When money is moved into the account, Betterment will then automatically purchase exchange traded funds (ETFs). The purchases will be made based on the way the user set their asset allocations. Selling the investments is also made simple. Betterment will sell the trades for you. The dividends earned will be automatically reinvested. Each quarter, any portfolio that is off by more than 5% will be rebalanced.

The bonds being offered on the site are iShares Barclays TIPS Bond ETF (TIP), which are 100 percent Treasury-Inflation protected bonds. The stocks being offered to Betterment account holders are essentially a basket of EFTs including:

• 20% iShares S&P 500 Value Index ETF (IVE)
• 20% iShares S&P 1000 Value Index ETF (IWD)
• 20% Vanguard Total Stock Market ETF (VTI)
• 15% iShares Russell Midcap Value Index ETF (IWS)
• 15% iShares Russell 2000 Value Index ETF (IWN)
• 10% SPDR Dow Jones Industrial Average ETF (DIA)

There is some asset allocation overlap with the selection of ETFs, and I would like to see some additional ETFs and asset classes currently not available. Though this should be adequate for someone investing less than $200,000.

Betterment Fees

At this time, Betterment does not have a minimum balance required for investing. Commissions are not paid on each trade. A flat rate of 0.9% annual management fees is required, plus the ETF management fees average around .20%. So you are approximately paying 1.1% annually for using their service, not bad, but not great either. Though the more you invest, the fee gradually decreases till any account with over $500,000 the annual fee is 0.3%.

This fee structure translates to about $45 a year on an account with $5,000 balance. Lower balanced accounts, like those with just a few thousand dollars to invest, may find Betterment to be a better deal as the fees will be less.

Caveat Emptor for Consumers

There are some precautions that should first be heeded. Many of the Betterment’s marketing materials advertise Betterment to be “better than a bank”. This can be a misleading phrase for novice investors (the audience they target) as Betterment is not a bank. The money being put into a Betterment account will be invested into stocks and bonds, not saved like a checking or savings account from a bank. Principal can be jeopardized with failing investments. So it is important to differentiate these facts before opening an account. Though with the current rate of fixed income investments from FDIC insured banks, I’m not sure how safe investing in traditionally “safe” investments really is. Right now you stand to lose money in real terms (after inflation), which in reality is the same having a negative return in a stock or bond ETF.

There has been some criticism that such differentiations have not been made clear to new users. While there are disclaimers and legal information contained on the site, there is a push for such data to be more concise and easier to find. There is also concern over the security of funds as mentioned on the site – specifically that the company is a member of the Securities Investor Protection Corporation (SIPC). The message continues to state that ‘securities in your account are protected up to $500,000’.

The SIPC is not to be confused with the FDIC, which insures the assets in banking institutions. The only thing the SIPC covers is the restoration of assets if the brokerage firm ends up declaring bankruptcy. This can be another unclear point for potential users.

Summary

Betterment might be a good starting point for young investors. It helps teaches the ropes to investing, and proper asset allocation. This in my opinion is a “good thing”, as too often I hear about inexperienced investors with poor, or no asset allocation. Their fees are low enough if you have a less than $10,000 to invest, their pricing is reasonable. The fees are much lower than if you were to higher a professional money manager.

The entire system relies on its automation so user interaction is minimal. Betterment only requires users to sign on, select their allocations preferences, and transfer their money from a checking account. The website is designed to do the rest including the purchasing of funds, selling of funds, and the rebalancing of portfolios on a quarterly basis.

There is a need to be cautious as the website promotes its services to be as simple as an bank account. But there is a big difference in placing money into a checking account and putting money into a Betterment account – primarily that the Betterment account comes with risks and no matter how low those risks are, users can still lose their money.

For the more advanced investor, Betterment isn’t the right service for you. If you can roll your own asset allocation, there is no need for using a service like Betterment. The more advanced investor will do better, and save money in commission fees if they use one of the top discount brokers we recommend: TradeKing or OptionsHouse.

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Betterment Review is from Investor Junkie Copyright © Empowering Media, Inc.

OptionsHouse Trading Fees and Commissions

OptionsHouse has one of the lowest pricing structures. One of the benefits of OptionsHouse does not charge an additional fee for broker assisted trades. In addition, they have any annual maintenance fees. Here is a breakdown of the fees you can expect on their platform:

OptionsHouse Benefits

Among the veritable sea of online discount brokerages available, it’s difficult to make your mark on the trading market but that doesn’t stop OptionsHouse. Owned by PEAK6 investments, a powerful financial services firm, OptionsHouse offers one of the most powerful and technologically advanced trading platforms available to the general public.

OptionsHouse’s trading platform can be a bit overwhelming at first glance, but is fully customizable. Their trading platform is similar to what a professional trader would have access to. You can rearrange, remove or add anything that might be going on on the trading floor right into your OptionHouse trading platform. All the activity in the trading platform is streaming, and real-time so you won’t miss a thing. The platform is quick and responsive to use. The other advantage with their trading platform there is not software to install on your desktop. In my tests it no only worked on all major web browers on Windows, but also Macintosh.

Research Tools

With the powerful platform at OptionsHouse come some of the best research tools I’ve ever seen. The list of tools is extensive but includes; a Risk Viewer, a Call Spread Investigator and a Profit and Loss Calculator.

The Risk Viewer can be used to better understand, and estimate potential risks in your portfolio. The Call Spread Investigator can be used to find potentially high return call spreads. The Profit and Loss Calculator to estimate the return on potential trades.

There is also the Trade Generator which will produce hundreds of options trades to choose from that match your exact criteria.

Virtual Trading Platform

But the most powerful tool that OptionsHouse has to offer which is hard to find anywhere else is the Virtual Trading Platform.

This Virtual Trading platform is available to you upon account creation even if you haven’t funded your OptionsHouse account. In this virtual environment, you are given access to a fully functional duplicate of the OptionsHouse powerful trading platform but with virtual parameters that mirror the live market. You are given $5,000 in virtual cash and are allowed to do whatever you want. In this virtual environment you can trade options and stocks while honing your skills, and building your strategy without any of the risk of trading in the live platform with real money. You can fund your virtual account with more virtual currency as you go and there are no barriers to what you can do. This is an extremely powerful tool for the beginner investor to build confidence and learn how trading is done. The weathered investor can use this tool to experiment with new business sectors or build strategy.

Apart from these impressive tools, OptionsHouse also offers free web tutorials on using their platform, investment coaching and free web seminars on a plethora of investing topics.

OptionsHouse iPad App

OptionsHouse has mobile app so you can trade anywhere. It recently announced it has a fully functional iPhone, iPod Touch, and iPad app to compete in the mobile market. From the app itself you can; access streaming quotes, trade stocks and options, trade spreads, monitor positions and orders, search companies and symbols, trade chain options, view quote charts and even use the virtual trading platform.

For other mobile devices, OptionsHouse does have a fully functional mobile website where you can do everything that is possible from the desktop browser based OptionsHouse website. This mobile version of the OptionsHouse website does require a modern mobile web browser.

Is OptionsHouse Right For You?

Even if you’ve already established yourself with another online discount brokerage, the trading platform and research tools provided by OptionsHouse are unparalleled. Opening an account just to take advantage of these tools could give you the edge you’ve been looking for to breath new live into your old portfolio.

If you’re still shopping brokerages, seriously consider OptionsHouse based on their competitive rates and impressive barrage of tools to cut through the confusion of online stock and option trading.

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OptionsHouse Review – Unparalleled Trading Tools is from Investor Junkie Copyright © Empowering Media, Inc.

I’ve been a satisfied customer of SogoTrade since mid-2007. The organization has been quite good throughout this entire time period, especially considering that it has changed ownership recently from Genesis Securities to Wang Investments.

I started out using SogoTrade very heavily in 2007-2008 when I was just learning investing, and honing my investment strategy. Back then, I was mostly investing in individual stocks and ETFs, so SogoTrade worked perfectly. However, in the past year and a half, I’ve refined my investing strategy to a passive investing approach that uses only low cost index mutual funds, and ETFs.

Since Vanguard is without a doubt the low-cost leader in index funds of this nature, I’ve moved most of my investments from my previous discount broker (see Vanguard review) accounts. The only investments left in my SogoTrade account are several index ETFs I am holding, and some individual stocks I play around with as part of my “play money” fund.

Enough about my history though, let’s get down to business and discuss the various characteristics and features of SogoTrade.com

SogoTrade Account Options

To date, the only type of account I’ve held with SogoTrade.com is an individual, taxable stock trading account. However, SogoTrade offers the following types of accounts from which a person can choose.

• Individual, taxable trading accounts.
• Traditional and Rollover IRA’s.
• Educational Savings Accounts (ESA’s).

SogoTrade Investment Options

Within my individual, taxable trading account (mentioned above), I have only so far invested in individual stocks and ETF’s. However, SogoTrade.com offers the following selection of investments from which to choose.

• Stocks.
• ETFs
• Margin accounts
• Fixed income (bonds) and CDs
• Money market mutual funds and regular mutual funds
• Stock/ETF options

SogoTrade Fees and Commissions

As is often the case in today’s investing environment where we seem to have many different brokerages competing for our business/money, the fees, commissions, and account minimum details are really what drive people’s decisions about which investing house to go with.

Listed below are the all-important fine-print cost details for SogoTrade.com:

• $3 commission (the lowest price I currently know of) for buying and selling stocks and ETF’s listed on the major stock exchanges. Shares can be bought using limit or market orders.
• $5 per options trade, with an added fee of $0.50 per options contract.
• No recurring/periodic account maintenance or inactivity fees on individual, taxable accounts.
• 6.50% annual margin interest rate.
• $500 account minimum.
• $15 commission for buying and selling no-load mutual funds.
• $5 for a paper version of your account statement. Free to receive online.
• $30 annual IRA fee. No fee for opening an IRA.

Visit their web site for the complete listing of SogoTrade’s fees. They also feature a very nice comparison of their fees to other major brokerages.

Online Account Interface and User Experience

Overall, SogoTrade.com’s online account/user interface offers the tools you need to execute trades without many added bells-and-whistles (which is what you’d come to expect from a low-cost leader in online stock trading).

Once you fill out all of the account sign-up forms and log in to your account, you’ll see a screen like the one in the image pasted below. Shown on this “starting” screen are the normal account details one would expect to see, including your cash balance, market value of your holdings, amount of cash you have available for trading, and total account equity. The screen also shows the current status of any open stock trading orders you have as well as a snap-shot of your portfolio positions and the market value over time of your total portfolio.

In order to get a more detailed view of what’s going on with your portfolio holdings, you can navigate on the “start” page to the “account” drop-down menu and click the “account positions” menu selection. When you do this, a screen similar to the one in the image below appears.

Along with showing the normal investment holding details (ticker symbol, price per share, no. of shares, total purchase cost, market value, and % and $ value gain/loss), one fairly interesting feature of this tool is that it displays a pie chart that shows a breakdown of your portfolio by long and short positions. As you can see in the screenshot below, I don’t currently have any short positions, however, this is a very useful tool to quickly capture the overall components of your portfolio.

Another important SogoTrade online account feature that I almost always have to use at tax time to tally up my stock gains/losses each year is the “account history” menu feature. An example of what this feature looks like is shown below. Using this feature, you can look up your stock purchase, dividend, commission, and selling records from a two year period.

Summary

To conclude, as I mentioned in the opening of the post, SogoTrade.com is currently my preferred method/brokerage for purchasing individual stocks because they offer stock trading at a low $3 commission. This is the lowest I’m currently able to find.

However, being a low-cost leader in stock trades, you should not expect a lot of extra “bells-and-whistles” or help researching which stock to buy. SogoTrade assumes that you have done this research independently. Additionally, SogoTrade is not the best/lowest cost option for purchasing mutual funds. If you are looking to invest in that type of security, I would recommend either Fidelity or Vanguard, since these brokers provide low-cost mutual funds, many of which carry commission free-trades.

Readers: Have you used SogoTrade.com? If so, what type of trading do you do with them? Mutual funds, options, ETF’s, or individual stocks? Do you know of any discount brokers that offer cheaper stock trading than SogoTrade’s $3 commission-trades?

This guest review was written by Jacob with My Personal Finance Journey.

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SogoTrade Review is from Investor Junkie Copyright © Empowering Media, Inc.

Basic Investment Accounts

Schwab’s standard brokerage account gives you access to virtually all stock, bond, ETF, and mutual fund investments that come standard at any major brokerage. You can access your account, and make trades online at Schwab.com, through the automated phone system, or with a live person. The account has no standard service fee. The account unfortunately requires a $1,000 minimum balance.
As a Schwab customer, you are also given free access to a variety of investment analysis tools. I can take a deep dive look at the fundamentals, or technical analysis of any major investment. I am also given access to investment reports from several other institutions such as Credit Suisse, Reuters, Ned Davis, Standard and Poor’s, and Market Edge.

Standard Rates

All automated phone trades have a $5 additional fee. Live broker assisted trades have a $25 fee.

Charles Schwab 401k – Retirement Accounts

I have both a Rollover IRA, and a Roth IRA with Charles Schwab. The accounts work just like a standard brokerage account outside of the tax implications of contributions and withdrawals.
Rolling my old 401(k) into the new IRA was an easy process. I just called up Schwab when I opened the new account, and their customer service representative took care of everything. Checks were mailed to me. All I had to do was mail them, or drop them off at my nearest Charles Schwab branch.

StreetSmart

In addition to standard online trading tools, Schwab customers can get access to StreetSmart.com and StreetSmart Edge. These professional trading platforms give live market data and the ability to enter more complex trades. This is free for customers that meet a minimum account balance.

StreetSmart allows for customized views, technical trader graphs, live option and bid ask data, and trading in one location. Many active traders use StreetSmart constantly during trading hours. The application also gives you pop up messages when trades conditions are met or alert conditions are met.

Schwab Mobile

Android, iPhone, iPad, and Blackberry users get an added perk for free. You can view account balances, transfer funds, contact customer service, enter trades, and deposit checks using the mobile application. I have found that I do not use it very often, but it makes life easy when I need it. If you are an active trader, their mobile apps will make your life much easier as you can research, and enter trades on the go rather than being tethered to your computer.

Charles Schwab Bank

A major benefit of using Schwab as a brokerage is Schwab Bank. Schwab Bank is an online only bank that operates similar to ING Direct or Ally Bank. The accounts have a much higher interest rate than standard brick and mortar banks. With Charles Schwab checking, you can write checks to pay your monthly bills.

The biggest perks of Schwab Bank:

1. Other bank’s ATM fees are automatically refunded, so you can get cash virtually anywhere, including internationally, at no cost
2. You get a check book and can write real checks (all checks are free)
3. You can make deposits by mail with pre-paid envelopes or the Schwab mobile app
4. Your checking and savings are linked to your brokerage accounts for instant transfers

Where Schwab Really Wins – Customer Service

I have only had positive experiences with Schwab customer service. My personal consultant, named Melanie, promptly answers any questions I have about my account. When I opened my new retirement accounts, she helped me find mutual funds and ETFs that I could buy with no fee. When I needed to update information in my portfolio, she pointed me to the right people. She is a great asset and is familiar with my portfolio and position. And, because it is Schwab, her advising and help is all free.
My Schwab Bank and rollover services were just as professional. Everyone has been friendly, helpful, and courteous. I do not have a horror story to tell you. I have never had a fee that I did not expect. I never had to argue. Everything was done right the first time.

Disadvantages of Schwab

Honestly, I have not had any real downsides in my experiences with Schwab. I do not have a brick and mortar location that I can use for banking, but I expected that when I signed up for Schwab Bank.
Some specialized departments, such as the cost basis analysis group, you have a wait time for customer service requests. I have never had an urgent request with a small group, however, so it has never been a problem for me.

A place Schwab could improve is the main website at Schwab.com. Everything is there and easy to find, but the interface could be modernized a bit to make finding information a bit faster.

Summary

I highly recommend Charles Schwab as a full service institution. I only have good things to say about every interaction I have had with the company and its staff. They are the Nordstrom of the investment world, and customers virtually always leave happy.

This guest post has been brought to you by Eric of Narrow Bridge Finance.

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Charles Schwab Review is from Investor Junkie Copyright © Empowering Media, Inc.

Zecco Products and Services

Zecco is a full service online brokerage. They offer nearly every financial service you will need and all at a low cost from their $4.95 stock trades and ETFs to low cost options, bonds and CD’s. Zecco’s products for retirement include IRA’s of all kinds, multiple investment vehicles for your IRA accounts including mutual funds, bonds and options and any trades come at the same low cost of $4.95. IRA’s are subject to an annual fee of $30.

Forex trading is also offered at Zecco; however Zecco only trades in the US market.

Zecco Stock Screener

For researching, Zecco has a set of “Screener applications” that help you choose investments based on any number of criteria including market cap, sector and yearly performance. These Screener products come free with any Zecco account and can be used to screen stocks, mutual funds and ETF’s to help you find the right choices for you and your situation.

Screens you create can be saved for later use, altered, or even shared with other Zecco members and products can be purchased directly from the Screener interface.

To get even more advanced during your buying and selling activity, Zecco has options strategy builders, stock and options research tools, interactive charts, lists of the top gainers and losers in the market and tax optimization software. With the exception of the tax optimization software, all these tools are free with every Zecco account.

For the day or serious traders there are desktop tools that display streaming quotes, alerts and tools for advanced analysis of stocks. These tools are premium features of Zecco and come at a monthly cost.

On the Forex side, you can open a practice account and play with virtual money to learn how Forex works.

Ease of use

Zecco’s interface hasn’t changed in some years, but it has always been easy to use and pleasing on the eyes. In the trading center, you can customize the interface in a number of ways, and select which section displays for you when you first log in. There you can transfer funds, access account records, download all your data and view statements as well as handle your various trading activity.

If you don’t like logging into Zecco and want to get right to trading they also offer a browser extension called Zap Trade that allows you to make trades quickly right from your web browser.

One feature I’ve always felt was done just right is Zecco’s watch list. The watch list can be filled with all the companies you have an interest in and there you will see an at-a-glance view of their activity. This can be changed between the short display that shows the stock symbol, full name and basic trading activity, and the detailed display that gives quantity, ratio and yield information.

Where they stand out

While Zecco no longer offers zero commission cost trades, they are have competitive prices that match or beat many of the other online discount brokerages out there including: Scottrade, Fidelity and E*Trade. They excel in customer service and can be contacted via phone, email or instant chat on their website for 24/7 support.

Their biggest asset is their mature, and well developed community called Zecco Share. Their community consists of over 300,000 members; day traders, certified experts and novices that all share information as well as their trade history. You can ask anything you want, and be certain that someone will give you a good helpful answer.

You can also take a peek at some of Zecco’s star traders, and see what they are buying or selling. If you haven’t traded before and grow tired of mimicking Warren Buffet, pick a mentor on the Zecco Share community and follow their lead.

The Zecco Share is much like a Facebook for the Wall street crowd and offers the ability to follow members, private message, chat and discuss anything you choose. Even the CEO of Zecco is part of the Zecco Share community and has his own blog where he shares information about the market and Zecco activities. They have also recently introduced Zecco Facebook were you can also connect to their online community.

Where They Lack

With everything mobile now, Zecco now offers a iPhone app called the Zecco Mobile Lite that was recently launched, and leaves users of other mobile platforms out. The Zecco online platform can be accessed through any fully functional mobile browser but a full function, multi-platform mobile app would then match with other discount brokers are offering.

Overall Zecco came out of the gate as a hit with their zero commission cost trades. Since that time they have had to change things up but have grown into a strong choice for discount online brokerages boasting one of the largest online communities of traders and still coming in at a lower cost than many other brokerages out there.

This has been a guest post by Jesse Michelsen of PF Firewall.

• Zecco Announces Zecco Elite
• Zecco Trading No Longer Free
• ShareBuilder Review
• SogoTrade Review
• E*Trade Review (Updated 2011)

Zecco Review is from Investor Junkie Copyright © Empowering Media, Inc.

The card is issued through Barclays Bank. The application form states only 1% of US residents will meet the Black Card qualifications. Though there have been reports of others in lower income levels that have been accepted. To add to the exclusivity, prestige and uniqueness, the card itself is made out of carbon.

Visa Black Card Requirements

You must spend at least $50,000 per year with your credit cards, and must have outstanding credit. If unsure, you should be monitoring your credit score. In our family we charge everything to our credit card, but pay it off every month. So this dollar amount is not completely outrageous for a high income household. They don’t specifically state any income requirements, but I would assume in the upper 5% of all income earners. At the time of this writing, the APR is 14.99%. I would assume you’ll pay this card off monthly, and not carry a balance.

Low Introductory Rate on Balance Transfers

When opening a Black Card account, you can transfer over your existing balances at a low introductory rate. At the time of writing, they are offering 0% APR for all transfers for the first 15 months.

Visa Black Card Concierge Service

Need tickets to the Superbowl? No problem, just contact their 24 hour concierge service. They will try to accommodate any thing you desire including: entertainment planning, business services, gift arrangement, travel information and assistance. It’s like having your own personal assistant. If you do use such services often, the $495 fee will pay for itself in no time. In my opinion, this is what makes the card worth it’s annual expense. The hiring of a personal assistant would cost you much more than their annual fee.

Visa Black Card Fees

The credit card carries an annual fee of $495. While to high income earners it’s not a lot of money, it’s still somewhat expensive. If you charge over $50,000, there have been reports this fee can be waived.

Visa Black Card Rewards

You get 1% cash back or points for use on travel purchases, with no black out dates. You also have VIP access to over 600 airport lounges worldwide. You also get various luxury gifts. One commentator got a Chanel handbag, which they estimated to be worth $300. I assume the gift sent is based upon your spending habits.

Visa Black Card Commercial

Now for some eye candy. I think the commercial they developed for the product was executed very well. It fits perfectly to the target audience, and adds to the prestige of the card. For those who are interested, they have a behind the scenes video for the commercial.

• Fidelity Investment Rewards Visa Card Review
• Responsible Credit Card Use
• How To Stop Credit Card Offers
• Exclusive Credit Cards
• The Poor Transfer Wealth to The Rich Via Credit Cards

Visa Black Card Review is from Investor Junkie Copyright © Empowering Media, Inc.

The book has had a recent resurgence, because of the events in the past 3 years. With government bailouts, Cash for Clunkers, TARP, TALF and other alphabet soup government programs, it’s no wonder. For those not familiar with the story, it could be taken directly from today’s headlines (though the book was written in 1957). It could be said Ayn Rand was somewhat a modern day prophet with her novel.

The book follows the main character Dangy Taggart, who is the Vice-President in charge of operations for Taggart Transcontinental. Traggart Transcontinental is a successful railroad company that’s been in existence for many years. The plot dives into an ever increasing government who wants to control greed, and make everyone equal in society. Though something odd keeps happening. Leaders in their respective fields keep disappearing or just quit. Business and entertainment leaders leave with no fair warning. They are effectively “going on strike” against the higher taxes, and increased regulations from government. As government increases more of it’s role, so does the increase in disappearing productive people. There are an increasing amount of “looters” or “muchers” in the book taking away other’s free will. The book topics can be very complex, and much more than what’s discussed superficially in this review.

The book is a complex story with many different sub-plots and story lines. You have crony capitalists like James Taggart, and Orren Boyle who are working with the government for their own personal gain. Characters like Hank Rearden spent most of their life working on creating a new metal that’s stronger and lighter than anything currently seen. After successfully making it gets badgered and is considered greedy.

John Stossel, from Fox Business News, had a show devoted to the discussion of Atlas Shrugged, and gives some additional insight into the book. The episode speaks better than I can in a 1000+ word post. You can find the episode on YouTube, and have included the first part below.

For this review, I’ll break the book down into one of my favorite Clint Eastwood movies “The Good, the Bad and the Ugly”

The Good

If you never owned a business, it’s kinda of hard to understand what a business owner goes through on a weekly basis. This book accurately reflects the different pressures an entrepreneur must go through (at least in the beginning of the book). It perfectly captures the blood, sweat and tears a business owner goes through. It captures the spirit of why to go into business, yes profit is part of it, but also the ability to create and produce something of value. Entrepreneurs get enjoyment from creating value, and exchanging it with others.

In many traditional movies and books the hero is a strong male figure. I find it very interesting the book revolved around a strong female heroine, instead of the traditional male role model. This, in my opinion, is what made two of James Carmon’s movies great: “The Terminator” and “Aliens“. Today we accept a strong female lead as a non-issue, but keep in mind this book was written in 1957. Times where much different then, and most women were not business leaders.

Ayn makes the characters in the book much larger than life, and people you more than likely would not meet in the real world. Keep in mind though it is a work of fiction. I can assume Ayn stereotyped her characters to make her philosophical points obvious.

The Bad

Did I say the book was long? Ayn was in desperate need of an editor. This book could be shorted to at least half the size, and still get most of points across. There is a rant that is over 40 pages long from John Galt, and could be summarized into 10 pages maximum. Since the book is so big, it can be an effective weapon to smack a socialist across the side of the head. The plot is in my opinion somewhat predictable, and there are some various subplots that could be removed without affecting the main story.

When you start reading it, don’t do it all at once as the book can get somewhat tedious. It took me over three months to complete the book, so pace yourself. Read it in 10-20 pages at a time.

I find it interesting (maybe ironic) the book references railroads and steel mills as the captains of industry. Steel mills were all but obliterated during the 80′s in the US, and I believe because of unions. Railroads are now heavily subsidized by the government, and have been for many years. Maybe this proves Ayn’s point of the book, because I don’t think Amtrak has ever been profitable.

The story is somewhat flawed in various parts. I don’t believe productive people would just get up and go on strike in some secret location. In reality, they just move to another state or another country. In this day and age it would be somewhat hard to completely disappear “off the grid”. Though in the age of the Internet, you can work from anywhere in the world.

The Ugly

At times, the book can be very hard to read. Some of the same themes are repeated at various points in the book, but just through different characters. In real life no one goes on multipage soliloquies (but no one talks like they are in a Shakespearean play either).

The plot is somewhat predictable, though does have some decent twists and turns. Yes the book can be long and drawn out, and gets into obsseive details not needed to get the point accross. This is similar to Tom Clancy’s novels like The Sum of All Fears describing every minutiae of detail. In the Sum of All Fears, do we really need a 30 page chapter describing how a nuclear bomb goes off? Ayn Rand goes into similar descriptive detail in her book as well.

The ending of the book seems to turn into a traditional action thriller which made me disappointed, and it seemed somewhat hurried.

In Summary

The book should be read not for it’s literary work, but for it’s philosophical view. From my perspective, most of the topics discussed in the book are old hat. I’ve always known them to be true, but this book adds more confirmation.

If you are entrepreneur, most of what’s discussed in this book should not be a surprise. If you come from a progressive or liberal viewpoint, it might be a big eye opener. You also might mistake the entire book is about self destructive greed. It’s not though. To summarize the book in a nutshell, the book is about about free will, and letting others act rationally selfish.

If you want to get the gist of the philosophy without having to read the entire book, may I suggest reading Atlas Shrugged Cliff Notes or The Virtue of Selfishness instead. Both are much more concise, and more to the point of Ayn Rand’s themes. Overall the book is ok from a literary standpoint, and I give it 3 out of 5 starts. From a philosophical view I give it 4 1/2 stars out of 5, for then a combined rating of 4 starts. The book might not be perfect, but it’s themes come close. So who is John Galt?

• Rich Dad, Poor Dad Review – Revisited Ten Years Later
• Review of “The Investor’s Manifesto” by William Bernstein
• “Stop Acting Rich” by Thomas J. Stanley – Book Review
• “How to Make a Fortune from the Biggest Bailout in U.S. History” – Book Review
• 2010 Hyundai Genesis Review

Atlas Shrugged Review is from Investor Junkie Copyright © Empowering Media, Inc.

Current Promotions

Transaction Fees

The best thing about Firstrade is the low commissions.

Stocks $6.95 / trade – unlimited shares

Options $6.95 + $0.75 / contract – no minimum

Mutual Funds

Fixed Income

* – Firstrade acts as principal whereby the bonds will be subjected to a markup or markdown.

Broker-Assisted Orders

As you can see, stocks and ETF trades cost $6.95. For me, the big savings are the fees on no-load mutual funds. It costs $9.95 to trade no-load funds. This is much cheaper than the $40 I used to pay at TD Ameritrade. Firstrade has one of the lowest fees I could find from an online brokerage, but I see from the top stock brokers review that there are quite a few more competitors today.

10 Commission-Free ETFS

This is a new feature at Firsttrade. They are offering 10 commission free ETFs: BLV, BIV, BSV, VIG, IVV, IJH, VBK, VWO, FXI, DBC. This is great! I can buy a few shares without having to worry about fees when I have a couple hundred dollars lying around in the money market account. These ETFs are commission free as long as you keep them for at least 30 days.

Products and Services

Firstrade has all the financial products you expect from a brokerage. Here is the list from their website:

Stocks

Choose from a wide array of stock market investing opportunities. Trade stocks listed on the NYSE and AMEX, the Nasdaq Stock Market, or the Over-the-Counter (OTC) markets such as the OTC Bulletin Board or Pink Sheets.

Exchange Traded Funds (ETFs)

Each ETF is a basket of securities that is designed to generally track an index – broad stock or bond market, stock industry sector, or international stock – yet trades like a single stock.

Bonds/CDs/Fixed Incomes

Hedge your account with municipal and corporate bonds, CDs and Fixed Income Securities.

Mutual Funds

Choose from over 11,000 different Mutual Funds. Diversity your holdings and create a professionally managed, low maintenance portfolio.

Options

Buy and sell puts and calls or Complex Option Strategies.

Dividend Reinvestment (DRIP)

Reinvest your dividends automatically and with no extra charge.

Internet Features

Firstrade is a discount brokerage and has all the basic features that you expected from an online company. You can trade online, check gain/loss, see your account history, and research. Pictured here is of the Account Dashboard. You can see quickly all your account information in one spot and customize the information that you want to keep track of.

Research

You can do basic research on stocks and ETF on the site. This is the research screen of VWO. Firstrade also has the usual screening tools to help you find equity that meet a minimal yield threshold for example.

Customer service

I contacted customer service a few times and everything was always resolved to my satisfaction. I never had to wait more than a few minutes and the customer service reps are very helpful and courteous. You can also do an online chat with the customer service if you don’t want to call. From what I understand, the brokerage specializes in Mandarin and Cantonese service. If you are more comfortable with these two Chinese dialects, it will be probably be worthwhile to try Firstrade. Overall, my customer service experience had been very positive.

New Web Site

Firstrade is in the process of transferring to a new website and not all functionality is available yet on the new site. For example, if you want to put in an order after the market closed, then you need to go to the “classic” site.

Conclusion

In conclusion, Firstrade was exactly the kind of discount broker I was looking for. The fees are low, customer service is excellent, and the website is always trouble free. I have been satisfied with Firstrade and will probably stay with them in the foreseeable future.

This review is written by Joe at Retire By 40 where
he blogs about his journey to early retirement by saving and investing.

• Betterment Review
• TD Ameritrade Review – The Perfect Online Broker?
• Vanguard Review
• optionsXpress Review
• Stock Broker Reviews (Updated 2011)

Firstrade Review is from Investor Junkie Copyright © Empowering Media, Inc.

Back then, Scottrade offered a ton of free trades, and I’m not sure I even paid a dime to Scottrade for my first, brief sojourn into the investing world. Of course I did not learn my lesson from this first negative investment experience.

Over the years I have had both good and bad experiences with investing in general, but I have always had a good experience with Scottrade, which is my personal favorite online discount stock broker.

History of Scottrade

Scottrade got it’s name from its city of origin: Scottsdale Arizona. The year was 1980, and online stock trading was still years away. Scottrade (then known as Scottsdale Securities) started by slowly building a network of brick and mortar branches. The corporate headquarters for Scottrade are now centered in St. Louis, but to this day Scottrade keeps true to it’s “offline” origins by maintaining 500+ branch offices located throughout the United States. This is much higher number of brick and mortar stores than any other online discount stock broker. That said, Scottrade is very much a product of the 90′s “.com bubble,” albeit a successful survivor of that era.

You are probably familiar with Scottrade because of their rock bottom prices. Scottrade charges $7 per online stock trade, an amount that was considered low even back in 1998, when Scottrade charged: the exact same amount! $7 per online stock trade. *(TradeKing or optionsXpress, for example, if you can’t find $500 to invest then perhaps you might want to consider not investing in the stock market right now anyway. The per trade fees will really cut into your profit margins with such a small minimum balance.

Security and Reputation

When it comes to investing as with most things in life, name and reputation are important elements. Scottrade is well respected at specializing in online brokerage services. They offer a very high FDIC/private insurance protection plan. They have been around for more than 30 years and are a trusted name in the industry. The firm has been ranked #1 by J.D. Power and Associates for “Investor Satisfaction” several times over the past few years.

One blip on Scottrade’s record, however, was a 2008 “misrepresentation” charge by the SEC, which was settled with the payment of a $950,000.00 fine.

Overall though, I do feel like my money is very safe with Scottrade. I have had good experiences with Scottrade’s customer service on the rare occasions when I have dealt with them. After doing some research I have learned Scottrade is known for their great customer service, in general.

Online Tools

Scottrade’s online “real time trading” and its online system are easy to navigate. Signing up for Scottrade is a streamlined and simple process. Although, as with any discount online broker, you will not receive the type of hands-on experience you would if you hired an active broker to work on your behalf, (at least not without paying more); for the do-it-yourself broker Scottrade has essentially everything you need.

Scottrade has three different investing platforms so you might want to consider further researching those options if you sign up for an account with Scottrade.

Online Community

Scottrade has a blog and an online community that is now over three years old. The blog is too self-serving to generally be useful in my opinion, but their online community can be a good place to go if you have any questions about Scottrade or Scottrade’s online technology. Unfortunately, you have to “join” (aka sign-up) to access the Scottrade forums section (they are called “Groups”.) These “groups” are, perhaps for that very reason they are not as active as one could hope.

Summary

Scottrade is like the Philadelphia Eagles of the investing world. They are never the greatest at any one thing, but they do enough small things right to be a contender. Like the Eagles, Scottrade might never be the champion in any given year, but year after year they are consistently good.

Scottrade offers inexpensive prices but you can find cheaper prices without looking too hard. That said, you have to appreciate the consistency of Scottade’s pricing.

Scottrade has cool online tools, but even ShareBuilder’s navigation system (see ShareBuilder review) might be slightly better. Overall however, if you want a nice dependable firm, and a place where you can invest your money with as little hassle as possible, then Scottrade might be the place for you.

Footnote: This price applies to online unlimited stock purchases of over $1.00 per share. Please note that a $1.25 contract price may apply as well. Please also note that prices are subject to change and that only you can make the proper determination as to which online stock brokerage houses, if any, are right for you and your financial goals. This is a personal review and of course you should meet with the proper financial experts prior to making such an important decision.

• Stock Broker Reviews (Updated 2011)
• TD Ameritrade Review – The Perfect Online Broker?
• SogoTrade Review
• Zecco Review
• Interactive Brokers Review

Scottrade Review is from Investor Junkie Copyright © Empowering Media, Inc.

ShareBuilder History

The founding of ShareBuilder traces its routes back to 1996 when NetStock Direct was founded in Bellevue, Washington. The company launched an online trading platform called ShareBuilder. The company was acquired by ING Direct in 2007. Since being acquired by ING Direct, there have only been minor changes in the features offered.

ShareBuilder Account Types

Currently, I have a total of seven investment accounts with ShareBuilder – one Roth IRA that was opened in 2005, and six individual investment (taxable) accounts that I have opened throughout the years to take advantage of free money offers that ShareBuilder frequently features (more on that subject later). Having said that, ShareBuilder offers the following types of investing accounts and investment options:

• Individual and joint taxable investment accounts
• Traditional and Roth IRAs
• Custodial/Education Savings Accounts
• 401k Rollovers and Small Business 401k’s

ShareBuilder Investment Options

• Stocks / equities
• Exchange Traded Funds (any ETF that is traded on the AMEX stock exchange)
• Mutual funds (recently added) – Be sure to understand the fees. ShareBuilder only offers certain “No-Transaction-Fee” mutual funds. Most mutual funds have a higher expense ratio than investment houses that specialize in mutual funds (see the Vanguard review or Fidelity review).
• Options and Initial Public Offerings (IPOs) - Typically, for only more advanced investors.

Fees, Account Minimums, and Commissions

Up until now, ShareBuilder is pretty much like your standard online brokerage investment firm. They offer the typical account types and investment vehicles. An inspection of their fee schedule is a key step in determining whether ShareBuilder is a suitable match for you. As such, the details of ShareBuilder’s fees, commissions, and account minimums can be seen in the table on their web site A summary of the key points can be seen below.

Account Minimums

This is one of the strong points of Sharebuilder, as there are NO account minimums (except for minimums imposed by specific mutual funds that you decide to purchase) and do not charge inactivity fees.

Fees & Commissions

ShareBuilder offers two pricing programs - Basic and the Advantage Program. The Basic Program is free, while the Standard Program comes at a fee of $12 per month. In my opinion, the Standard Program is not worth the price because real time trades are still $7.95 per trade, as compared to cheaper discount brokerages. Zecco charges $4.95 a trade, while Sogotrade is $3 a trade. This review will only discuss the details of the Basic Program.

Within the Basic Program, there are two methods that investors can purchase securities – Automatic Investments and Real Time “Normal” Investments.

Automatic Investments – Fee $4.00

• Automatic Investments are when an investor selects which securities he or she wants to buy, and then the actual trade will not be executed until a set time (once a week – sometime on Tuesday).
• Obviously, there is a big disadvantage here in that you have to wait to buy your securities for at most a week after placing the request, in order to take advantage of the “reduced” pricing (still more expensive than Sogotrade though).
• Important Note: You cannot sell securities using automatic investments. In this way, ShareBuilder makes it more costly to exit a stock, than to purchase.

Real Time Investments – Fee Varies

• For real-time trading of stocks and ETFs, the cost is $9.95 (in my mind, too expensive).
• For day-to-day trading of most mutual funds, there is a $19.95 commission (again, in my mind, too expensive because you can buy proprietary mutual funds for free at Vanguard or Fidelity).
  • Sharebuilder also offers 70 No-Transaction-Fee Mutual funds that do not incur this trading cost. However, in investigating the funds offered, the expense ratios were generally higher than equivalent mutual funds you can find at Vanguard or Fidelity.
  • Example – Sharebuilder offers the Dreyfus S&P 500 Index Mutual Fund (expense ratio 0.51%) at no-commission. However, the Vanguard S & P 500 Index Mutual Fund carries an expense ratio of only 0.18%.

Online Account User Experience

Overall, the user interface is very easy to navigate. They even have a nice little “investor education” section of their site to get new investors up to speed on how to invest.

Current Asset Allocation and Account Navigation

A couple of things that I really like about the ShareBuilder interface is 1) that it is easy to navigate, using the various tabs at the top of the screen, and 2) that I can easily view my current asset allocation in the pie chart in the middle of the screen, which is based upon the different securities I own.

Portfolio Builder

One of the other things that particularly attracted me to ShareBuilder when I was just learning to invest was that they simplify investing by offering a handy Portfolio Builder tool. The Portfolio Builder tool allows the investor to input certain specifications, such as investment goals, time horizon, risk tolerance (screenshot #1), tax rate, current net worth, and anticipated monthly investment, to generate a suggested portfolio of low-cost ETFs (screenshot #2). In this way, you can get an idea of the type of investment classes to research.

Summary

Here’s a quick recap of ShareBuilder. Overall, they offer various tax-deferred, and individual account options that one would expect from a popular brokerage firm. However, their commissions and fees are significantly higher than other discount brokerage firms. In my opinion, I would not invest significant amounts of my money at ShareBuilder. Instead, I would open up an account with Vanguard or Fidelity, and simply invest in their proprietary, lower-cost mutual funds or ETFs. Having said this, you might be asking yourself, 1) “When would be a good time to invest money in ShareBuilder?” and 2) “Why do you have seven accounts with ShareBuilder?” In fact, the answer to both of these questions is the same; it makes sense to invest money in ShareBuilder only when they are running their promotional offers that give you $50 when opening a new account.

The following is a guest post by Jacob at My Personal Finance Journey.

• Vanguard Review
• Scottrade Review
• SogoTrade Review
• TD Ameritrade Review – The Perfect Online Broker?
• Smart Money 2011 Broker Survey

ShareBuilder Review is from Investor Junkie Copyright © Empowering Media, Inc.

TD Ameritrade Fees

The pricing is not the cheapest in the industry but is right in-line with most other brokerage firms.

TD Ameritrade offers just about any investment option that you are looking for. The company offers common stock, preferred stock, bonds, mutual funds, exchange traded funds, options, and money market accounts. You can even open a margin account although it’s not recommended. TD Ameritrade is similar to Scottrade in that the discount broker has branch offices around the country. TD Ameritrade currently has investment consultants at over 100 different branch offices.

TD Ameritrade was voted the number 1 rated broker in Kiplinger’s ranking of online brokers.

Why Use TD Ameritrade?

With many other online discount brokers to choose from why use TD Ameritrade?

• No Minimum Opening Deposit – One of the biggest advantages of TD Ameritrade is that the company has no minimum investment amount. You can fund an account with $50 or $100 and get started investing today. This is a change in policy for TD Ameritrade. The brokerage firm used to charge a $2,000 minimum to invest. The new policy makes it easy for investors both large and small to start investing immediately.
• Low Fees – Fees are what matters when you are looking for an online broker. TD Ameritrade charges just $9.99 for any online stock transaction. You can buy and sell stock with flat simple pricing. There are lower cost brokers out there like Scottrade but TD Ameritrade’s cost is pretty reasonable when you consider the variety of services that you are getting. There are also no maintenance fees as well. Sometimes brokers will hit you with a $50 fee for not keeping a large enough balance in your account. That’s not the case at TD Ameritrade.
• Powerful Research Tools – Most online brokers today offer some kind of report that shareholders can use to investigate a stock. While I wouldn’t base my decision to buy or sell a stock on them, they are useful tools nonetheless. The research reports are an area where TD Ameritrade shines. The online broker offers investing and trading reports from Jaywalk Consensus, Research Team, Market Edge, S&P Columns, and S&P Research. There are premium research reports from companies like Zack’s that can be purchased for an additional charge.
• Investment Options -TD Ameritrade offers just about every asset class that you can think of. You have plenty of mutual funds to choose from with over1,200 different fund offerings. These funds can be used in your standard account or to start an individual retirement account or a 529 plan to save for your child’s college. All of these accounts can be set up at TD Ameritrade.
• Trading Tools – The Thinkorswim Trading Platform at TD Ameritrade has been voted the number one trading platform by Barron’s. You get access to advanced mobile trading applications. The mobile platforms make on the go trading a breeze. The mobile applications are available for your Blackberry, iPhone, Android, or Windows phone.

You get real time performance and risk monitoring, live streaming video of CNBC Plus, and trade analysis with volatility and probability tools. You will also get access to live charts and an active trader interface. TD Ameritrade clients will also have access to Command Center 2.0, QuoteScope, Strategy Desk, Pattern Matcher, and Market Motion Detector. All of these tools are designed to help make stock trading simpler.

Customer Service

The customer service is outstanding at TD Ameritrade. Holding times are minimal and customer service agents are always helpful and friendly. Emails are responded to inside of 24 hours. You can get a free investment checkup at any branch.

Summary

TD Ameritrade is a good broker for all of the services provided. They have a number of great investment options, straightforward pricing, and solid investing tools. The no account minimum is a big selling point since so many brokers try to nickel and dime you with fees. Opening a new account is pretty easy. You can fund it electronically and start buying and selling stocks the same day. The customer service is top rate and its good to know that you can always drop by a branch office if you have a question. If you are looking for the lowest cost brokerage house in the industry then look elsewhere. However, if you are looking for a broker that offers a good value for all of the investment tools that you need then TD Ameritrade may be right for you.

Visit our TD Ameritrade Promotions page for the latest deals.

• How to Choose an Online Broker
• Stock Broker Reviews (Updated 2011)
• Fidelity Review – Opening an Online Brokerage Account
• Barron’s 2011 Broker Survey
• Smart Money 2011 Broker Survey

TD Ameritrade Review – The Perfect Online Broker? is from Investor Junkie Copyright © Empowering Media, Inc.

Currently we have reviewed these discount stock brokers:

• Charles Schwab Review
• E*Trade Review
• Fidelity Review
• Firstrade Review
• OptionsHouse Review
• optionsXpress Review
• Scottrade Review
• ShareBuilder Review
• SogoTrade Review
• TD Ameritrade Review
• TradeKing Review
• tradeMONSTER Review
• Vanguard Review
• Zecco Review

I’m always looking for suggestions to improve this section of the site and will be expanding it in the future.  I plan on dividing the sections: best discount broker, discount broker, option trader, etc.

I’m also looking for writers to review some of the other discount brokers that I currently don’t an account with. Please contact me if interested in reviewing any of the brokers mentioned on my site (or even ones not currently listed).

• E*Trade Review (Updated 2011)
• Smart Money 2011 Broker Survey
• How to Choose an Online Broker
• TD Ameritrade Review – The Perfect Online Broker?
• Barron’s 2011 Broker Survey

Stock Broker Reviews (Updated 2011) is from Investor Junkie Copyright © Empowering Media, Inc.

TurboTax Home and Business Edition

If you’re a freelancer or have a single member LLC, using the Home and Business edition of TurboTax can be a great fit. For those not interested in this edition, Turbotax has others best suited for:

• TurboTax Free Edition (FREE)
• TurboTax Basic ($19.95)
• TurboTax Deluxe ($29.95
• TurboTax Premier ($49.95)
• TurboTax Home and Business ($74.95)

When visiting their web site, TurboTax helps aid picking the right version best suited for your needs. With previous versions, you had to download and install software on your local computer.  TurboTax is now completely online and in the cloud.

You can try them out for free, and only pay when file. The government’s eFile is included with all versions. Once you complete your federal return, simply choose to transfer your data to your state return from within any of the TurboTax Online products. TurboTax Online State products are available for an additional charge.

Personal Info

Like GPS navigation in your car, TurboTax starts off by asking you to check off any life events that happened in the previous year that could be related to your taxes. It uses very easy to understand icons and descriptions to get your filing status correct and to make sure it doesn’t miss anything later on during your GPS like guide.

Business Income

Have you paperwork ready to go because TurboTax is ready to walk you through your past year and uncover any deductions and credits you may qualify for with your business.

• Business Income & Expenses
• Rentals and Royalties
• Business Taxes
• Business Credit
• Sale of Business Property

A great feature of the software is the instant feedback you get based on the information you enter. Your refund (or taxes owed) amount changes as soon as you give the necessary data. It’s fascinating to see how certain credits and deduction can help you. Are you worried about doing taxes yourself? TurboTax not only helps you reduce your chance of an audit, they also give you clear guidelines with illustrations on what to do if you are contacted by the IRS.

Personal Income

Both my husband, and I received wags from employers the past year so we gathered our W-2s and quickly filled it out on TurboTax.  Besides our wages, we also had to review some of our other income sources to see if they were:

• 1099 INT – Interest earned
• 1099 DIV – Dividends
• 1009 G- Tax Refunds, unemployment, etc
• Tax Exempt Interest
• SSA 1099- Social Security
• 1099 R – 401(k), IRAs
• Jury Duty
• Gambling Winnings

It was comforting to know that we were being guided carefully through a list, and the software checked even some possibly overlooked income.

Transferring Your Information

TurboTax allows you to go ahead and transfer all your information from your federal filing to your state to save time. If you are a Quicken user (see Quicken 2011 review), you can save loads of time and errors, by importing your data directly into TurboTax.

Have a Question? Live Community Can Help

Besides offering audit support, you can also take advantage of the wonderful resource that TurboTax has developed with Live Community. If you’re not familiar with Live Community, it’s a free database of commonly and not so typical questions that people are having when they are filing their taxes.

TurboTax has a team managed the information to provide accurate and timely answers.

Desktop and Online – Whatever Is Easier for You

If you prefer, TurboTax offers an online version of their Home and Business Edition as well. It has all the great features of the desktop version and you don’t have to download any software.  You can start on your tax return, save it, and come back to complete whenever you need to. It’s completely flexible and it can be a great resource this tax season.

Summary

TurboTax is the most established vendor in the do-it-yourself tax return market. Their software is easy to use, offers a wide variety of deductions, and offers helpful guidance alone the way.

Readers: Since I use a CPA to manage our taxes now, I could not effectively review TurboTax 2011 (though I’ve used it for many years), and asked Elle from Couple Money to write this guest post.  I think TurboTax is perfect for the straight salary person, or a just starting out small business.  How has your experience with TurboTax been?  Would you recommend it, or would you use something else?

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TurboTax Review is from Investor Junkie Copyright © Empowering Media, Inc.

Below, I share some of my experiences, divided up in to several sections to cover the different facets of the Vanguard experience – account options, types of investments offered, investment costs, and customer service.

Account Options Offered At Vanguard

Currently, Vanguard offers the following account options. Beside each type of account, I’ve included a brief summary of my experiences, where applicable.

• 401(k) rollovers to a Vanguard IRA – This type of account enables you to transfer your 401(k) retirement account at your previous employer and convert it to a traditional IRA with Vanguard. I completed this process in August 2010 after leaving my old employer, and the process was executed without any failures or delays. And, better yet, there were no additional penalties/fees incurred by the process from Vanguard.
• Annuities – Vanguard offers both fixed income and variable annuities. While I don’t personally have one of these, I understand Vanguard has some of the lowest rates in the industry for annuities. This is mostly because they don’t have full-time sales people selling their product and pass the discount onto you.
• Roth IRAs and Traditional IRAs – Vanguard gives investors the option of opening either a Traditional (pre-tax contributions) or Roth (post-tax contributions) IRA. I have been using a Roth IRA from Vanguard for 3 years now, and I have found it a very effective investment vehicle with their low cost mutual funds.
• Individual (taxable) Accounts – Lastly, Vanguard allows you to save money in taxable accounts in either stocks, bonds, CDs, or mutual funds.

Investment Types Offered

Vanguard offers a very comprehensive array of investment options, regardless of the type of account you choose to open. This review focuses only on Vanguard’s “bread-and-butter” – mutual funds and ETFs.

Vanguard Mutual Funds

• 119 total mutual funds – including money market, international, balanced, bond, REIT, and stock mutual funds.
• Vanguard offers both actively (stock picking) and passively (tracking an index) managed mutual funds.
• Offers lower fee “Admiral Shares” mutual fund options. These shares generally require a balance in the mutual fund of at least $10,000. However, the expense ratio for these Admiral Shares is generally 30-50% lower than that of the normal mutual fund shares.

Vanguard ETFs

• In addition to mutual funds, Vanguard has also become a major player in the ETF markets, currently offering 48 different ETFs in the majority of the same areas that they offer mutual funds.
• Generally, ETFs have expense ratios ~0.1% lower than the same asset class of mutual fund. While this is not a huge difference, it can add up over the years with larger account balances.

Personally, since I am a passive investor, the main investment instruments I use through Vanguard are index mutual funds and ETFs. I had always known that they offered some of the lowest expense ratios/operating expenses in the industry. See below the expense ratios for the funds and ETFs that I own with Vanguard against equivalent investments with Fidelity (see Fidelity Review).

The results from this study showed that Vanguard was able to beat Fidelity on expense ratios 70% of the time. In other words, Vanguard had lower expense ratios on 10 of the 14 funds that I own. Simply put – no one beats Vanguard on index investing. Period.

Trading Fees and Commissions

Vanguard charges no commission for trading their mutual funds and ETFs. Purchasing stocks and non Vanguard ETFs through Vanguard can be expensive. This isn’t surprising since their focus is on low cost mutual funds.

Stock and ETF Fee Schedule

Unless you have a somewhat large account with them, Vanguard isn’t a great place to trade stocks. You are best to use other discount brokerages.

Minimum Balances and Initial Deposit

Generally, the minimum investment amount for Vanguard mutual funds is $3,000 which is somewhat steep for the first time investor. However, for Vanguard ETFs, the minimum is only 1 share and might be best suited for beginning investors. Vanguard also offers admiral shares which have even lower in annual fees. To qualify:

• Invest $10,000 or more in most Vanguard index funds that offer Admiral Shares.
• Invest $50,000 or more in Vanguard actively managed funds that offer Admiral Shares.

Vanguard recently lowered the dollar requirements and is great news for investors.

Customer Service

Overall, the ease of use of the online Vanguard system, and corresponding customer service has always been very effective and straight-forward. Whenever I am unable to figure out something online, it is always easy to get a real, live person on the phone who is knowledgeable and can help me (this is very important to me).

Portfolio Management

There are two very nice elements of Vanguard’s web site I wanted to highlight.

Mutual Fund and ETF Screener

Attached below is a screenshot of the Vanguard “fund screener” interface. It is a very effective tool that can be employed to “check-off” the specifications of the mutual fund (see black box around criteria on left hand side of picture) so that you can quickly find the type of fund to fit your specific investing needs.

Portfolio Analysis Tool

The portfolio analysis tool provided for free by Vanguard (see screenshot below). You can gain insight in to your asset allocation as well as the overall costs of taxes, and manage risks associated with your portfolio.

Readers: How would you rate your experience with Vanguard?

The following is a guest post by Jacob at My Personal Finance Journey.

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Vanguard Review is from Investor Junkie Copyright © Empowering Media, Inc.

Like the WSJ app, the Barrons app is executed perfectly on the iPad.  It flows exactly how I invision an online magazine should be executed.  Without question, if you currently subscribe via the paper edition, you can completely replace it with the iPad edition.  One tidbit that caught my eye – iPad subscription is available free for a limited time.  From their description, it sounds like you’ll pay extra for the iPad app in addition to the print or online edition.  I don’t understand why this can’t be available for free for either subscription method?  People are paying for the content, and not the medium.  If this is the case, I will unfortunately revert back to the online edition only. For now I will enjoy the iPad edition.

One oversight that’s missing from the paper edition.  The long list of stock quotes.  Does anyone go to a newspaper to get their financial quotes anymore??  For many years I always considered this filler, and only good for lining the bottom of birdcage. If you like the fact the Barron’s iPad edition only contains the articles, you won’t be missing anything. The one thing I do miss with either the WSJ or Barron’s app are the comments that are available online. Sometimes the comments are more insightful, or offer an intelligent rebuttal to the author’s article. Yes you do have to filter through some of the crap, but there are definately diamond’s in the rough. Instead of completely mimicking the print editions, I hope in the future they add more interactivity from other readers.

Screenshots

Readers: what other financial iPad apps do you like?

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Barron’s iPad App Review is from Investor Junkie Copyright © Empowering Media, Inc.

The Four Pillars of Investing

William J. Bernstein

If you were to read just one book on this list, purchase this one. The book teaches you about proper asset allocation.

A Random Walk Down Wall Street

Burton Malkiel

A classic book that basically states most people do not beat index based funds. Presents all of the evidence and research on this subject.

The Investor’s Manifesto

William Bernstein

Bernstein’s latest book that discusses the sub prime crisis and goes into additional details about asset allocation. Also read my detailed review of the book.

The Intelligent Asset Allocator

William Bernstein

Bernstein’s first book, and goes into much more detail than “The Four Pillars of Investing” book. If you want to understand more of the technical details pick up this book

The Intelligent Investor

Benjamin Graham and Jason Zweig

The classic value investing book that everyone should read. It has been updated with comments from Jason Zweig who currently works at the WSJ.

The New Buffettology

Mary Buffett and David Clark

Insights in the mind of Warren Buffet, and the investments he makes.

Wealth Secrets of the Affluent

Christopher Jarvis and David Mandell

All sorts of tips and details into protecting your wealth from legal troubles.

The Millionaire Next Door

Thomas Stanley and William Danko

How do wealthy people act? Much different than you expect and they are among us.

The E-Myth Revisited

Michael Gerber

A book that is a MUST have for any entrepreneur. Gets you out of just being a technician.

Stop Acting Rich

Thomas Stanley

The latest book from the same author who wrote, “The Millionaire Next Door”. Read my detailed review of the book

Buffettology

Mary Buffett and David Clark

First installment with insight on how Warren Buffett invests.

Rich Dad Poor Dad

Robert Kiyosaki

Great for someone wanting to start a business, and has some out of the box ideas. Yes it contains a lot of fluff, but it does have some great advice. See our recent Rich Dad, Poor Dad review

Precious Metals Investing For Dummies

Paul Mladjenovic

A straightforward book that discusses investing in commodities.

The Creature from Jekyll Island

G. Edward Griffin

Puts the Federal Reserve in a different light. Somewhat long and long winded but it’s still an eye opening read.

Unlimited Wealth

Paul Zane Pilzer

An old economic book that’s currently out of print, but a great discussion on how wealth is created.

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The Best Finance Books is from Investor Junkie Copyright © Empowering Media, Inc.

Power E-Trade Pro

E-Trade is perfect for active traders, and their application for it is second to none. There is no additional charge to use this service.  It’s available to any customer who executes at least 30 stock or options per calendar quarter. Power E-Trade Pro comes with:

• Live streaming CNBC TV – Keep up-to-date with the latest news
• Fast, and easy-to-use navigation console – For quick trades and execution
• Strategy Scanner – Quickly spot trends with their powerful technical screener
• Sector & Industry Tracker – A bird’s eye view of the market and sectors
• FREE NASDAQ TotalView – Find trading opportunities and have access to Level II quotes
• Streaming News & Watch Lists – Take action on stocks you are monitoring.

All that is needed is a minimum $2,000 deposit.  For the more advanced traders, E-Trade now offers an API to automate trades.

E-Trade Mobile Pro

Complementary to their Power E-Trade Pro service, E-Trade excels in mobile device support.  Trade anywhere, at anytime.  They currently support these devices:

• Blackberry
• Apple iPhone
• Apple iPad
• NEW Android OS

Pretty much all of the functionality of their web site can be done with their mobile applications.  When using their app for the Apple iPad, I couldn’t find a reason why I would be forced to use their traditional web site.  This is nice if you are an active trader who needs access to your account anywhere you go.  As I’ve mentioned in my Apple iPad review, it’s a great device that is much more portable than a laptop computer, yet you don’t have the cramped screen of a smart phone.  For the mobile trader, an Apple iPad with 3G support is your best bet.  E-Trade’s commercials are always entertaining, and their latest commercial highlights their mobile device support.

E*Trade Baby

E-Trade Commissions and Fees

Their pricing is slightly higher than other discount brokerages, but not completely out of line with others.

Advanced Security

As a computer professional, security is of the the utmost importance to me.  I understand how much the Internet can be like the Wild West, and want to sleep at night that my financial information is secure.  This is why I use E-Trade’s RSA SecurID key fob.  You receive a keychain-sized device that generates a personal 6-digit access code every 60 seconds.  You then login with your username, password and key.  This make unauthorized logins to your E-Trade account nearly impossible.  In my opinion all banks, and brokerage online brokerages should offer this feature as standard.

Summary

E*Trade has been around for many years. E*Trade offers a wide base of services from brokerage to traditional banking services. While they aren’t the lowest priced brokers, their site is easy to use, trades execute fast, and their telephone customer service is responsive. While they offer services for the causal investor, their services appear to cater more towards the active trader. Be aware if you have under $10,000 with E-Trade, and do not trade often, they will charge an inactivity fee of $40.00 per quarter. If you keep a moderate sized balance, and do more than 30 trades per quarter, E*Trade is a good fit for you. Customers who are traditionally buy-n-hold and a small amount to invest, you may want to consider other brokerage houses.

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E*Trade Review (Updated 2011) is from Investor Junkie Copyright © Empowering Media, Inc.

Transferring Accounts

I originally had most of my accounts with E*Trade (see E*Trade review), and was a customer of theirs since 1997. While I was not unhappy with their service, I was concerned about their financial viability in 2007. To start the transfer process I went down to my local Fidelity branch. One of their service representatives was more than happy to help me transfer my accounts. It was a simple process, and within a week all accounts were transferred. I unfortunately lost all of the financial history I had with E*Trade (i.e. dates stocks were bought), but this isn’t an issue with Fidelity per-se. Fortunately I keep all of my financial records within Quicken 2011, and this wasn’t a concern of mine. For others though, make sure you record the purchase date of all equities before transferring to Fidelity (or to any other brokerage house for that matter).

Fidelity Features

I picked Fidelity over the many other discount brokerage houses because:

• The $7.95 per trade for all equity trades.
• The 30 iShares commission free ETFs.
• A broad range of investment choices, including stocks, ETFs, bonds, and options, more than 4,700 Fidelity and non-Fidelity mutual funds.
• The Fidelity Investment Rewards Visa Card. I’m able to deposit my cash back rewards directly into a brokerage account.

Fidelity has all of the major features the other investment houses offer. I’m only going to highlight the features unique to Fidelity.

Fidelity Full View®

This feature is available to all Fidelity customers. Similar to Intuit’s Mint.com, you can use their Full View® feature to include third party accounts within Fidelity. They currently support over 9,000 accounts, and are using Yodlee to do the integration. For me personally, I would rather use Quicken, or Mint to do this feature. Fidelity’s user interface, while not bad, in my opinion is somewhat clunky, and unpolished in a few areas.

Fidelity Active Trader Pro™

As an Apple Macintosh user their active trader platform isn’t directly compatible. To use their service on a Mac I must setup a VMWare Fusion instance. While this is to be expected, it is somewhat of a pain. Unfortunately most financial applications are still marketed towards Microsoft Windows. Once installed, the application offers many of the features, and active trader would want:

• Real-time streaming market data
• Advanced charting
• Real-time profit and loss estimates from hypothetical selling
• One-click trading

For more information on the technical and financial requirements visit Fidelity’s web site.

Fidelity Mobile App for Apple iPad

Stay connected to the markets while on the go. The recently released Apple iPad app is perfect to use with your Fidelity account. I’ve used the iPhone app before, and did not consider it that useful for other than a quick glance at my portfolio. The iPad version offers more functionality, and uses the larger screen effectively. The app has features such as:

• Real-time market quotes for logged in customers. All other investors receive 15-minute delayed quotes.
• Up to the minute news stories
• Top stock % gainers, top % losers and most actives
• Monitor your money: positions, balances, and intraday changes
• Trade stocks, mutual funds, ETFs, and options all from your iPad!
• View account history
• Compare stocks within their chart view

For more information about Fidelity’s Mobile Apps for the iPhone® and iPod touch®, visit their web site.

Summary

In the three years I’ve had to contact their customer service line a few times. Every time I’ve called I’ve gotten quick responses, and was able to resolve my issues quickly. Here is my summary of what I think of Fidelity:

Pros

• Great pricing on trades, and free trades on select ETFs. The free trades are great when you are dollar cost averaging.
• Fidelity’s iPad app is great and much better than the iPhone version
• Large selection of their own funds available commission free
• Can purchase brokered CDs and corporate bonds
• If you own a Fidelity Visa credit card your cash back is directly deposited into an account.

Cons

• The web interface is somewhat clunky compared to the some of the other brokerage houses (i.e. E*Trade)
• If you are an active trader (I am not), their Active Trader Pro platform may not be best suited for you.
• While they state their margin rates are low (their lowest is 3.75%), other brokerage houses like Interactive Brokers have much lower rates (1.7% APY)
• Vanguard purchases are charged at their regular commission rates

The last issue isn’t a Fidelity issue as all other brokerage houses charge a commission when purchasing a Vanguard fund. The only way around this is opening and account directly with Vanguard and is something I recommend also doing. Bottom line with Fidelity, it’s hard to find a brokerage house that offers all of the features, decent customer service and at a great price.

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Fidelity Review – Opening an Online Brokerage Account is from Investor Junkie Copyright © Empowering Media, Inc.