From Free to Fee

Any business has to make money to remain in business.  That's a fact.  It is also a fact that small investors pay a larger percent of their investment dollars in fees than do larger investors.  Those two facts came into focus for me recently.

Loyal3 Shuts Down

Loyal3 is a commission-free brokerage firm.  They not only allowed investors to buy and  shares of stock without paying commissions, they also allowed the purchase fractional shares, so that investors can invest a small amount of money at a time, as little as $10. 

Loyal3 had three downsides:

• It only offered about seventy different companies, so if you wanted other stocks you were out of luck
• It saved costs by engaging in batch trading, only going to the market once a day.  You got the price at that time, not at the time you placed the order
• It did not offer IRAs

Last month Loyal3 investors were told that as of May 22, accounts would be transferred to FolioFirst, a low-cost brokerage firm that gives commission-free trades and allows the trading of fractional shares.  FolioFirst offers 200 different stocks.  However, it charges a fee of $5.00 per month.  Right now, my Loyal3 account is about $1500 so $60 per year means a cost of 4% per year, which is much higher than the average mutual fund or ETF.  I will not be moving to FolioFirst, and given the small size of my account, I didn't want to go to the hassle of moving the shares elsewhere, so I sold them.

Motif Institutes Yearly Fees

Motif Investing allows investors to purchase or sell  a basket of stocks for one fee of $9.95.  Until recently, that was the only fee charged by Motif.  However, starting May 15, Motif accounts under $10,000 that have had no commission trades in the last six months will incur at semi-annual charge of $10.  My Motif account is about $8200, so that cost is about .24%, which is in line with many mutual funds.  I have decided to move my Loyal3 money to Motif, which will cover my fee for this six month time period. I'll probably add enough to bring the account over $10,000 to get it back to fee-free status. 

While investing fees have definitely dropped over the last few years, the question is how low can they go and maintain a viable business.  What's your favorite low-fee or free investment platform? 

Robinhood: Commission Free Stock Trades

Last week I wrote about Loyal3, which is one commission-free stock broker.  This week I am writing about another, Robinhood. 

What is Robinhood?

Robinhood is a smart-phone based stock brokerage.  All transactions are done via phone app.  In order to use Robinhood, users can register on the website but then must download either the Android or Apple version of the Robinhood app.  No trades can be conducted via the website.  

How Do You Use Robinhood?

Once the app is installed on your phone, you can enter your banking information and transfer money to your Robinhood account.   A feature known as "Robinhood Instant", if activated, gives you immediate access to up to $1,000 that is en route from your bank account.  It also gives you instant access to money made via selling shares.  

To purchase shares of stock, simply search for the ticker symbol or company name on the app. Tell the app how many shares you want to purchase and whether you want a market order (meaning you'll pay whatever the going price is at the time the trade is made) or a limit order (meaning you tell the app how much you are willing to pay per share and if the stock is at or below that price, the shares will be purchased.  Selling shares works the same way--you tell the app how many shares to sell, and whether you want to sell for the market price, or whether you only want to sell if a certain price is reached. 

How Much Does Robinhood Cost?

Robinhood does not charge for stock trades involving US stocks, so you can buy one share or a hundred without worrying about trading fees.  Robinhood does have fees for transferring your account to another broker, for buying foreign stocks (even Canadian) and for paper statements or confirmations. 

Robinhood also offers  a service called Robinhood Gold that allows you to buy stocks with borrowed money, allows you to trade after hours (without it, orders placed after the market closes are executed first thing in the morning) and gives you instant access to larger deposits.   The cost of Robinhood Gold increases as the size of your account increases.  

What Can You Not Do With Robinhood?

As with most things, a lower price means a lower level of service.  Some things you can do with a full service broker that you cannot do with Robinhood include:

• You cannot buy or sell options 
• You cannot short sell stocks
• Robinhood's terms of service indicate that limits are in place to make the platform unsuitable for day trading
• They do not guarantee instant execution of trades
• They do not offer any research on companies or any investment advice
• They do not currently offer retirement accounts
• There is no website access; all trades must be accomplished on a smartphone or tablet app

Have I Used Robinhood?

I'm a Baby Boomer, not a Millenial.  I do not own a smartphone and don't particularly want the bill that comes with one.  I have a "blackberry" style phone which, to me, is easier to text on that a smartphone.  I have wanted to try Robinhood for some time but have been unable to do so because I lacked a smartphone.  However, my husband recently needed a new phone so we got him a smartphone (which he hates).  

I was able to register online and download the app with no trouble.  Getting all the needed information into the app was a bit of a pain---he has a small cheap smartphone and typing errors were common.  However once it was set up and money was in the account, trading was easy.  I put in market orders for two shares of AT&T and one share of Lending Club.  Those executed at the opening price the next day (I placed the orders after hours). 

Once that was done, I entered an order to sell the Lending Club stock if the price increased by 10% and to buy another share if it decreased by 10%.  So far those orders haven't executed and from what I can see on financial websites, those prices haven't been reached.  

How Does Robinhood Compare to Loyal3?

Robinhood offers far more choices and far greater flexibility than Loyal3 does.  It allows you to trade any US listed stock at no charge and to have control over the price you pay or receive.  

The only advantage of Loyal3 (assuming you are willing to trade via app rather than website) is that Loyal3 sells fractional shares, and therefore allows you to invest as little as $10 per company, no matter what the price of the shares.  While the lack of commissions makes it feasible to buy only one share of a company on Robinhood, the cost of those shares means that $50 is likely to only buy you part of one company, rather than part of five.  

Investors who want to buy stock in a variety of companies for a small amount of money may find they prefer Loyal3.  If you have several stocks on their list that you want to own, if those stocks are not very volatile and you want to invest as little as $10 per purchase, you may be happier with Loyal3 than with Robinhood. The fact that Loyal3 limits your choice of stock can be an advantage (limiting your choices generally makes decisions easier) or a disadvantage (if you want a stock not on their list). 

If you want to invest in volatile stocks and want some say over the purchase price, or at the least want to be able to push a button and buy "now" (realizing that "now" will have some lag), then Robinhood will better meet your needs. 

Have you used Robinhood or Loyal3?  What do you think?

If you want to try Robinhood, use this link and both you and I will get a free share of stock. 

Loyal3: An Introduction to the Stock Market

If you look at the top of my blog on my links bar, you'll see a link to my Loyal3 Lunch portfolio.  It was a gimmick I tried last year to reward myself for bringing my lunch to work rather than buying the mediocre food from the lunch counter downstairs.  I've pretty much dropped that idea--it wasn't changing my behavior all that much, and people weren't reading my posts about the portfolio--but I have kept my account and I have added to it.  I wrote about Loyal3 about eighteen months ago, so I thought it was time to take another look at it.

What is Loyal3?

Loyal3 is an online stock broker whose target market is people who are just beginning to invest in individual stocks or who do not invest a lot of money at one time.  

What Makes Loyal3 Different from Other Brokers?

There are a number of ways Loyal3 is different from other stock brokers:

Loyal3 does not charge sales commissions. 

Most brokerage firms make their money by charging a fee every time a customer makes a purchase or sale.  Generally they charge by the transaction so that the commission as a percent of the price goes down as the size of the transaction goes up--which means sales commissions are very high for small transactions.  Loyal3 does not charge sales commissions so when you buy $10 worth of stock,  you get $10 worth of stock.

Loyal3 does not offer the entire stock market. 

In fact, it only offers stock in about seventy companies, most of which are well-known household names.  If you want stock in a different company, you will have to look elsewhere. This is both a strength and a weakness.  It is a strength because it helps narrow the research field for new investors.  Too often people do not invest because they don't know what to buy.  The Loyal3 stocks, for the most part, are household names 

Loyal3 utilizes batch trading and does not guarantee any price.

 With most brokerage houses you can tell them you want to buy a certain number of shares of XYZ and that you are willing to pay up to $xx.xx per share--or you can tell them to buy (or sell) shares RIGHT NOW.  Loyal3 customers tell Loyal3 how many dollars worth of which stock they wish to purchase.  Once per day Loyal3 goes to market and buys the needed number of shares at the current price.  If they stock you are buying is very volatile, it may cost you significantly more or less than you anticipated. 

Loyal3 does not offer IRAs, Roth IRAs or anything but a basic taxable account. 

 Many people prefer to own stock inside tax-advantaged accounts.  Loyal3 does not offer those account.

Loyal3 sells fractional shares. 

 While the orders placed with most brokerage houses are for a certain number of shares of a particular company, orders with Loyal3 are made by dollar amount.  Since you can invest as little as $10, this means that you often by fractional shares.  

Loyal3 does not offer margin accounts.  

While most brokerage houses allow you to borrow money from them to buy shares of stock, Loyal3 operates strictly on a cash basis.  They link to your bank account and when you place a buy order, if you do not have cash in your Loyal3 account, they withdraw it from your bank, and once it hits their account, the stock is purchased. Recently I ordered some shares on 11/16.  They were purchased on 11/18, and judging by the daily price chart on Yahoo, it looks like there were purchased about 10:30 a.m.

Is Loyal3 for Me?

No business is the right fit for every customer.  Loyal3 is a terrific brokerage house for the beginning or hobby investor.  My Loyal3 account is a toy for me--I hope to make money but I don't have enough invested with them to cause any major problem if my investments lose money.  I firmly believe that for most people (including me) the majority of their assets should be in mutual funds.  However, to me, investing in the stock of companies I can follow is interesting.  Loyal3 allows me to invest a little money without having it eaten up by fees.

Loyal3 does not allow you to name the price you are willing to pay for your shares, or accept for them, if selling,  which, in my opinion, makes it unsuitable for investing large amounts of money at one time.  In fact, Loyal3 will not allow you to buy more than $2,500 worth shares per transaction or more than $5,000 per month per company. 

Loyal3 does not provide investing information or advice.  Since that information is freely available in many places, I consider that only a slight weakness.  The fact that they offer only a limited number of stocks makes it easy to set up watch lists or run Google Alerts on the companies in which you are interested.  

Portfolio Update July 1

Wow, half the year has gone.  It is time to take a look at our investment portfolio, analyze it and decide if any changes are needed.

Vanguard:

We have Roth IRAs invested in Vanguard's S&P 500 index fund, plus regular IRAs and a taxable account that we tranferred to Vanguard from a financial advisor.  The advisor had us in a large number of mutual funds, and the cost to sell each one is $20 per account; therefore we have not been in a hurry to sell them.  We did move out of the worst performing ones late last year and we just analyzed what was left. We have several funds that are significantly underperforming their associated index and if that continues at the end of the year, they will be on the chopping block.  After anaylzing everything we did decide we were overexposed in US stocks and so we sold some of our S&P 500  fund and bought Vanguard's index funds for international bonds and for international stocks.  Overall, these accounts are up 5.23% this year. 

One of the things a lot of people track is the income generated by their portfolio.  So far this year, this portfolio has generated $2788 in dividends and capital gains.  I expect that amount to rise as we have increased the bond percentage in our portfolio from about 25% to about 30%.  My husband is 60 and I am 55; we are getting to the point that we need more stability and income in our portofolio.

My 401(k):

My 401K was invested 25% in MFS Agressive Growth Allocation Fund A, 25% in Franklin Total Return Fund A and 25% in Janus Triton, with 12.5% each in MFS Growth Fund-A and Delaware US Growth Fund A.  For the first six months of the year, the YDT performance was 1.77% which is lower than my other investments.  

I decided to re-allocate and now I have 38% MFS Government Securities Fund A, 20% Janus Triton, 19% Oppenheimer International Small Mid Co A, 11% Delaware US Growth Fund A and 12% Pioneer Fundamental Growth Fund A

For the first six months of the year, my dividends, capital gains and other earnings (as opposed to increases in share value) totalled $1,647.85.  I expect that to increase in the next six months due to the increased bond holdings.

Motif Investing:

This was a toy for me to play with.  Motif Investing allows you to invest in up to 30 different companies at one time, for one fee.  You can either assemble your own group (Motif) or buy one of theirs.  Once you own the stocks, you can sell them one at a time, or you can sell the whole motif for only one fee.  The motif I developed isn't doing very well--my $1000 is down to $960, though I have collected some dividends.  Overall, I invested $7,000.  My portfolio is worth $7223.69 and over the last few months I have transferred $320 in dividend income to Loyal3.  So far in 2016, I have earned $105.31 in dividends at Motif, for a yearly yield of about 3%.  If you want to invest via Motif, use this link and we both get $100.

Loyal3:

I started investing with Loyal3 as an incentive to bring lunch from home rather than to buy it from the lunch counter in my building.  I got tired of that, but have used the account as a place to invest the dividends I got from Motif.  Through Loyal3, which is a no-fee stockbroker, I own stock in AMC Theaters, Alibaba, Disney, Hershey, Intel, Kohls, Target, TimeWarner, Unilever and VF Corp.  So far, I've broken even; AMC, Hershey, Intel and Unilever are up, the others are down.  My $630 investment has garnered me $5.91 in dividends for an annual yield of about 2%.

Prosper:

So far this year we added $300 in new money to this account and we transferred $550 from Kickfurther to Prosper.  Our XIRR return on this account is 11.48%. Prosper shows my seasoned returns to be $12.85%.

Lending Club:

I'm not liking all the things I've been reading about the corporate troubles Lending Club has so I haven't wanted to invest more money with them.  I haven't pulled any out, but I'm thinking about it.  Right now my account value is $19,791.89 and my adjusted account value (Lending Club computes a hypothetical value based on the number of late notes and how late they are) of $19,173.84.  The increase is only $313 so far this year.

Kickfurther:  

Kickfurther says my profit since the inception of the accout is $382.17.  However, they have yet to subtract anything from that for bad debts.  They paid me for the first four bad deals I had, in the amount of about $175.  Right now I have about $260 in deals that aren't paying.  Some I think have some recovery potential--KF has indicated that it has the inventory and I personally think the inventory will sell at some price (bamboo kitchen drawer organizers and silk comforters); the others I suspect won't give us much if anything, but hopefully I'm wrong.  Bottom line, for in investment of about $2500 made in dribs and drabs, mostly from June-Dec 2015, there is a real possibility that the value of the investment is a $20-50 loss, if you consider the $175 that KF refunded me to be a loss, along with my predicted loss from the deals I have that aren't paying.  The real questioin is how much value can KF get out of the bad deals; and at this time we haven't seen evidence they can get any.  However, they have a legal team working on it now. I think Kickfurther has potential; I'm just not sure the pricing is right on it.  If you want to try it, use my link and you get $5.00 toward your first investment.  

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and One More Broke Twenty-Something* http://diseasecalleddebt.com/extreme-saving-no-new-clothes/ 1. How We Avoided Buying New Clothes for a Whole Year http://brokegirlrich.com/the-little-costs-of-friendship/ 2. The Little Costs of Friendship http://familymoneyplan.com/interview-brokegirlrich/ 3. Behind the Screen Interview #7

5 Ways to Invest Your Tax Refund

It is always tempting to take a windfall and spend it on something fun, but if you are approaching retirement (and all of us should consider ourselves to be in that boat--just with different finish lines) investing at least part of it is a smart money move.  Here are some options.

1. Peer to Peer Lending:  If you have at least $2,500 dollars to invest, Peer to Peer Lending via Lending Club or Prosper offers returns between 5% and 8% annually, with decent, though not instant liquidity.  You can read my posts about Peer to Peer Lending here.  Statistics going back before the bear market/recession of 2008 show that less that 1% of people who have invested in at least 100 notes at $25 each have lost money.
   
   
2. Kickfurther:  Kickfurther is a platform by which investors finance inventory for businesses by purchasing that inventory and returning it to the company to sell on consignment.  When the inventory sells, investors receive an agreed-upon return.  There are two risks.  The first is that the inventory doesn't sell.  If that happens, the investors can vote to repossess the inventory and try to sell it in some other way to recoup their investment.  The second is that the business will sell the inventory and then use the money to pay the rent, and not have enough to pay investors. The advantage of Kickfurther is that you can invest as little as $20, and most offers are for much less than a year, and once the repayment term starts, payments are supposed to be made monthly.  I've been investing in Kickfurther for about a year and at this point I would classify it as a relatively high risk/high return investment.  Click here to get $5.00 towards your first investment.
   
   
3. Motif:  If you want to try the stock market, Motif is an interesting concept.  For one sales commission of $9.95 you can purchase one "motif" or group of stocks.  Motif has a wide selection of company-designed motifs, and it allows investors to design their own motifs and market them to other investors.  Most motifs have a theme, just as "Growing Dividends" or "Video Gaming" and the stocks in the motif reflect that theme.  I have written about Motif before.  If you invest via this link, we both get $100.
   
   
4. Loyal3:  Another option, if you want to pick stocks, is Loyal3.  While they only offer the stocks of about seventy companies, all trades are commission-free, and you are allowed to buy fractional shares.  This means you can use Loyal3 not only to invest a substantial sum, but also to purchase a few dollars with of stock on a weekly or monthly basis.  I'm using Loyal3 to invest the money I save by not eating out at lunchtime.  Read about my investments.
   
    
5. Mutual funds:  For people who don't really want to learn about the stock market or how to pick stocks, mutual funds allow you to outsource that job to either a professional or a computer.   With mutual funds, the money of many investors is pooled, and investments purchased.  If the investments increase in value, the price of the shares goes up; if the value of the investments falls, so does the share price.  While there are a lot of flavors of mutual funds they are basically divided into index funds, which purchase shares of stocks or bonds to mimic one of the indexes and actively managed funds which have a manager who, following the policies laid out for the fund regarding the types of investment it makes, buys and sells investments trying to beat the market as a whole.  Few succeed long-term.  All cost more than index funds.  One of the best place to get index funds or low-cost actively managed funds is Vanguard.

If you are investing adequately to meet your future goals, then spending a windfall on fun isn't necessarily a bad idea; however if you are behind on your retirement savings, you'll spend a lot more time wishing you had more money than you will spend at Disneyworld with your tax refund.

Loyal3 Lunch

How many lunches?

If you haven't been following this series, I'm trying to break my habit of eating out at lunch for no good reason.  Each day I bring my lunch gives me $5.00 to invest in stock with Loyal3, an online commission-free broker. I brought my lunch four days this week; today I had to pick my daughter up from school since they got off early after the school Mardi Gras parade and she begged me for smoothies so I was nice and bought them for both of us.

Which Stock?

I looked at my portfolio and decided to buy more Target since that's the one in which I had the least invested.  

Am I making money?

About like the market--so no.

Comments: 

Have you tried Loyal3.

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and Femme Frugality*

Loyal3 Lunch

How many lunches?

If you haven't been following this series, I'm trying to break my habit of eating out at lunch for no good reason.  Each day I bring my lunch gives me $5.00 to invest in stock with Loyal3, an online commission-free broker. This week should remind me to meal plan.  Tuesday I had an errand to run at lunchtime and drove through a favorite fast food place; by Friday I was sick of grilled cheese sandwiches and there was nothing else in the fridge.  This week I got $15.00 to invest.

Which Stock?

Retire Before Dad has a list of Loyal3 stocks (they sell a very limited number) and has set up a constantly updated spreadsheet that rates them. You can see the chart and methodology here.   When  I looked at it, Best Buy was number 1 and Intel was number 2.  For some reason, I'm nervous about Best Buy; I'm just not convinced they are going to be around long-term.  It's a gut feeling, not an educated point of view.  In any case, I didn't want to buy Best Buy, so I bought Intel.  

Am I making money?

I'm up this week!

Comments: 

Off to plan some yummy lunches so when my husband buys groceries tomorrow he gets what I need so I can skip the overprice mediocre food at the building lunch counter and buy stock instead.

*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Friday Night Shenanigans*

Loyal3 Lunch

How many lunches?

If you haven't been following this series, I'm trying to break my habit of eating out at lunch for no good reason.  Each day I bring my lunch gives me $5.00 to invest in stock with Loyal3, an online commission-free broker. This report is covering two weeks, since I didn't write one last week.  Last week we didn't have much in the fridge at home as far as leftovers, and I was in a hurry, etc.  In any case, I only brought my lunch three times.  This week was better; I brought lunch every day.

Which Stock?

The market has taken a beating lately.  Last week I decided that I had good reasons for liking all the companies in which I had already invested; therefore I put more money into the one that had dropped the most from the time I bought it, Disney.  This week I looked at how my stocks had done since the beginning of last year, and bought the one that had dropped the biggest percentage, VF Corporation.  

Am I making money?

Like the vast majority of people, I lost money this week.

You can see my whole Loyal3 Lunch portfolio by clinking the link at the top of the page.

Comments: 

You note the highly technical analysis of why I pick these stocks.  I've been reading a bunch of investor blogs trying to get a handle on the lingo, and figure out what I should be looking for in all those numbers.  However, for me, this portfolio is a toy; instead of buying shoes I don't need I buy stock I don't need (and which I hope makes money for me).  I do not recommend that anyone use such an approach when investing large sums of money (whatever "large" is to you). 

Loyal3 Lunch: Starting a New Year

How many lunches?

If you haven't been following this series, I'm trying to break my habit of eating out at lunch for no good reason.  Each day I bring my lunch gives me $5.00 to invest in stock with Loyal3, an online commission-free broker. This week I brought my lunch four of five days; this morning I was rushing out of the house so we could stop on the way to school and buy glue.

Which Stock?

I decided on Intel this week.  Sometime this week in surfing across the web I saw an article recommending it, and the article made sense (and unfortunately I didn't bookmark it).  

Am I making money?

Like the vast majority of people, I lost money this week.

You can see my whole Loyal3 Lunch portfolio by clinking the link at the top of the page.

Comments: 

You note the highly technical analysis of why I think this is a great stock.  I've been reading a bunch of investor blogs trying to get a handle on the lingo, and figure out what I should be looking for in all those numbers.  However, for me, this portfolio is a toy; instead of buying shoes I don't need I buy stock I don't need (and which I hope makes money for me).  I do not recommend that anyone use such an approach when investing large sums of money (whatever "large" is to you). 

Loyal3 Lunch: Two Weeks in One Post

How many lunches?

If you haven't been following this series, I'm trying to break my habit of eating out at lunch for no good reason.  Each day I bring my lunch gives me $5.00 to invest in stock with Loyal3, an online commission-free broker.  This post is to report on Christmas week and New Year's week.  Christmas week I worked three days and did not buy lunch at all.  New Year's week I worked three days and bought lunch once.

Which Stock?

Christmas week I invested my $15.00 in Kohls and got .3043 shares.  New Year's week I invested $10.00 in VF Corporation but the transaction has not been completed.  

Am I making money?

I have invested $155.00 dollars, and the current value is $153.06.

You can see my whole Loyal3 Lunch portfolio by clinking the link at the top of the page.

Year End Comments: 

Little bad habits can end up costing big money.  As I said when I started this series, most of my lunches "out" were going down to the mediocre lunch counter in my office building.  Getting lunch there is fast and convenient, and it doesn't taste bad.  On the other hand, dropping $10.00 per day isn't unusual.  Giving up that lunch means taking a few minutes in the morning to grab leftovers from the fridge or remembering to ask my husband, who does the grocery shopping, to pick up Lean Cuisine.  

Do you have a bad financial habit you need to break?  Would directing a certain sum of money toward a goal you have (whether that goal is a stock portfolio, a Coach bag or a trip to somewhere fun) help you break that habit?  

Loyal3 Lunch: Week 7

How many lunches?

If you haven't been following this series, I'm trying to break my habit of eating out at lunch for no good reason.  Each day I bring my lunch gives me $5.00 to invest in stock with Loyal3, an online commission-free broker.  This week I brought my lunch four days; therefore, I have $20.00 to invest this week.

Which Stock?

Stocks took a beating this week.  I decided to add more of the stock in my portfolio that had dropped the most.  AMC had dropped 9% since I bought it.  Why the stock that dropped the most?  Well, basically, I believe in these companies and believe they will do well; therefore, when the price drops it is like getting my favorite things at the store when they are marked down.  We shall see if this is a good strategy or not.  

Am I making money?

Well, I didn't notice it until after I had pushed the buttons, but I got an eight cent dividend from VFC this week.  However my portfolio as a whole is down 3%.  Before today, I'd invested $120.00 and it is worth $116.65.

You can see my whole Loyal3 Lunch portfolio by clinking the link at the top of the page. 

Loyal3 Lunch: Week 3

If you haven't been following this series, I'm trying to break my habit of eating out at lunch for no good reason.  Each day I bring my lunch gives me $5.00 to invest in stock with Loyal3, an online commission-free broker.  This week I brought my lunch each day I was at work, but I was out two days, and on those days I ate restaurant meals.  My Loyal3 portfolio will grow by $15 this week.  I am buying shares in VF corporation which makes a variety of clothing brands. You can see my whole portfolio up on my link bar.  So far I've invested $50.00 and today it is worth $50.22.

Loyal3 Lunch: Week 1

I told you in my "Plugging a Leak" post that a big money-waster in my life was buying lunch for no good reason.  I'll be rushing in the morning and forget to grab something, or what is in the house doesn't appeal to me, or what I brought for lunch doesn't appeal to me, or (about the only "good" reason), friends suggest going out.  I decided that for every day that don't eat out (and avoid the junk food box in the office kitchen) I will put $5.00 into stock via Loyal3, a commission-free online broker.  I opened the account with $10.00 last week, which purchased 0.0865 shares of Walt Disney stock.  This week the only day I ate out was the day I went to Baton Rouge on business.  I could have brought a lunch, but I chose not to.  Therefore, this week's deposit into Loyal3 is $20.00.  I am going to purchase stock in AMC, the movie theater company.  They pay a dividend worth about 3% of the current value of the stock, and I am looking for dividend stocks.  Professional analysts give it a "buy" or "hold".  The price is on the low side as compared to earlier this  year.  I know AMCs theaters are popular here.

I plan to buy shares in between six and eight different companies in this portfolio.  Hopefully I'll makes some money along the way.  Do you have a leak in your wallet?  Could you re-direct a few dollars per week into the stock market via Loyal3.

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and One More Broke Twenty-Something*

Plugging a Leak

I'll confess, my husband and I do not have a budget, and never have in a formal sense.  We have always lived below our means on the big things like houses and cars so we have not felt a need to watch the pennies carefully.  Still, I keep reading about the power of goal-setting, so I'm going to give it a try.  However, me telling my husband what he can spend at the grocery store this week will go over like a lead balloon (yes, he does the grocery shopping and groceries are one area where we could cut a lot).  So, what to do?  Well, one place I know I spend too much money is for lunches at work.  I often eat "out" (the lunch counter in my building) for no reason other than that I didn't think to grab something at home. Add that to the times I go out to be sociable, and I've found a real leak that can be plugged.

Now, what to do about it that won't make me feel deprived and will make me feel like I'm accomplishing something?  I've decided to open an account with Loyal3, an online stock broker about whom I wrote here.    Every week (the mimimum investment is $10.00) I am going to invest $5 per day that I did not eat out at lunch.  Every week I'm going to tell you how much I invested, and in what.  Hopefully, this will be a better use of my "lunch money" than the use I'm currently making of it.  Yes, it's kind of a game; I have other money that I will invest in other things and even if I never go out, this only comes to about $100 per month, but every month a large part of that $100 ends up sliding through my fingers; if this motivates me to save, that's a good thing.  It will also give me something about which to write.  You can follow this series by looking for Loyal3 Lunch on the keyword list on my sidebar, or to see the portofolio, look at my navigation bar.

To open the account I had to make a minimum investment of $10, so I invested it in Walt Disney.  Why Walt Disney?  Because I like going to Walt Disney World and know other people do too.  It is a well-run company that has a lot of loyal followers.  Is this a good time to buy their stock?  I don't know, I haven't investigated that.  My next purchase will be more carefully investigated and the reasons for the purchase more fully explained. 

Do you have a bad spending habit that you break and direct savings to investment?

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and One More Broke Twenty-Something*

New Financial Products: Loyal3

I don't know about you, but Amazon.com is one of my favorite places to spend money. It sure would be nice if I could get a piece of their action.  Oh, wait, I can get a piece of their action, I can buy stock in the company.

Conventional wisdom since I've been investing has been that ordinary investors should put their money into mutual funds and buy the market rather than purchasing individual stocks.  That advice is based on three factors:

• Many small investors lack the time, desire and/or know-how to adequately investigate the value of a company and therefore could purchase shares at the wrong price point or hold them when they should sell;
• Investments should be diversified, and small investors are unable to invest in enough different stocks to be diversified and
• The sales commissions charged by traditional brokers took far too large a piece of a small investor's investment.

A new website, Loyal 3, seeks to address the last two items.  Loyal 3 sells stock in 64 different companies to individual investors You can purchase fractional share and therefore can invest as little as $10 in each company.  More importantly, Loyal 3 does not charge to buy or sell stocks. If you want to invest $100 in Coca-Cola, you can do that, and you will pay no sales commission.  

Is there a catch?

Yes, sort of.  Loyal 3 does what they call "batch trading".  If you call your full-service broker and tell him to sell your stock in xyz, he'll do so almost immediately. If you tell him to buy PDQ, it is yours.  Loyal 3 waits, and places one order per day for the stock.  If you are trying to market time, Loyal 3 is not for you.  Also, they only offer 64 stocks, so if you want something else, you have to go elsewhere. 

Have I tried it?

Unlike most of the other products on which I have reported, I have not tried Loyal 3.  I am planning to open accounts for my kids and my nephew and to give them stock for Christmas next year.  I'll pick something like Disney or McDonald's and couple the gift of stock with some merchandise.  The low initial investment ($10) and lack of sales commissions make that possible.  

Conclusion:

I think conventional wisdom is probably right to discourage ordinary investors from putting too much money into individual stocks.  However, I find individual stocks far more interesting than mutual funds.  While I would stick with mutual funds for the majority of my investing, I think Loyal3 offers small investors the chance to invest a little fun money with companies they find interesting.

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and Shoeaholic No More*