If it's an established business, then you wouldn't necessarily have to use only those 10 months, and go use historical figures.

Thanks. Roths look like the stone cold nuts and give you so much flexibility. Like if one year you need more money than normal, you can take the excess funds you need out of the Roth and not pay more taxes and at a higher rate.

I get the normal 3% match into my SIMPLE IRA. This doesn't equal a whole lot of money, but let's say it's ~$300 a month in my IRA.

My question is how do I determine when to buy stocks. I'm not meaning timing the market or anything.

For example, I buy 12 shares of PCX at $25.05 for $300.60, but I have to pay a $7 fee from Scottrade so I've effectively paid $25.63 for each share. This is a 2.3% increase in price, 4.6% if you include selling it.

If I were to wait until I had $600 available, I could pay $25.34 per share. This is obviously a 1.15% increase or 2.3% overall.

If I were to only have $100 available, I'd be paying $26.80 per share or a 7% increase, 14% if selling.

I figure it really doesn't make a WHOLE lot of difference, but wanted to see if anyone had any helpful tips on allocating size of purchases.

I do realize waiting involves losing on possible short term gains etc.

My best guess is the optimal strategy is just to allocate lot sizes and go with it, for instance $250 + 7 per trade (or 2.8% premium).

Peachtree is a viable alternative.

I'm posting here because I'm a finance noob and don't know if my questions deserve their own thread.

My girlfriend and I are about to come into decent salaries and don't really know appropriate uses for our money. We both have doctorate degrees, so we're educated, but we're not finance people and therefore are looking for some advice where to start. I've read (skimmed) the stickies but I think most of the information in them is beyond where I'm at right now.

For example, our initial plan was to simply pay off our student loans as quickly as possible, but have just realized that if we can make more by investing our money then we'll pay in interest on the loans over a given period of time, then we come out ahead. These are the kind of things that 2+2ers hanging on this forum probably understand inside and out - but we literally don't know what to do.

I guess I'm asking is what would be the top 3 resources that someone should read if they need to learn what to do with their money - not necessarily invest, but just how the hell to deal with earning ridiculously higher salaries then what they're used to as a graduate student.

Thanks in advance...

Well, I think a good start would be to go to your bank and open up an investing account.

Read up on what stocks, bonds, mutual funds, and ETF's are.

I would also encourage you to research areas that may interest you, such as real estate, currency trading, entrepreneurship, etc.

Years back I used ADVFN free for intraday. But looking back I'm not sure it wasn't as flaky as say a yahoo or MSNBC free tick. If there's real money at stake or even if not and someones just learning there's no reason not to just pay up for a real vendor. I've used DTN IQ with Quotetracker and it gives me NYSE, Nasdaq, AMEX, OTC and pinks for just like $60 a month. Without Level 2 by the way. Some brokerages will give u some data feed free or super cheap if you make so many trades per month(like 30 or so for some) or even if not the fees are real low.

You know what I'm sorry, I failed huge in my question and theres a huge difference between free real time tick data vs what i really meant to ask:

HISTORICAL tick data.

Okay, right on. Do you have any specific recommendations for what to read to get started, though? I guess I could pick up a finance 101 book or something, but hopefully there are some resources for beginners that you folks might recommend... (again, I know there is a ton of stuff in the stickies, but I thought that was beyond what I'm currently capable of understanding and digesting...)

get A Random Walk Down Wall Street. It's a great intro and easy to read.

Thank you. I'll pick it up tomorrow.

Couple of dumb questions:

1. Am I correct in understanding that an etf is just a name for "some bundle of stuff traded on a stock exchange" which can't conveniently be called anything else? Like suppose there existed a way to bundle some gold, some 300 of the 500 companies on the S&P500 in an index, and a few bonds in one thing, it could be called a blah blah blah etf, and today it could be worth $25 (per what? share?) and tomorrow $30?

2. When people say etf's (and other vehicles) are "tax-efficient", do they simply mean that there are no dividends, i.e. only earnings are capital gains when they are sold, i.e. one pays capital gains tax as opposed to income tax (typically higher than capital gains tax)?

There are different kinds of ETFs, but the majority of people think of them in one simple way, as it is the most common.

The Exchange Traded Fund, in that simple facet, is nothing more then a mutual fund that can be bought and sold during the trading day. Mutual Funds are bought and sold at an end of day Net Asset Value - which may or may not be the highest or lowest point during the day. ETF's give investors the flexibility of making decisions about a mutual fund and potentially get a better price then the end of day NAV. While this is an argument point by those such as John Bogle (founder of Vanguard) as it gives investors who might normally be buy and hold the opportunity to trade and this will adversely effect their performance due to commissions and just straight up making bad decisions.

But to your point about bundling a bunch of things together? Yes, there is nothing preventing fund companies from doing that - and there are some funds that are purely derivative based that do things like that. But if the fund cannot be understood simply, it should be avoided.

No, dividends are paid in funds that hold stocks. The tax efficiency comes from the bundling of dividends and that many ETFs that are stock based track indexes. Indexes are not actively managed and have low turn over. Therefore capital gains are limited as most indexes do not change their "holdings" frequently. With regard to the bundling of dividends - not all companies payout at the same time. Mutual Funds and ETFs put out dividends at normal intervals, regardless of when their holdings paid out. It becomes inefficient to pay out different tax lots.

Thanks nuclear.

Couple more follow up questions:
1. So an etf has a fund manager? Board of directors?

2. I understand the statement of your answer, but I can't see how paying tax less frequently is more tax-efficient? If I get paid $100 dividends in Jan and $100 in Feb, I pay some tax. If I get none in Jan and $200 in Feb, I pay the same tax right?

Many of the most popular ETFs are simply an additional type of share class for their equivalent mutual fund. Those that aren't though yes, they would have a manager or manager(s). A board of directors perhaps so, depending on how the fund company has been incorporated.

In that case its more about efficiency for you and how you deal with the money received. If you do a Dividend Reinvestment Program, you end up having many lots of smaller amounts of shares that in the future if/when you sell you likely need to account for them. It can become a pain to deal with.

If you simply take the cash and at a later time buy specific lot sizes you can keep track of, it makes it easier to deal with.

The tax efficiency comes from the passive management of index based ETFs. More actively managed mutual funds will sell positions to rebalance their portfolio and face capital gains that have to paid, whereas a passively managed ETF won't have to distribute capital gains all that often. But tax conscious mutual funds can harvest tax losses and make their tax expense comparable to some ETFs.
Are ETFs Really More Tax-Efficient Than Mutual Funds?

if you want to get into the stock market specifically, i would recommend "The Little Book That Beats The Market" it's a great beginners guide to some of the basic principles when choosing to invest your money. Good luck!

What interest rate are you paying on your loans?

Do you have 401ks at work with a company match? If so, make sure you are contributing the amount that captures the full match.

A couple of books that advocate some simple investing systems are The New Coffeehouse Investor and The gone fishing portofolio. They are similiar in idea though the method is slightly different.

I bought Saving For Retirement over the weekend, read it, and have already opened a Roth IRA. It's a great book for people who have been "meaning to start..." for awhile. It's all incredibly simplified but it explains the basics and is really motivational for just getting started.
http://www.amazon.com/Saving-Retirem.../dp/0132271907

nuclear/1logic, cheers for the responses.
I'm still a little unclear though, I was of the understanding that tax efficiency simply means less tax due, to say nothing about how convenient your annual tax returns may be to file. Are you saying the tax is always the same, it's a just a convenience thing?

I am reading Market Wizards and have a question. In the beginning Michael Marcus said he got broke when buying special commodities. How do they really work?

I mean, stock you can keep when they are really really low and hope they rise. But how come he for example deposited $5000 and got broke on his whole roll? Why are there no value left at all?

Without having read the book to know what he invested in I'm not sure anyone can answer.

Could he have bought options that expired worthless?

Both.

I was bringing up something people need to consider also though, but the primary driver for tax efficiency is that majority of ETFs are based on indexes which do not turn over (buy/sell) often and thus have limited capital gains.

Take for instance American Funds Growth Fund of America. From 1997 to 2000 it had HUGE capital gains that contributed immensely to its outperformance - before taxes. Granted with taxes it was still an outperformer, but for many people those gains were reduced on a Real Return basis because of taxes. Therefore it was not a very tax efficient investment.

I think this was around 60's and it was either cotton or soybeans or wheat, dont remember exactly. He bought some kind of contracts and the government had something called "Limit up" and "limit down". Can't really grasp what kind of stuff this was about and how they could be completely wiped out.

If you buy wheat at $5 and it first increases to $6 you have made $1. But if it goes to $4 you have lost $1. What if they go down to $0? They will most likely go up in the future, right?

I don't trade futures, but can provide some info.

They still have limit up and limit down. This is when the commodity advances or declines a certain amount and the market on it closes. There are limits to how much they can move in a day.

As for losing all your money, futures are leveraged. You don't have to put up the full amount to buy the contract. If he bought a contract for $5,000, the contract would actually be worth say $50,000. So if wheat went down 10%, he would have lost his full investment.*


*This might not be the actual specifics of the contract, as I know little about futures, but it works as an example.