Stocks for Dummies

[LynnTH]

So, I just opened up an Ameritrade Account. This is all new to me. Looking to buy some stocks right now. I have set up my bank account as payment. Don't want to fund the account as I don't know how much I will use. So my question is - say I buy some stock at $20 a share but my bank account does not transfer the money for a few days. Do I still get the stock at $20 a share or at what the current rate is when funds are deposited...

 

[MickeyMouseCD524]

I don't know about TD but for Fidelity you initiate the transfer and Fidelity credits your account (it usually debits from the bank next business day). But once I initiate the transfer I'm free to trade as I please and they fill my trades in real time. They don't wait for the money to debit from my bank. Does that make sense? Sorry it's early.

 

[LynnTH]

I don't know about TD but for Fidelity you initiate the transfer and Fidelity credits your account (it usually debits from the bank next business day). But once I initiate the transfer I'm free to trade as I please and they fill my trades in real time. They don't wait for the money to debit from my bank. Does that make sense? Sorry it's early.

Yes, But I am not initiating any transfer of funds until I actually purchase the stock so then I will transfer exactly what I am buying. I have read that there is sometimes a delay in this so just wanted to verify that I would still the get the stocks at the value I purchased them at? (clear as mud..)

 

[starry_solo]

Yes, But I am not initiating any transfer of funds until I actually purchase the stock so then I will transfer exactly what I am buying. I have read that there is sometimes a delay in this so just wanted to verify that I would still the get the stocks at the value I purchased them at? (clear as mud..)

If you don't have funds in your account (not bank account but the account you set up with Ameritrade), it is unlikely you will get the stock you want at the buy price indicated. Companies don't typically float customers money.

note: I haven't asked my brokerage to float me any funds. Any funds I use to purchase stocks are already sitting in an account with the business

 

[georgina]

This is really a question you should ask the brokerage, they may have a FAQ somewhere online. This comes under the subject of settlement time. Many places have gone to 1 day, so the funds would have to be there in 24 hours after the trade. My Vanguard brokerage has a separate settlement fund attached which is in a money market, so it earns some interest. When I buy a stock or fund the money comes out of my settlement fund, and when I sell something the proceeds go into that fund. I can transfer money between my checking account and the settlement fund as needed. So if I want to buy something I transfer what I think will be enough to cover it into that fund first, knowing I can transfer any extra back to me.

 

[MickeyMouseCD524]

Oh got it. I agree with @starry_solo I think you would need to transfer funds to make the trade.

 

[LynnTH]

Ok. Thanks Everyone.

 

[craigkerstiens]

To add some further clarification. You need funds in your account to be able to purchase any stocks. You'll need to make sure you've setup the accounts to be able to transfer funds, that is often with some micro deposit verification. Once you've done that transfers usually take 2-3 days. Once the cash clears you can purchase stocks. When you purchase it is as of that price per share that you purchase.

When selling there is a clearing time, this is a few days before the funds are actually yours to withdraw. For stocks (equities) the trade withdraw if trade date + 3 days.

Now... some unsolicited advice. Picking stocks isn't just a matter of the companies you like, over the long term there are a lot of people that do research and pick and end up worse off than just putting into something that comprises the whole market. There are a number of funds that simply follow either the entire market or some specific index (a defined collection of specific stocks - such as the DOW or S&P 500). Over the long period these indexes tend to out perform any individual stocks that a lot of folks pick (of course there are exceptions to this). If you're simply looking to grow your money, something like a total market fund or a S&P index fund are good bets... all this said, this is fully unsolicited advice, so if you want to have some fun picking and choosing go for it, but know what you're walking into

 

[MillauFr]

Just buy their lowest cost S&P 500 index fund and then forget about it. Don't try to buy individual stocks.

 

[wishuponastar1984]

Now... some unsolicited advice. Picking stocks isn't just a matter of the companies you like, over the long term there are a lot of people that do research and pick and end up worse off than just putting into something that comprises the whole market. There are a number of funds that simply follow either the entire market or some specific index (a defined collection of specific stocks - such as the DOW or S&P 500). Over the long period these indexes tend to out perform any individual stocks that a lot of folks pick (of course there are exceptions to this). If you're simply looking to grow your money, something like a total market fund or a S&P index fund are good bets... all this said, this is fully unsolicited advice, so if you want to have some fun picking and choosing go for it, but know what you're walking into

I agree with your advice. The OP sounds like a novice investor and trying to pick stocks if you don't have a lot of savvy is like just betting in Vegas. I have my money in an Index fund which is very much a set it and forget it type of investment. It also sounds like the OP is trying to "time the market" which again is a very risky proposition. There is the concept of dollar cost averaging which means consistently investing over a period of time will almost always yield better results than trying to make a big bet when you think the market it down.

 

[LynnTH]

OP Here. Not buying a ton of stocks. Just looking at some Cruiseline stocks (CCL) as they of course have taken a dive. If we buy 100 shares then we get OBC on every cruise we take (we cruise a lot). So, only looking to spend about $2000-$2500 - nothing major. More for fun. I did figure out how to fund the account. So, that is set up. Now just seeing if they go lower before I decide to buy.

 

[craigkerstiens]

OP Here. Not buying a ton of stocks. Just looking at some Cruiseline stocks (CCL) as they of course have taken a dive. If we buy 100 shares then we get OBC on every cruise we take (we cruise a lot). So, only looking to spend about $2000-$2500 - nothing major. More for fun. I did figure out how to fund the account. So, that is set up. Now just seeing if they go lower before I decide to buy.

Cool, have fun. Cruiseline may be a great bet, but it also may take a long recovery, as long as you're okay with it going even lower and view it more as a bet and as you say are doing it more for fun then enjoy!

 

[wishuponastar1984]

OP Here. Not buying a ton of stocks. Just looking at some Cruiseline stocks (CCL) as they of course have taken a dive. If we buy 100 shares then we get OBC on every cruise we take (we cruise a lot). So, only looking to spend about $2000-$2500 - nothing major. More for fun. I did figure out how to fund the account. So, that is set up. Now just seeing if they go lower before I decide to buy.

I bought 100 shares back in 2013 for my first Seabourn cruise (a CCL company) and at the time I thought it was a pretty low risk investment seeing as I was getting $250 OBC per cruise. For a while I had made over a 25% gain but looking at it today it is down nearly 40% from my cost basis which equates to $2800 loss on my 100 share investment. This stock market downturn has wiped out all the OBC (plus more!) I had gained. Buying single stocks goes against my general investing policy. I now wish I hadn't just looked at the paltry OBC.

 

[LynnTH]

I bought 100 shares back in 2013 for my first Seabourn cruise (a CCL company) and at the time I thought it was a pretty low risk investment seeing as I was getting $250 OBC per cruise. For a while I had made over a 25% gain but looking at it today it is down nearly 40% from my cost basis which equates to $2800 loss on my 100 share investment. This stock market downturn has wiped out all the OBC (plus more!) I had gained. Buying single stocks goes against my general investing policy. I now wish I hadn't just looked at the paltry OBC.

I know the risks. But you really haven't lost anything unless you plan selling now. That is why I am looking at buying now with all the Coronavirus fears - the stocks have dropped dramatically. Good time to buy - but not to sell. Still have not bought yet. Waiting to see if if goes lower.