Author: Mike Holman

Categories
Money

TradeKing Online Broker Review

TradeKing

Customer-driven TradeKing is an award-winning online discount broker that charges a flat commission for any kind of equity order – be it market, limit or broker assisted. TradeKing only charges $4.95 per trade; Zecco is slightly lower at $4.50 per trade but has pricing tiers for different types of trade including $19.95 for broker-assisted orders.

Trade King charges only $0.65 for an option contract. There is no minimum to open or maintain an account, but margin accounts require $2,000 for equities and $25,000 for writing naked puts and $100,000 for writing naked calls. A naked option trade is executed by someone who does not have a position – long or short – in the underlying stock and is exposed to considerable risk.
Award-winning Customer Service

TradeKing is pretty nifty and has garnered awards from industry standard like Barrons and Smart Money in 2008 and 2009 for outstanding customer service – you are assured of speaking to a live person in minutes without having to punch a lot of buttons, expect an email reply within 2 hours on a trading day. Better yet, you can even have a live chat to get immediate feedback if you are still confused about an issue.

While every brokerage is obliged to get its customer the best price available, that does not always happen especially with a volatile stock. TradeKing promises best execution – such as speed of transaction and execution price, failing which, your trade is free. There are some exemptions to this, such as advanced orders and stop orders and it is best to be aware of what these are.

Impressive Suite of Free Tools

Another of TradeKing’s appeal lies in its easy user interface arsenal of free trading tools for stocks, options, EFTS and mutual funds. For stocks and options, it has scanners that will trawl through the market for those names that fit your criteria. You can save the criteria and not have to input them each and every time. There are useful interactive tools with views that you customize, such as easily zooming from short to long-term horizons, drawing trend lines or comparing performances against the stock indices.

It has intuitive tools for options trading. In the options scanner, there are 25 criteria to define the options you are looking for. There is a companion options strategy tool that will devise options strategies from basic puts and calls to straddles, strangles and collars. You can place an order without having to change screens.

Uses the profit and loss calculator to figure out the potential for making or losing money from possible or existing positions, and a probability calculator to work out how likely it is your stock or option will reach touch your desired price. Additionally, there is a very powerful tax manager which processes all transactions and corporate actions, works out, before you trade, short and long term gains or losses, and churns out tax reports on demand.

Special Offers and Education

TradeKing provides a whole range of educational materials in a variety of media such as videos mp3s, text and podcasts so that you can down load a seminar and listen to it on your iPod. Materials go from basic to sophisticated trading strategies. It is leveraging social media and has a trader’s community where you can follow the top trader, ask questions or chat with like-minded investors.

Currently, TradeKing is running some very attractive promotions. It will: –

  • Reimburse up to $150 in account transfer fees
  • Pay you $50 for every referral that opens an account with $1,000 and executes you a trade. The $50 bonus shows up in your non-Ira account.

Although there are slightly cheaper discount brokers around, TradeKing has a very impressive all round service. Operating since 2005, TradeKing has earned well-deserved kudos from both users and reviewers.

Categories
Money

Roth IRA vs Traditional IRA

When making decisions about your financial future, it can be confusing and frustrating trying to understand the ins and outs of financial planning for retirement. Many people can’t afford to make a money mistake. Understanding IRA’s may be one of the more difficult aspects of planning for retirement savings goals. But gaining the knowledge of which IRA may be better for you, the Traditional IRA or the Roth IRA, can help to improve your money in the future.

Traditional IRA

First off, IRA stands for Individual Retirement Accounts. They are designed by the federal government. The Traditional IRA was first established in 1981 to help American citizens with a way to save for retirement through a means that is tax beneficial. Taxpayers are able to contribute a yearly total of $5000 or $6,000 (over 50 years old) into an account. The contributions are tax deductible and earnings on the account are then tax-deferred until the account holder reaches the age of 59 ½.

Roth IRA

The Roth IRA is a more recent venture, established in 1998 is not an option to individuals who have a gross yearly income of $110,000 for singles and $160,000 for married people. Also with the Roth IRA, the contributions are not tax-deductible in the year they were made. However, the money contributed and distributed from a Roth account is tax-free during the lifetime of the account.

Deciding which kind of IRA is the right one for you will ultimately be a personal decision. Each person may have their own opinion about which to choose so individuals are best to decide for themselves or upon the advice of a financial advisor. Many feel that the Roth IRA is the best choice because in the long run all the money in the account will be tax-free for life (provided laws remain the same), even if the contributions are not during the working years. If you meet the financial guidelines, the Roth can be viewed as having the more valuable option. Some individuals feel that they prefer the tax-deduction benefits during the working years through the Traditional IRA. Concern about the changing of laws in the future years is relevant because of the country’s growing deficits.

Making the Change

Some individuals will first choose one type of account over the other but then down the road change their minds. Regardless of which account you started first, you can make the switch. You can do what is called a ‘rollover’. While a rollover is possible, it doesn’t come without a cost. You will be required to pay taxes at ordinary rates on the amount transferred but you are not required to pay penalty fees for early distribution. Making the decision to rollover funds will require that you look at the end result and if the hit you took in taxes early will be less than what you would have spent in the long term. For instance, if an individual 35 or younger were to convert from a Traditional to a Roth account, the move would likely be smart and ultimately pay for itself but not work from those older than 35.

Categories
Money

ShareBuilder Online Broker Review

ShareBuilder is a subsidiary of ING Bank and is consistently rated as one of the top discount online brokerages.  If you have an ING Direct account, you can connected it with your ShareBuilder account which makes the entire process of investing simple – and creates the opportunity for ShareBuilder’s most notable feature of automatic investing.

Automatic Investing with ShareBuilder

While many investors push for frequent day trading and short investments, ShareBuilder promotes the idea that wealth is created through long term investing and automatic investments.  They are also a fan of reinvesting your dividends.

There are some very attractive rates for individuals using ShareBuilder with automatic trades.  You can purchase fractional shares which means every cent of that investment is going toward the cost of buying your selected stock.

Automatic investing allows you to purchase specific dollar amounts of stocks on a weekly, bi-weekly or monthly schedule.

Real Time Trades with ShareBuilder

If you decide you don’t want to use the automatic investing feature of ShareBuilder, or that you would like to supplement it with real time trades, you can do that as well.  You can buy or sell your stocks in share amounts real-time, act immediately on your investment decisions and conduct orders in seconds during market hours.

Open a ShareBuilder Account

If you have about ten minutes, you have enough time to open an account.  You just need to have your standard personal and financial information available to open the account online – including your social security number, employer, bank account data, identification and address.  They also ask you about your trading experience.

Once you’ve opened your ShareBuilder account, you have some options for the plan you’d like to use.  There is a Basic Plan, Standard Plan and Advantage Plan available.  On the Basic Plan, you don’t pay a monthly fee but you pay $4 for each automatic investment.  The Standard Plan is $12 per month, and you get up to 6 automatic investments included at that price, with additional automatic investments at $2 each.  For individuals who want to use more frequent automatic investing schedules, the Advantage Plan is $20 per month and includes 20 automatic investments and additional automatic investments at $1 each.

Real-time trading will cost the same per trade no matter which ShareBuilder plan you select and seem a bit pricey at $9.95 per online trade.  For more info on ShareBuilder’s pricing, visit their pricing page.

How to Use ShareBuilder

If you have an ING Direct savings account or an Electric Orange checking account through ING, you can connect them to your ShareBuilder account and transfer money for free, instantly.  If you use another bank account, you can transfer money to your ShareBuilder account through ACH, checks, or wire transfer. If you’d like to place a real-time order and cover the cost of the order from your bank account immediately, ShareBuilder uses Express Funding and charges $5 per trade to do so.

You can set up automatic transfers from your bank to your ShareBuilder brokerage account to fund your automatic investing, or you can make real-time trades via the internet or phone.

Categories
Announcements

Congrats To Globe And Mail Best Blog Winners

As most of you know the Globe and Mail just had their annual blog competition.  This year there were two categories (investing and personal finance) and only Canadian blogs were entered.  Money Smarts ended up getting 4th place in the personal finance category.  I was happy with this since the first three blogs are much bigger and presumably have an easier time rounding up votes.  We ended up getting 517 votes which I thought was quite good.

Unfortunately the Canadian Capitalist was part of the blog picking panel so his blog wasn’t in the competition.

Congrats to the two winners – Squawkfox and Preet as well as everyone else in the competition.  And thanks for anyone who voted for Money Smarts!

Here are the final standings for the personal finance category:

  1. Squawkfox – 1034 votes
  2. Million Dollar Journey – 809 votes
  3. Gail Vaz-Oxlade – 793 votes
  4. Money Smarts – 517 votes
  5. Canadian Personal Finance Blog – 490 votes
  6. Canadian Mortgage Trends – 382 votes
  7. Michael James on Money – 364 votes

And in the investment category:

  1. Where Does All My Money Go – 978 votes
  2. Canadian Couch Potato – 831 votes
  3. Larry MacDonald – 609 votes
  4. Think Dividends – 470 votes
  5. Canadian Financial DIY – 461 votes
  6. Humble Student of the Markets – 443 votes
  7. How To Invest Online – 357 votes
Categories
Announcements

Blog 3rd Birthday and Globe and Mail Best of Blogs Competition

We’ve just passed the third anniversary of Money Smarts Blog otherwise known as the blog formerly known as Four Pillars.  Three years, about a thousand posts and I feel like we are just getting started.

Thanks to all the readers who have read our stuff, commented and bloggers who have linked to us.

Globe and Mail Best of Blogs Competition

We are honoured to once again be an entrant in the Globe and Mail Best of blogs competition.  There are a lot of great blogs in the list so go check them out if you haven’t already done so.

You are welcome to vote for Four Pillars in the personal finance category.  The way the voting works is that you can pick 3 blogs as your faves so that will allow you to pick two good blogs plus this one.  🙂

This is the link to get to the voting page.

First time visitor?

Feel free to check out our blog and subscribe to our feed to get new articles everyday or subscribe to posts by email.

We’ve got lots of articles on investing, real estate, RESPs and just about any other topic you can imagine!

Here are some of our most popular posts:

Check out the archives for more articles.

Thanks for visiting!

Categories
Announcements

Four Pillars Renamed To Money Smarts Blog

For anyone checking out the Four Pillars site you might have noticed that the domain has changed to MoneySmartsBlog.com.  This is the big change I alluded to a month ago.

I picked the wrong weekend to do this switch as I haven’t even had time to change the header or a bunch of other stuff – but oh well.  It’s done!!

Please let me know if you see any problems with the new site.

Mike

Categories
Investing

Timing The Stock Market


As I’ve articulated before, I’m not a big fan of timing the stock market, and everything I’ve read about the efficient market hypothesis (that stocks are rationally priced at all times based on the sum of everyone’s understanding of the market) makes sense.

That being said, there also seems to be a great case against selling when markets fall, or buying when markets are very bullish (going up fast). Following the market sentiment apparently can erode the gains many investors could have made. The average investor supposedly made around 6% annually in the market during the 90’s, when the market as a whole was gaining 16% annually. The explanation for this was that most investors were following the “hot money” and buying things AFTER they’d increased in value.

The general advice seems to be that the best thing to do would be nothing.

Given this, if its a bad idea to sell after the market has dropped like it has recently, wouldn’t it make sense that now is a good time to buy? If people lose money selling in fear after a drop and buying in greed during a bull market, it seems to me that doing the opposite should be a good idea. This is often called a contrarian strategy and while I haven’t read much of an objective critique of it, I imagine the investors I admire would claim that its just another form of market timing.

My strategy is to buy from a pool of stocks that have a long history of uninterupted, increasing dividend payments. I currently own BMO, NA, ROC and RUS (this one was a mistake, I somehow got it in my head that it fit my criteria, and afterwards realized its a cyclical). After a price drop, it seems rationale to try to scape together more money to buy more of this (since if I figured they were worth buying at X, they should definitely be worth 90% of X).

I believe the conventional wisdom though, would be to just keep buying on my regular schedule and not try to buy extra (i.e. time the market).

Categories
Frugal

Fun And Frugal Activities With Your Kids – Riverdale Farm

Every parent of young children is continually looking for new activities to do with their kids.  Preferably activities that are inexpensive or even free.

One option I have is to take my kids to Riverdale Farm which is located near the downtown core here in Toronto.  Of course this particular activity isn’t available to everyone reading this but perhaps there is something similar near where you live.  If you do live within a reasonable drive of Riverdale Farm (it is near the Don Valley and Gerrard) then I strongly suggest you check it out if you have little ones you need to entertain.  The farm is free, has free parking, open all year and even has special activities once in a while.

There are quite a few different animals there – cows, sheep, goats, horses, pigs to name a few.  Recently there were a number of baby animals – the piglets were the cutest by far.  The setting is quite scenic – it is fairly hilly and there is a path down to the Don Valley as well as a pedestrian walkway which spans the Don Valley river and parkway and ends up in Riverdale park.

My kids like the animals but their favourite activities are running around and rolling down the grass hills.

Most of these photos are from last November and a couple are from late February – you don’t need to wait until summer to enjoy the farm.

All pictures taken with my Canon 200sx.

Does your area have any free farms or petting zoos available?

Mmmmm....future bacon.
Feeding the goats (which is not allowed by the way!).
Horsies.
Unfriendly stare
Donkey.
Rasta Sheep.