Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Saturday, July 7, 2012

Client Makes First Trade

Source: Capital Pixel
Experts continually point out that market timing and stock picking over long periods of time underperform the major market indices after taking into account fees, hidden and explicit, charged by active managers.

The impact on retirement assets can be substantive.  This has, understandably, attracted considerable attention to indexed investing.

The icing on the cake that investors are coming to understand is that the process is easy, doesn't require a lot of time, and can readily be monitored to see if you are on track to produce the required nest egg in retirement.

This week I introduced the trading part of the process to a novice investor.

We first reviewed 3 basic steps:  asset allocation, figuring out how to invest, and monitoring the process.  We chose an asset allocation model that is basically 40% stocks/60% fixed income/cash.  She is 42 years old and this is her entry into the world of investing, so she is starting a bit conservatively.  She set up her brokerage account with Schwab.

The model is: 
Source: Schwab

CLICK GRAPHIC TO ENLARGE  As you can see, the targeted percentage for each asset class is specified.  From here she just needs to know what funds to invest in, do a little arithmetic, and where to go on the Schwab site .

Broker sites will have a prominent link on their main page to execute a  trade.  Click on the Schwab trade link and it takes you to:
Source: Schwab

CLICK TO ENLARGE This, of course, is where you enter the trade.

She opened her account with $10,000 and, by her model (above), she wants 25% in "Large Cap Equity."  Thus, she needs to invest approximately $2500 in a "Large Cap Equity" index ETF.

There are several ways to find the ticker symbol for various choices.  One way is to Google "large cap indexed ETFs."  Another way is to find someone who is knowledgeable about markets.  I suggested the commission-free Schwab ETF with ticker symbol SCHX.

At the bottom of each Schwab page is a quote box, which she used to find the price of SCHX.

Source: Schwab
She divided $2500 (amount she wanted to invested as determined above) by the price-per-share of $32.21, and she found that she needed to buy approximately 75 shares.

From here it is straightforward.  In the box above, she entered the symbol (SCHX), selected "buy" from the "Action" drop-down menu, entered 75 in the "Quantity" box, and chose "Market Order" from the "Order Type" drop-down list.  Then she clicked "Review Order."

CLICK TO ENLARGE  Note the estimated dollar amount of the trade.  On the same page, the amount available to trade is also given.  It is good practice to get in the habit of eyeballing this amount.

All she had to do next was to scroll down and hit the green "PLACE ORDER" button.

She had made her first trade!

Disclosure:  This post is for educational purposes.  Individuals should do their own research or consult a professional before investing.


  1. Nice newbie tutorial Robert! To add to the fine post, be wary of the type of asset and the kind of account you have. Some assets are meant for tax deferred accounts and some like MLPs fit nicely with taxable accounts.

  2. Good points. In this instance it is a couple who are American citizens working overseas. They have no 401(k) or similar brokerage account and just want to get started learning how to invest their own assets.