I followed some ‘theories’ but every stock trade just resulted in me paying out a minimum of 1% in fees just to buy it. My returns were crippled. THEN Etrade & Ameritrade started their “account maintenance fees” of 15 – 20 dollars every 3 months. That was 1-2% percent of all the money I had! It was awful.

If I had to do it over again, I’d go with no fee DRIPS (dividend reinstment plans). I’d pick a strong company with good dividend returns (I’ve done well with Southern Company (SO)) and let the money sit there. Why? It’s not a glamorous investment.. it’s not going to get me 10% in a month but with investing.. you need to have something that will give you solid, predictable gains. That way you have backup when you do riskier ones… it’s called diversification.

If I didn’t want something that safe.. I’d go with an EFT. EFT stands for exchange traded funds. They’re a select group of stocks that are bought.. and then rarely sold unless necessary. In other words, they’re passively managed. This saves you money in two ways – for one, you don’t have to pay a big shot group of people for their continual oversight and trading of your basket of stocks.. and two.. it minimizes your tax burden. During the stock market crash in 99-00, mutual fund holders were not only paying high fee loads while the value of their mutual fund plummeted.. they also had capital gain tax to pay. That *****.

You can pay tax on a mutual fund that decreases in value if your manager sells funds that have increased in value (thus earning money and making you pay tax on it) while not selling stocks that are losing money (and therefore not offsetting the gain)

So in summary.. consider two things. DRIP plans and EFT funds. Ishares is a company that trades in a lot of EFT funds.. there’s also one I’ve been eyeing for awhile.. symbol EEM. Developing countries EFT.. unbelievable performance w/in the last year.

Anyway food for thought. Just pay attention to your costs of trading – whether it be mutual fund expenses or stock trading expenses.