I want to buy five stocks and hold them. What's the cheapest way?
December 4, 2013 6:11 AM   Subscribe

I have 3,000 and I want to buy four or five stocks and hold them for the next ten or more years. What's the cheapest way to buy these four or five stocks.

I'd like to buy 4 or 5 "value stocks" that I think will grow in the future. I am well aware of the risk involved in losing my entire 3k investment+comission fees. I'm fine with that. These stocks are also investments that I want to hold indefinitely regardless of market viscissitudes? What's the absolute cheapest way to purchase these stocks? I want to mimimize fees as much as possible. I'd like to allocate this 3k over these four or five stocks as well. Is there a good site that will let me do this optimally, doing the calculations as to how much to buy of stock a, b, c, d, and e so that it totals 3k or so.

Again I don't plan on trading them anytime in the near decade. I just want to buy them, hold them, and that's it. Which brokers (an ironic term for someone who is supposed to make you money, no?) chargest the fewest fees and takes a hands off approach.
posted by RapcityinBlue to Work & Money (10 answers total) 12 users marked this as a favorite
Look at the online brokers - a bunch of them will offer a certain number of free trades. If someone is offering that deal right now you should be able to actually do this for free. Buying liquid stocks is something you should be able to execute for a flat fee very cheaply assuming no one is trying to gin up new business with free trades.

Just make sure there isn't an account minimum under which you'll have to pay a fee.

Most of the online brokers have some functionality like you are looking for - but- I'd probably just use XLS or Google Docs to figure out quantities.

No online broker is going to try to get you to do anything - I wouldn't worry about the "hands off" approach.

I have a basket of really cheap financial stocks I bought in fall '08 that I funded, made the trades and log into the account once a year to download the tax docs. I'm not even sure they send me emails anymore.
posted by JPD at 6:27 AM on December 4, 2013

Here's a guide to discount brokers. Looks like Options House is cheapest, but I'd suggest spending just a few dollars more and getting an account at Schwab or Fidelity. They offer more services (but are still hands-off), so if in five or 10 or 20 years, you want to do something more, you won't have to open a new account.
posted by Mr.Know-it-some at 6:53 AM on December 4, 2013

You may not need a broker at all. Your preferred publicly held companies may offer no-to-low-cost investment services such as a dividend reinvestment program (DRIP) or direct buy program. Check each firm's web site under "investors" to get the details.

Many of the most popular DRIPs and direct-buy programs are served by Computershare.
posted by peakcomm at 7:24 AM on December 4, 2013 [1 favorite]

Whatever you do, make sure they don't have a low account activity fee. I have a similar strategy and was holding stocks from 2006. A few years ago the Canadian portion of the on-line broker was bought by a different company and my stocks were split into two different groups. The new group charged me a low activity fee of $25 a quarter, so when I checked it out at the end of the year I was $100 in the hole. Grr.

If it helps, the account that charges the fee is Scotia iTrade. The original (otherwise fee free) account is E*Trade.
posted by valoius at 8:51 AM on December 4, 2013

ShareBuilder has worked pretty well for me at $4 a trade. The difference between their $6.95 "online trade" and $4 "automatic investment" options is that the $6.95 option lets you buy stocks NOW, whereas the $4 option buys only on Tuesdays. They have various offers where you can get $50 for opening an account (although it depends on what kind of account you want) so if you only make 5 trades, you could potentially come out $30 ahead.
posted by gueneverey at 10:26 AM on December 4, 2013

Are you sure you have picked the right 4 or 5 value stocks? You could purchase the Vanguard Value Index Fund which holds 312 value stocks. Annual fee is $7.20 for a $3000 investment.
posted by JackFlash at 11:22 AM on December 4, 2013 [2 favorites]

Sharebuilder offers free investment credits (for the $4 automatic Tuesday investments) periodically. Check slickdeals or other sites -- I recently found about 10 automatic credits.
posted by jabes at 2:20 PM on December 4, 2013

In regards to a broker, I have used Tradeking for several years for exactly this sort of thing and have been very happy with them. It's $4.95/trade, with no account fees or trading minimums if your balance stays above $2500.

You'll have to figure out your allocation amongst the stocks yourself.

If you're going the value investing route, I would think about possibly setting target prices for whatever stocks you buy. Doing this isn't absolutely critical but even very solid companies do become overvalued by the market from time to time. You can be a lot more relaxed and have a better chance of sticking to a holding strategy if you've rationally set up a sell point ahead of time. Of course, you can revise this price as a company's prospects change. You want to be cool-headed when you buy and cool-headed when you sell.
posted by eelgrassman at 12:13 AM on December 5, 2013

nthing tradeking. They have good educational material for beginner investor.
posted by radsqd at 7:06 AM on December 5, 2013

I just asked this question earlier this year. I ended up using Scottrade, as the delta between a $4 trade and a $7 trade seemed small enough, I trusted the name, and Scottrade's site is easy to use. There are no annual fees; you just pay $7 flat to buy the stock.

Whatever you use, if your stocks will pay dividends you should look into whether your place has a DRIP or FRIP (reinvestment of dividends commission free). Most, but not all, of them do.

Maybe this is against the rules (if so, mods, please delete and I am sorry), but Scottrade has a referral deal where the referrer and the referee each get 3 free trades, so if you do go with them I'd be glad to do that. MeMail me if you are interested.
posted by AgentRocket at 2:28 PM on December 5, 2013

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