ETF's

How do you invest with ETF's

First you would need to set up an account with an internet broker.
Remember you will be using tax-paid funds.
Using their online trading platform you can buy and sell shares within seconds.

"Ask" is what they are selling at. "Bid" is what they will buy back at. Note these prices fluctuate, so if you wait a while the deal may get better.

You have a cash account and you can purchase shares within that account. When you sell, there is generally a three day waiting period till the shares clear, it's called settled. Re-trading unsettled funds is a no-no.

For TSP the corresponding ETF's would be Cash= G-fund, AGG= F-fund, IVV= C-fund, IJR= S-fund, and EFA= I-fund. These are iShares, there are other matches but iShares are very consistant in their daily updating.

The Cash account pays interest for funds on hand, generally at the end of the month. Not quite as good as TSP, but within reason.

So using tax paid funds, one can construct a clone of the TSP funds, trade within seconds. And going to cash; withdraw the funds in case of an emergency. With TSP an inter-fund-transfer is free. Trades with ETF's have a trade cost plus the Ask/Bid difference. Using ETF's you can go with other indexes/sectors/etc., which there is a multitude. A good reference to the various ETF's can be found at the Barcharts web site: http://www.barchart.com/
 
Spaf, you can re-trade unsettled funds immediately but if you sell those shares before they settle in three days, it's considered a "free ride" by the government and you'll be hearing about it. Unless of course you set your account up as a "day trading account".
 
M_M, anyone,
What happens if you "free ride"? What does the government do?....:confused:
 
The time I did it, this was when I first started my account, Scottrade just sent me a form that I had to sign as acknowledging that I had read and understood it. Mainly explaining what a free ride was. Never heard anything from the IRS about it. Of course I just got a letter from them a few months ago saying I owed them money from some stocks I sold in 2004 and never claimed. They were losses anyway so they ended up owing me money.........:D
 
Thanks Mike!
I could just see 4 big black SUV's parked in my front yard.........:o
 
How do you invest with ETF's
So using tax paid funds, one can construct a clone of the TSP funds, trade within seconds. And going to cash; withdraw the funds in case of an emergency. With TSP an inter-fund-transfer is free. Trades with ETF's have a trade cost plus the Ask/Bid difference.

"Unless of course you set your account up as a "day trading account"

A mention of the 'wash rule' for active trading same stock. I don't know if it applies to ETFs, probably does. Primarily affects tax loss write-off. Within 30 days, you can't buy, then sell at loss, then buy back at lower price, and write off that loss. But you can go back and match up like trades, i.e., you made the round turn 4 or 5 times in oct and again in nov, you could offset any of the losses in the first month with gains from trades 30 days later
 
FUTURESTRADER,

What you are saying is critical to having a reputable internet broker. At the end of the year you need to download your trading transactions, and have an accountant that can translate that into your tax return. If not the IRS will be after your rear end. Been there, done that!
This sounds funny for me since I worked in the same building with the IRS, on the floor below them......:embarrest:
 
Anyone interested in investing in the four fastest growing countries (Brazil, Russia, India, China), then check out Claymore's new BRIC ETF - Ticker symbol EEB
 
ETF's in an IRA?

I'm looking at transfering my TSP to an IRA to take advantage of the 72t rule.
Would ETF be a good choice? No taxes or paperwork involved inside IRA right? You could mirror TSP funds. Would the costs be too high?
 
Re: ETF's in an IRA?

I'm looking at transfering my TSP to an IRA to take advantage of the 72t rule.
Would ETF be a good choice? No taxes or paperwork involved inside IRA right? You could mirror TSP funds. Would the costs be too high?

clester,
I use ETFs for trading with my internet broker, there are so many that you can mirror just about any index or sector. A lot of the internet brokers offer IRAs
There are some web sites that set up portfolios using ETFs!
However, to set up a long term IRA, I would look to see what some reputable mutual fund companies offered i.e., Vanguard, USAA, etc.
I would definitly do some research before making a final decision.
I think EWGuy has gone down this road. You may want to send him a PM and see what he has to say.
Spaf
 
Thanks Spaf,
I was thinking of EFT's for the flexability. Most large companies like vanguard restrict you ability to move around. On the other hand expenses are low.
I assume EFT's with internet brokers have the $10 per trade fee, are there other fees if, for example, you trade large blocks like $50,000 like I do with TSP?
 
Yea, brokers charge a fee for a trade, whether you buy 1 or thousands. Most trades are done in blocks of 100, but you don't have to. The fee is what the broker makes. Brokers that charge more generally have more frills to their systems.

The other cost is the "ask" and "bid" price. If the stock had a price of $20.00 they could ask 20.05 for it....or they would bid (buy it) for 19.95. That's where the company makes the money.

What broker one goes with is a matter of personal preference, but I would caution against the real cheap ones.
 
So, do you think ETF's are a good option if I transfer my TSP to an IRA and make SEPP withdrawals? just looking for best guesses. anyone? thanks.
 
So, do you think ETF's are a good option if I transfer my TSP to an IRA and make SEPP withdrawals? just looking for best guesses. anyone? thanks.

As with any investment, there are risks. I like ETFs because there are so many to chose from and they are mainly indexed to mirrow a certain sector. However, check out www.barcharts.com go to market overview and click on ETFs, there you can see the majority of the funds and their performance. Plus you can play with their performances via the tab buttons. Another good site is www.iShares.com
 
I recently bought FXI , which is capturing the China market. A bit of diversification into Asia while it's on the upswing. It's an iShares EFT.
 
Sharebuilder is a Warren Buffet company I believe. It is more of a buy and hold broker.

Scottrade you can transfer money electronically or they can transfer money from a savings or checking account like a allotment.
 
I am interested in this one: H & Q Life Science Investors

Georgia gal:

HQL appears to have lost a significant amount of value over the last 12 months, going from about 18 bucks down to 13 bucks, and has a negative 25 percent growth rate.

What do you know that makes this one worth looking at? Yes, it's paying a dividend. But there doesn't appear to be many other things to make it an outstanding performer.

So what do you know about it?

thanks
 
Hey James,

I know debits and credits, and I know tax law, and I know how to cook, etc. etc.

I'm interested in HQL because I'm interested in investing in biotech companies for the long haul because of the aging baby boomer population. We baby boomers are squeaking like a gazillion little mice, wanting everything to be cured.

I like the idea of somebody with more expertise than me doing the picking. And, I like the idea that the price has dropped. That's a good thing.

I'm going to do more research before I set it up after the first of the year, but right now it looks like I'm going to go with a sharebuilder account, and it looks like HQL will be my primary target for now.

By the way, this year I made what turned out to be fabulous investments in ALNY and RNAI. And I could a made a bunch on ACOR but my broker talked me out of it. And so far my ANIK is doing well also.

I'm just real interested in Biotech. I am so sad that I did not buy Genentech. (sic?)

GA
 
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