Welcome to Investing for Beginners podcast, this is episode 39. Andrew and I are going to respond to an email that Andrew got asking us some questions. So today we’re going to talk a little bit about some of his questions, go in-depth and answer those for him.
So without any further ado, I’m going to turn it over Andrew, and he’s going to take us through some of the questions.

* How trading fees can affect your investments
* How IRAs work
* The differences between a Roth and a Traditional
* The benefits of a 401k
* Some pros and cons of Robinhood

Andrew: thanks, Dave, okay this is from Kurt.  Kirk says
“Hi Andrew, I recently less than two weeks ago came across your podcast and found it so useful and informative. Then I went back to the beginning and then in the process of binge listening to my way through the list of 30 some episodes.”
Andrew: which by the way I say that I highly recommend doing that I remember when I first started listening to podcasts I went through archives of the ones I liked and that’s a great way to you know get knowledge and get acclimated with what’s going on with these topics of these podcasts. so continuing to read on with the email
“before discovering the Investing for Beginners podcast I loaded RobinHood on my phone and began thinking about which stock or fund to purchase. I’m glad I found you when I did, I still don’t have a clue which will be my first purchase, but I now understand that my original selection would have been based on greed for something that is likely overpriced or has other indicators of a poor investment.”
Andrew: sidebar again, that’s very insightful and good job there Kurt at recognizing that and potentially you know you probably saved yourself thousands of dollars in losses and pain by stumbling onto this resource and really taking it to heart and picking it up really quickly, so that’s great back to the email Kurt says so
“I set up my account with Ally, and I’ll keep reading and doing company research. I hope to make my first of many regular monthly investments around Thanksgiving, possibly sooner if something happens to cause the market to dip. thanks again for educating beginners like me to save us from ourselves.”
Andrew: you’re welcome, very well put.
“I’m finding this to be fun and refreshing after 20-some years of dealing with mutual fund and annuity managers who offer little help and don’t have a clue on how to be an intelligent investor.
Andrew: Now to the questions. Do they, so he’s talking about Ally’s  $4.95 trading fee.
He asked: do they charge both buying and selling or one or the other?
So some of these are just going to rapid fire. Dave, I know you know the answer.
Dave: that would be yes.
Andrew: yes so you got a fee on the buy fee on the sell.
How much does the investment need to appreciate before one makes that back?
Andrew: I mean that’s going to depend on how much you’re putting in. So I believe we’ve talked about it before but on 150 dollars a month that’s anywhere from one to three percent of a loss like right off the bat.
If you’re going to invest more than that obviously making $4.95 back isn’t that big of a deal. That’s a big reason why I always talk about you know try to have at the bare minimum one hundred and fifty dollars to invest. So you’re not losing five, ten, fifteen percent straight off the bat just off of a transaction fee.
When you when you talk about a thousand dollars or more it that $4.95 is unsubstantial and you know you don’t have to make you don’t have to worry about it you don’t have to wait a long time to make that up.
and even in the grand scheme of things I mean you’re going to see stocks go up in you could see him go up a...
United States


00:00:00your tuned in to the investing for beginners podcast step by step premium investment guidance for the led him to say there is a a her to decode industry jargon silence crippling confusion and help you overcome the motion by looking at the numbers your path to financial freedom now
00:00:36right folks welcome to investing for beginners podcast this is episode thirty nine injured I are going to respond to the email that enter got asking us some questions so today we're going to talk a little bit about some of his questions going depth and answer those for him
00:00:54Sorani further do I'm gonna turn over Andrew and he's going to take us to some other questions thanks Dave okay this is from Kurt Kurt says hi Andrew I recently less than two weeks ago came across your podcast and found it so useful in them for informative that
00:01:11went back to the beginning and then in the process of bins listening my way through the list of thirty some episodes which by the way I say that I highly recommend doing that I remember when I first started listening to podcasts I totally went through archives of the
00:01:29ones I liked and that's a great way to you know get knowledge and get acclimated with what's going on with these topics of these podcast so continuing to read on with the email prior to discovering the investing for beginners podcast I loaded Robin Hood on my phone and
00:01:45began thinking about which stock or fund to purchase I'm glad I found you when I did I still don't have a clue which will be my first purchase but I now understand that my original selection would have been based on greed for something that is likely overpriced or
00:02:02has other indicators of a poor investment side bar again that's very insightful and good job there Kurt at recognizing that and potentially you know you probably save yourself thousands of dollars in losses in pain by stumbling on to this resource and really taking it to heart and picking
00:02:22it up really quickly so that's great back to the email %HESITATION Kerr says so I set up my account with ally it will keep reading and doing company research I hope to make my first of many regular monthly investments around thanksgiving possibly sooner if something happens to cause
00:02:39the market today thanks again for educating beginners like me to save us from ourselves you're welcome very well put I'm finding this to be fun and refreshing after twenty some years of dealing with mutual fund and and they were the managers who offer little help and don't have
00:02:55a clue on how to be an intelligent investor now to the questions do they let's talk about allies for ninety five trading fee yes do they charge both buying and selling or one or the other so some of these are just gonna wrap the fire %HESITATION Dave I
00:03:13know you know the answer that would be yes yes so you get on the field by field the so how much does investment need to appreciate before one makes that back I mean that's gonna depend on how much you're putting and so I believe we talked about it
00:03:32before but on a hundred and fifty dollars a month %HESITATION that's anywhere from one to three percent of a loss like right off the bat if you're gonna bust more than that obviously making for ninety five back isn't that big of a deal that's a big reason why
00:03:49I always talk about you know try to have at the bare minimum a hundred fifty dollars to invest so you're not losing five ten fifteen percent straight off the bat just awful transaction fee when you when you talk about a thousand dollars or more is that for four
00:04:07ninety five Israeli on unsubstantial and you know you don't have to make you don't really have to worry about you don't have to what wait a long time to to make that up and even in the grand scheme of things I mean you're gonna see stocks go up
00:04:20and down who you could see him go up percent on a percent sometimes more than that sometimes in the in the decimal ranges and so you don't want to get into that mindset too much of like all wall I gotta make this for ninety five back right away
00:04:35understand that over the course of the year over the course of their inner sixty five days however many trading days are in there the the stock's gonna fluctuate and you're going to see it go up and down by depending on how much you put then it could be
00:04:50anywhere from a couple Bucks couple sense you could see ten fifteen twenty twenty five you know hundred dollars just gain and loss within a day so these are all things that happened %HESITATION as the market fluctuates so try not to fix a on that but at the same
00:05:08time understand that yes it does make an impact on your return so make sure you are trying to invest as much as you can and that the bare minimum try to do like a hundred and fifty dollars per trade back to the questions he asks what are other
00:05:24real costs of training such as taxes this this could be a great this is this is a great topic all on its own so I think we should talk about this Dave because we haven't really covered like capital gains taxes and I don't it's something that's so we
00:05:45may second and to me I I love getting this question because to me I've been doing this for five years plus and so these type of details is so intuitive to me and to me it feels like two plus two equals four but I know that %HESITATION as
00:06:02a beginner you you're taking this all in and it's all brand new to you so there's a lot of different rules and and different kind of tricks that you can do to really help your your returns and and help your capital grow in obviously avoiding taxes %HESITATION you
00:06:17know we're not saying that an illegal way but kind of crafting the tax code to work beneficially for you is definitely a big part of investing obviously rich people know how to shields their money from the government if you want to put in that in those terms so
00:06:36let's talk about taxes real quick %HESITATION capital gains taxes there's long term and short term first Dave once you go over like how can we avoid taxes as an investor I never selling that's true I mean always honestly like you know people talk about buff and stuff and
00:06:56%HESITATION I I think you talked about that before where you know that that that's one of the best ways to to have a tax shelters and never saw yes and that's actually what I kind of try to practice so yeah I mean there's not only are there performance
00:07:16gains from doing that but obviously the tax implications but you know you you started your side as IRA for beginners dot com IRA's are fantastic way to limit the impact of capital gains taxes so break those down for us and and how they relate to like the tax
00:07:37%HESITATION dilemma well I guess the the easiest way in and kind of the simplest terms when you think about the different kinds of accounts that you could you could open it when I'm talking about accounts of talking about IRA's so when you look at either a Roth IRA
00:07:56or a traditional IRA it has implications on whether that money is tax up front or whether it's going to be taxed on the back end and the so when you look at it a Roth IRA for example let's say that you have a hundred dollars that you're taking
00:08:12out of your paycheck and your depositing that into a Roth IRA to invest for your future that hundred dollars has already been taxed by the government soul Uncle Sam at the end of let's say you know that grows to a thousand dollars some day which would be awesome
00:08:29when you take that money out you are not going to be taxed on that money because you've already paid your taxes on that hundred dollars so the only tax implication you would have would be on the investment itself on the gains in the investment but with the traditional
00:08:51the traditional is not taxed so that is going to be money that is going so there's the traditional there's kind of two not benefits I guess you could say benefits there are wind that money is the hundred dollars is taken out of your paycheck and is put into
00:09:09your traditional IRA that reduces your taxable income by a hundred dollars so that on that particular paycheck and when you do your taxes into the year that money is a hundred dollars less so in theory you're paying Uncle Sam a little bit less money at that time however
00:09:27when you put that hundred dollars in a traditional IRA and you go to take that money out you're going to be taxed on that money thirty forty fifty years down the road so it really kind of depends on how you want to do it there is a lot
00:09:43of different trains the schools of thought on how you should handle IRA's and we talked a little bit about that in the past and I've written some articles about that as well to go more in depth fun that the I guess the quick and dirty easy way to
00:09:58think about it is if you're younger it's probably a better way to go by going the traditional route because you're going to have all those decades of time to earn all that money that you're not gonna have to pay taxes on when you quote unquote graduate in the
00:10:15year you get done with working and you get to retire and sat on the beach you don't have to pay taxes on those monies bought the flip side of that you know I knew the other advantage in this is what the school of thought is with the people
00:10:27that go with the Roth route is that we don't know what to tax rates going to be thirty forty fifty years from now heck we don't even know what is going to be two years from now because right now they're having a lot of discussion about changing our
00:10:39tax code so these all have big implications on what our money's going to be the flip side of that is with the traditional is that you know you are reducing your taxable income now but you're taking the chance that you'll be in a lower tax bracket fifty years
00:10:56from now and you'll have to pay less taxes on that so there are a lot of ins and outs and that and I'm very much simplifying this and if this is something that you're serious about learning more about I would strongly encourage you to talk to an accountant
00:11:10that would be able to give you you know tax advice I am I'll say this right now I am not a tax accountant and I am not licensed to to talk to you about that specifically but I can give you the the overview of how it works so
00:11:23that they can kind of help you go a bit farther into that now Andrew is much more versed in the capital gains that I am I'll be honest with you on that and I know he can speak a lot more intelligently about that than I can yeah something
00:11:38there's not gonna be obviously they have these tax vehicles for when you want to retire so we talked about the IRA is %HESITATION keep in mind that you know an IRA is the same as having like a checking account in the sense that you can go to the
00:11:53bank opened a checking this open the savings and go to another bank opened another checking their you can open an IRA %HESITATION that we %HESITATION we we like to use trade king that's now called ally I know I use that personally of also have an IRA with Merrill
00:12:11edge %HESITATION one that I open the years ago so you can have these IRA's with multiple brokerage companies and that's no different than having separate checking accounts when you talk about things like for one K. A.'s which tend to be tied to like the company you work for
00:12:33a lot of times you know you have that account separate and then when you leave the company then you could roll that into an IRA %HESITATION and that that becomes another cat you can have so something that you should definitely think about if you're using an IRA is
00:12:48obviously realize that this is money that's going to not be touched until you retire else you're gonna pay huge penalties so meaning there's no like magical tax shelter that's gonna let you cheat taxes this year and completely be able to spend that money this year and and just
00:13:06not pay taxes this is not going to happen on this is one of the government's ways of really incentivizing people's investments in the savings rate and all those sorts of things but also understand that there are like contribution limits to how much you can put in and that's
00:13:22across all IRA is that you may own so per year they cap and that it's going to be different depending on how much you make what your income is so try to look that up you know this is obviously disclaimers for the absolute beginners but be aware of
00:13:37that and then that should come to help you make a decision on what kind of an account you want to buy as well not by the sign up for so when you talk about long term or short term capital gains much when you sell a stock the government's
00:13:54gonna what whatever you made from that they're going to want a piece of that now there is a short term in the long term so the way they define that is a short term capital gains tax means any stock that you've held for believe it's like a year
00:14:12you know I don't know what the exact office three sixty five or office three sixty four days so if you held the stock for a year or last that's short term capital gains tax if you held a stock for more than a year I believe it's like right
00:14:28when you get to three sixty six days then it becomes a long term capital gains tax so you know say it's November now twenty seventeen I buy a stock today if I saw the next week it's a short term capital gains tax if I sell it let's say
00:14:43December twenty eighteen and now it's a long term capital gains tax so again another reason to hold for the long term your taxes are going to be better now the difference between the short term and the long term capital gains tax it could be a pretty huge specially
00:14:58the welfare you are so a long term capital gains tax is going to be taxed at your ordinary income bracket so I mean you know you could I don't know what your personal situation is maybe on the twenty five percent thirty five percent thirty nine point six percent
00:15:15income tax bracket that's what you're going to pass a tax that's that's pretty huge ram means to say you got a stock that doubled in the you may like ten grand will you know almost five granted that's going to the government that obviously socks but that's kind of
00:15:32how it is and one way to kind of get around that is like what they was talking about with the Roth IRA where because you're the pay tax on that one you sell that stock you don't have to pay that capital gains tax so he make a stock
00:15:48that double than you bad five grand you keep that five grand and as long as you withdraw it when you retire that's your money now %HESITATION for the long term capital gains tax rate they they have different ones and this is as of this recording twenty seventeen they've
00:16:10been known to change it but right now fear in the twenty five to thirty five percent tax bracket you're gonna pay fifteen percent and if you're in the highest tax bracket you're gonna pay twenty percent so it's still a lot cheaper than than pay that the ordinary tax
00:16:26rate in something also to consider is let's say you saw the stock say soul to stocks right you made a thousand with one and you lost like five under with the other we're not going to pay taxes on the ones who lost and the one you lost is
00:16:42gonna credit towards the one you gain so in reality only made five hundred by gaining five hundred losing five hundred I mean getting a thousand leasing five hundred sealing the pay tax at the end of the year %HESITATION based off five hundred so that's why sometimes you hear
00:16:58on the financial media they'll talk about like at the end of the year which were we're coming up on now let's talk about people tax harvesting basically selling positions other down in order to lower their tax load and don't give me starlight stupid that is like to lose
00:17:16money on purpose so that you can pay less taxes is absolutely the most **** backwards thing you could do but just understand that that's the way taxes work and there's no magical way to get around paying taxes so you can understand why that's such a huge issue in
00:17:35politics is because yes there is such a potential to make money in the stock market and then when you realize like how much of it goes to the government it can be really disheartening at the beginning but that's another reason why when I talk about my eleven I
00:17:51talk about the real money portfolio and this is the one that we're putting a hundred fifty dollars a month and that's a Roth IRA so I'm actually the way I segment there is I have these trailing stops and so I'm actually selling positions maybe more frequently than your
00:18:08average buy and hold investor and a big reason %HESITATION something that to keep in mind is if you're not following along with the Roth IRA you might be paying capital gains taxes on top of that so it might not be as profitable for you because I'm in a
00:18:22Roth IRA I understand that I don't have to pay capital gains taxes because they took the money up front and so that's puts me in a position to really move through my positions as I like and and really compound money at a much faster rate assuming that I'm
00:18:38making good stock picks and taking those those cells and and putting them into a bigger bigger positions so these are all things to keep in mind maybe it changes your strategy and in the sense that if you're in a traditional maybe %HESITATION by a whole you're gonna be
00:18:58more buy and hold than the a portfolio that's a rock because the traditional will have capital gains taxes %HESITATION which I believe that's when your when you take it out right is when the when the %HESITATION take those capital gains taxes are not gonna they won't charge yeah
00:19:16down here whatever down now it's only it's only when you make a withdrawal right okay so I mean but it still might change your strategy a bit because knowing that you have to pay those taxes as you know I might be wrong the weather be any capital gains
00:19:34taxes on just retirements in general right is there only to them that my only tax you on the withdrawal amount not not so much like leading all the tech capital gains taxes accumulate I don't think they would let him accumulated would be just based on whatever you make
00:19:52withdrawal from the account right so like the sea with your hundred thousand they would do whatever the withdrawal taxes yes so yeah I mean there they are at their like the capital gains taxes are gonna be applicable in a in a retirement account but if you have just
00:20:09a regular brokerage account where it's not an IRA or another for one K. you're gonna be looking that capital gains taxes there enough to pay that year yes %HESITATION huge differences actually and as far as having these tax shelters and seen big differences and how much you're gonna
00:20:27pay in taxes every year what's the best way to get started in the market download Andrews free ebook at stock market PDF dot com you won't regret it yeah for sure and you know other thing to keep in mind with the IRA and the rock or I'm sorry
00:20:47the traditional in the rock a lot of people refer to an IRA is just your traditional so forgive me if I slip on upon terms there for a moment the there are some exceptions that allow you to take your money out of the traditional without paying a penalty
00:21:04%HESITATION and those are typically things like buying a house for the first time or else education expenses they will allow you to withdraw the money without having to pay any penalties for those the ROF %HESITATION you have a five year window of that you have to keep the
00:21:21money in and then after that you can withdraw it at any time without any penalty on the money solely on the government has set a mop such that there are some different restrictions that they're trying to help people help themselves and you'll save save the money and and
00:21:41keep the money in there %HESITATION when it %HESITATION was talking about the four oh one K.'s a four oh one K.'s are kind of set up so early in that you have a choice whether you want to choose to have your %HESITATION investments put in either a traditional
00:21:56or are rocks and you could split up to you can do fifty fifty you can do seventy five twenty five they really kind of depends on what's your long term strategy is with your plan for retirement ends you know when you work for the for a big company
00:22:12in our matching %HESITATION if you are not taking advantage of that you need to be slapped because that's free money that you're not taking advantage of %HESITATION when I worked for Wells Fargo they've made it they matched at six percent so you bet your **** that I was
00:22:25the %HESITATION investing we six percent every paycheck on their matching at so that was a nice little perk ends you know so there's you know there's a bandaged his to doing both of these but you know definitely want to look at however you want to set it up
00:22:40in you know when you're talking about four oh one K.'s when you stop working for that company one of the things that you want to investigate to when you leave the company some companies will charge you a fee sometimes monthly sometimes is annually to hold your money for
00:22:57you because if you're not working for them then obviously there's no park and there's no advantage you know to keep you having your money invested with the company and some companies will charge you a fee to keep your money in their account and so that's something you definitely
00:23:13want to research and you can roll him away from the company into another brokerage account wherever you want and %HESITATION I would strongly encourage you to do that if you you know you work for a company for five years you got fourteen thousand dollars in that irae of
00:23:31storms are the four oh one K. I would strongly courage you to roll that away from that company so the you keep track of your money I've heard horror stories when I was working at the bank of people that would you know how their spouse would pass away
00:23:49and they would also the star finding you know all four oh one K.'s that were the company they worked at thirty two years ago and they didn't know anything about it they were the beneficiary on it it just was kind of forgotten and you know some cases it
00:24:02was a fair a fair amount of money and it was you know a very very expensive very very complicated process to try to get that money to the person that it deserves to go to but because there is nothing set up ahead of time the person that passed
00:24:17away forgot about it didn't do anything about it they collected it whatever may be it becomes a very very complicated problems so %HESITATION I could go on and on and on about some of those kinds of stories that I've heard and seen and had to deal with in
00:24:29my time and so I would encourage you if you have any of those kinds of things is to not just the collected or think I'll get to another day deal with it now set it up make sure that you have it where you have control over it and
00:24:43also make sure the Senate charging your money because that's money's coming out of your pocket your debt you know your saved it and now they're taking it away because you're just left it there cell anyway I'll get off my soapbox and that sorry I can this warm and
00:24:57like I just moved recently %HESITATION couple times actually %HESITATION and I got something in the mail from my broker I was saying like if you don't confirm change of address or something then you're you're going to forfeit your callers so there's really only allow everything to read those
00:25:13like yeah I'm logging in right this second and make yeah address is up to date because their **** said something about like abandoning then the count if I left the if they don't hear anything from you or yes you'll get another feels like a mail back or %HESITATION
00:25:28you know something in the system it's really strange so yeah be careful out there it yep yep yep different definitely be careful at me when I left when I off wells %HESITATION as one of the first questions I asked him I called I called the HR department and
00:25:44ask them you know they're going to be any sort of fees because I tried reading through the prospectus and you know that's you know that's a lots of fun let me tell ya and %HESITATION yeah I tried reading through that to find out if there were saying sort
00:25:56of fees that they charge I couldn't find anything so that I called some of the people in the company and %HESITATION a few of them I have to talk to had no idea what I was talking about so I had to go back to talk to my financial
00:26:06adviser that I work with at the branch and he told me yeah they don't charge anything so I left it there for a little while until I got figured out what I wanted to do with it than a rolled into another IRA so it's actually very very easy
00:26:18to do what's nice about that too is like like you said every company can kind of be different but if you have an IRA you know it's universal that yep cycle wall over the how the area with this broker everything know what their fees are it'll have to
00:26:32write go through yeah I'll round about that you had to call in right yeah exactly on the west coast or whatever yeah the the last little tidbit I wanted to get to talk about with the IRA's is entered I focus a lot on brokerage accounts because of investing
00:26:50and that's that's our focus but you can open IRA's in a bank you go to wherever you bank with and they should offer IRA's whether it's or or Roth or traditional and you could do them in the savings account or you could do that and CD's now of
00:27:05the interest rates on both of those are quite poor and you know that's really a route you want to go than there is that option it's safe and secure it so FDIC insured up to two or fifty thousand dollars if your with a a bank of credit unions
00:27:21I think have different rules but if you're with bank of America for example do you know that if you know any accounts that you have are insured up to two and fifty thousand dollars but the FDIC which is nice and safe and secure but you're also not gonna
00:27:34make it we do so keep that in mind good boy I think %HESITATION if let's move on so you talked about taxes he says if I sell some shares of a company that I've been investing in over a period of time my selling the first shares I purchased
00:27:57or the last not sure if I understand what he's trying to ask I think what he's trying to ask is if you buy let's say you buy ten shares dentures dentures dentures ten shares when you go to sell are they selling are they selling the first ten shares
00:28:14the bar for ten dollars are they selling the last the elf ten shares you bought for forty dollars it doesn't matter now I know it's it's not it's not first in first out right okay I mean yeah it's like those shares is it's like %HESITATION it's account balance
00:28:31so if yeah if your account is worth five hundred dollars you sell twenty shares then it's going to be you know but twenty five dollars right right okay so yeah I mean and the market's gonna dictate what the shares are worth the stock in the B. what your
00:28:46opportunity costs was right sh okay thank you you help me out of that one you're welcome doesn't rather for taxes that game no %HESITATION if you use those funds to purchase another stock right away you stuff the paint in that game taxes on the previous cell I assume
00:29:06yes so we're at this is that we're talking about like if you have a brokerage accounts obviously you try to get into those areas and for one K. isn't and use those contribution limits as but so you can if you have money out on top of that you're
00:29:25then you want to mess you might be looking at like in an individual brokerage account and at that point in time you're going to be looking at capital gains taxes so in this example he's talking about if I'm gonna just take those funds rolled over to a new
00:29:42two new stock so can I can I get out of taxes that way that unfortunately the you can't do that like yes you can take the money and you could purchase a new stock but you're gonna have to have money set aside for when your tax bill comes
00:29:57around next April so I mean it's probably a better idea to take that money and cannot deduct what you may the ready and then the rest of it and and throw that into the account it's it's kind of the same as running a business and if you're not
00:30:15you know if if you're not paying taxes on every single piece of income like a paycheck you know people's W. twos %HESITATION they get those deducted automatically but if you're a small business owner sole proprietor or anything like that you might not be automatically withdrawing from every single
00:30:31cell every single piece of revenue so you really it's a good idea to have some so the savings and a really be tracking that because when tax season comes around you're gonna be left with that bill and and trust me you don't want to have the IRS they're
00:30:48the last people you want to be chasing you for money yeah locating not that I know from experience yet this is just a lie here via %HESITATION the how the tax bill I definitely those on the priority number yeah yep so the next question %HESITATION the kind of
00:31:08transitioning into to brokers now so the these are all great questions by the liquor if I return switch brokers at some point do my stocks go with me or can I have them transferred to another broker or will they forever be handle with the broker I use initially
00:31:24they've if you switch they got to go with you so you can if it's in a let's say than a Roth IRA with broker a you can roll it into broker beat %HESITATION and depends on the brokerage some brokerages could do it for you other ones you'll have
00:31:44to go to broker a and sell the shares or I'm sorry not shelled shares you have to go to them and request a roll over and they could do the roll over for you so I had to do I have to go back to my original one and
00:31:56that's a lot of back and forth but you know there is with this stuff this is this is thousands of dollars it's definitely worth a couple hours on the phone that it takes to get this done yeah like you said it's gonna depend but some of them are
00:32:08pretty seamless yep next question for instance if I was one of the millennials that used a Robin Hood to purchase several pairs of snap its imprint the seas which I'm not on the job and then listen to your show wanted to move it to ally to manage my
00:32:27shares with one broker take that cash and purchased new shares with the second sorry I completely miss read that as well so if if you listen to our show he purchased snap and wanted to move it to allied to manage my snapchatters along with my other more intelligent
00:32:44investments is that possible or do I need to sell my shares with one broker take that castle purchased new shares with the second broker yes so if you you can roll over you can run away like I said before you can roll over shares you had another company
00:33:02to another account but then if you want to purchase other shares of that particular company you have to purchase them separately so you can't %HESITATION can't merge accounts so basically like if it's in the individual brokerage account you're gonna have to pay that capital gains taxes yes so
00:33:22yes can get it transferred in that sense right exactly and also with if it's in a Roth IRA you have to roll it into a separate are out there a and then purchase shares into that account you can't merge the accounts yeah I believe they have to like
00:33:40you said it has to be like a a dollar balance they call him or what they call them it's it's like a they call it some stupid chair thing %HESITATION they they make a quality of it but basically it's equivalent to each one you have is a dollar
00:33:54the right yep sh okay this here's a great topic does it ever make sense to use a fearless broker like Robin Hood to purchase stocks I'm gonna say no why why I think so my reason for not using them is they actually it's not the US and I
00:34:21put it the put that in parentheses Robin Hood does have some to these to make money come yes they do not charge you to open an account yes they do not charge you to trade another let me rephrase that they do not charge you to buy a stock
00:34:39however when you so yeah he S. waiter another question how are they are able to offer a filesystem how do they make a profit I'm gonna tell you how to make a profit described in real quick we don't need the rescues Robin Hood this is all we do
00:34:53not know this is an ugly and a lot of investors of report the back about this so yeah exactly so Robin Hood has several streams of revenue the first one is that they earn interest off of any unused cash in your account soul let's say you open an
00:35:12account with a thousand dollars and you buy a five hundred dollars of whatever it is the you want to buy if you have that five hundred dollars just sitting there for years and years and years and years Robin Hood is going to be making interest off of that
00:35:26money they get to keep you do not this is part of their contract and they are legally allowed to do this it's at whatever the federal fed fund rate is at that time which I think hovers around two to three percent so it's not a huge money but
00:35:42if you got a million people we've been five hundred dollars in your account and nurturing interest off that that's a lot of money the other ways that they earn interest %HESITATION that they earn money is there is there have been quite a few angel investors that have bought
00:35:59into Robin Hood as an investment and the last I read it was up to sixteen million dollars has been invested into the company to invest in the app another reason why I do not like Robin Hood was I personally have never used it but I had a coworker
00:36:15that used it for awhile and it is an apple only on your phone is not an app you can use or they do not have a website you can go to on your computer and do research and things like that so the research tools that they have available
00:36:29to you are limited so it's not as robust as ally would be for example the other source of revenue that they have is they you when you sell a stock by the F. F. S. sorry the SEC and federal rules these of the institutions that govern the trading
00:36:50buying and selling of stocks they have a you a law that requires that they have to take money from the investor when ever they sell a stock at now granted it's a very very small fraction was twenty three dollars and ten cents off every one billion dollars of
00:37:09trading so if you sell your hundred dollars of Microsoft yearly it's not going to be much but again when you have a billion or more users selling buying and selling stocks it can become extremely expensive very very quickly ends so that's a big reason why that they they
00:37:32don't make money are that sorry that's how they make money off of this service and another reason why I am not a big fan of Robin Hood was that my friend my friend said it's like Facebook in you can go there you can swipe right you could buy
00:37:46a stock it's just it's too easy about a little your little girl getting the whole your phone %HESITATION %HESITATION yeah yeah exactly what Tesla they go god what happened %HESITATION willing you know drunk trading would be like a whole whole whole on the peak like mom way more
00:38:10so than regular junk trading on a regular broker right exactly so so you know I guess the answer it it hurts question it's not the less there are they are making money you know there's just no way any company would ever do something like that not make money
00:38:26so %HESITATION it does it cost you not necessarily but it you know if you're you know they're making money off you not using your money to invest in the market so that's why when you you know would you invest you should try to invest as much of that
00:38:41money as you possibly can disclaimer there's also been some reports that the cell button disappears temporarily although if that's looking applets or what that is %HESITATION there's also been report that there's some Axmann deposit of fifty thousand dollars per day I don't know what that's all about and
00:39:05they are moving towards margin accounts now so that's gonna be a office obvious big potential revenue stream for them to be able to charge the kind of fees that come along with margin accounts and margin calls and and borrowing and buying stocks by borrowing honestly charging interest on
00:39:28that so that's something to watch in the future yes you can buy stocks now how with no fees but like they've talked about there are other ways that they're getting paid and you are participating in that personally I like ally just because like you said the whole obviously
00:39:51be able to do on the computer is nice also robin hoods limited of not to say that I'm not buying US stocks but from what I can see from their website it looks like it's just real E. US equities at this time vital see options to to buy
00:40:11it internationally maybe that's different for if they are in other countries but something to keep in mind as well and you know it's just kind of like the thing there's no such thing as a free lunch you you have to be skeptical of something that because the mass
00:40:27graves being free and I think that maybe the biggest single F. forgot to mention this box this is huge for the way that we love to invest as you can't do it %HESITATION upon that you cannot automatically reinvest your dividends on any of these positions and so just
00:40:45based off that that would turn me off to the company I'd never in the past really thought about looking at the March and obviously very happy with ally %HESITATION it is great to see different competitors come up and I think at the end of the day it's gonna
00:41:04really force the brokerage industry the kinda look at itself and say okay we got to be honest we gotta %HESITATION %HESITATION %HESITATION other other race to to make these kind of services affordable it's it's better for the consumers obviously and the people he is a like us %HESITATION
00:41:20but the these are some of the pros and cons to keep in mind when it comes to Robin Hood and I don't even know if they do retirement accounts are not allow something I didn't look into but %HESITATION obviously they they are making money and it looks like
00:41:36they are kind of going that route of being the popular and and collecting users and I'm gonna find a way to monetize at the end he'll if these founders are making money from venture capitalists and they don't really have to worry about turning a profit at the end
00:41:51of the day no could be like all of the other stocks we talk about which are terror they could be great companies but terrible investments so yep those are hopefully that answers all Chris questions on those make up the majority of them I'm glad the bottom up I
00:42:07think again these are going to be a lot of things that people who are for starting now or go to the come across and then they're going to be questions and obviously the more questions that we can resolve the the simpler that the whole process becomes so I
00:42:22hope this is a valuable resource and less and and maybe something to listen to again and will like you send the email you know go back through the archives and and kind of Ben's listen them and gain as much knowledge as you can I think it's a very
00:42:38smart thing to do and it's a great way to learn different topics and passions and techniques and obviously investing falls into that very nicely yep exactly and you know what I think the the last little thing that I wanted to kind of take on with what the answer
00:42:55was saying was knowledge is power the more you know the more you could do it the better you can do ands you know as you know you continue to listen to what Andrew and I are trying to help everybody with you know hopefully we can help you grow
00:43:09as an investor and you know I know every day that I sit down and I read through the different blogs in the books and magazines in the articles that I read through it I'm just I'm trying to learn I'm trying to absorb everything as much as I can
00:43:22every single day and you know I approach this as an opportunity to learn something new every day and I do and that's what keeps me excited and energized and used about all this is you know the system and was really fascinating topic to be and you know I
00:43:38a I enjoyed talking with Andrew about it and I enjoy talking to you guys about it and it will you know I guarantee you the more that you study this the more you absorb it it will become easier and easier and easier for you and you know it's
00:43:52just it's baby steps you just got to keep doing it you know as my grandmother used to say to me when I was younger you know water dripping on a stone eventually makes an impression so you know just keep at it don't get discouraged just keep at it
00:44:05I love it all right well I guess that's gonna that's gonna wrap it up for us for tonight I hope you enjoyed our conversation answering the questions the current sentence thank you Kerr for sending those to enter those were great questions %HESITATION very intelligent and very well thought
00:44:20out and I hope we answered all those for you ands we talk a little bit about I. R. A.'s we talked a little bit about brokerages and yeah capital gains taxes and taxes are very important thing to think about so without any further do I'm gonna go ahead
00:44:33sinus off you guys have a great week and we will talk to you guys next week we hope you enjoyed this content seven steps to understanding the stock market shows you precisely how to break down the numbers in an engaging readable way with a real life example get
00:44:52access today at stock market PDS dot com until next time have a prosperous day the information contained is for general information and educational purposes only it is not intended for a substitute for legal commercial and or financial advice from a licensed professional review our full disclaimer at E.
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