I really like Zecco since if you have at least $2,500, you receive 10 free trades per month. I give you the basics since you are a beginner and I want to make sure you at least have a basic understanding before investing.
I think for you, Zecco can be great, but that you should use some generalized rules to lessen stock specific risk.
I think the first thing you need is an emergency fund and that should be deposited in AmTrust Direct or any bank you can find. It should be at the very minimum 3 to 6 months, but 8 months to one year is better. You can always build up your E-Fund while you are saving and investing. It's a good idea to at least have something to pay emergencies and save towards an 8-12 month E-Fund. As a general rule, any money that you need in a year should be invested in cash-instruments, such as a CD, money-market, short-term tax-exempt municipal bonds (tax-exempt money market), savings, or T-Bills.
You then need to have an asset allocation. In the stock portion, you may want to keep a cash reserve of up to 20% (so if you have 70% stocks, you may want to have 56% in stocks and 14% reserved for purchasing stocks). You may also want to take a look at preferred stocks as they are slightly less risky and provide dividend income. In general, I think the following works well for someone with at least a 8 for risk tolerance on a scale of 1-10. Bonds are considered to be of intermediate-term (mix of 5 to 10 year bonds) or of a total bond index.
The cash reserve is in addition to the emergency fund.25+ years 95% Stocks 5% Bonds (as much as 19% reserved in cash)
20-25 years 90% Stocks 5% Bonds 5% Cash (as much as 23% reserved in cash)
15-20 years 80% Stocks 10% Bonds 10% Cash (as much as 26% reserved in cash)
12-15 years 75% Stocks 15% Bonds 10% Cash (as much as 25% reserved incash)
8-12 years 60% Stocks 25% Bonds 15% Cash (as much as 27% reserved in cash)
5-8 years 40% Stocks 40% Bonds 20% Cash (as much as 28% reserved in cash)
3-5 years 25% Stocks 35% Bonds 40% Cash (as much as 45% reserved in cash)
1-3 years 10% Stocks 40% Bonds 50% Cash (as much as 52% reserved in cash)
Less than 1 year 100% Cash
In general, I think the following works well for someone with at least a 4 for risk tolerance on a scale of 1-10. Again up to 20% of stock portfolio is reserved in cash for future stock purchases (at lower market rates or dollar-cost averaged into the market).
The cash reserve is in addition to the E-Fund.25+ years 80% Stocks 15% Bonds 5% Cash (as much as 21% reserved in cash)
20-25 years 70% Stocks 20% Bonds 10% Cash (as much as 24% reserved to cash)
15-20 years 60% Stocks 30% Bonds 10% Cash (as much as 22% reserved to cash)
12-15 years 50% Stocks 35% Bonds 15% Cash (as much as 25% reserved to cash)
8-12 years 40% Stocks 40% Bonds 20% Cash (as much as 28% reserved for cash)
5-8 years 30% Stocks 40% Bonds 30% Cash (as much as 36% reserved for cash)
3-5 years 20% Stocks 40% Bonds 40% Cash (as much as 44% reserved for cash)
1-3 years 10% Stocks 30% Bonds 60% Cash (as much as 62% reserved for cash)
Less than 1 year 100% Cash
Resources:
http://www.mfea.com
http://www.morningstar.com
http://www.smartmoney.com
I think that TDAX is great since there are several investment options. This might ease it. These depend on your expected retirement date.
| TDD | TDAX Independence 2010 ETF | 24.85 | ETF |
| PCX |
| TDH | TDAX Independence 2020 ETF | 23.74 | ETF |
| PCX |
| TDN | TDAX Independence 2030 ETF | 22.88 | ETF |
| PCX |
| TDV | TDAX Independence 2040 ETF | 22.65 | ETF |
| PCX |
| TDX | TDAX Independence In-Target ETF | 25.69 | ETF |
| PCX |
Good Bond FundsIEI - intermediate investment grade (very high quality as 98.3% are AAA)
TIP - long-term inflation protection (very high quality 99.5% are AAA;
subject to substantial interest rate risk)BND - intermediate investment grade (high quality as 79.8% are AAA)
AGG - intermediate investment grade securities (high quality; 74.5% are AAA)
LQD - long-term investment grade securities (moderate quality, 28.6% BBB and 69.3% over A; at least 97.9% investment grade and 2.1% unrated). It appears that all securities might be investment grade, but according to Morningstar, 97.9% have a BBB rating or higher which qualifies for an investment grade rating.
It is also subject to substantial interest rate riskSHM - provides short-term tax-exempt income (unknown quality as the fund is too recent)
CMF - intermediate-term investment grade (high-quality 76% are AAA)
BSV - short-term bond (high-quality 72.8% AAA)
Stock FundsVTI - Vanguard Total Stock Market Index ETF
SPY - S&P 500 index
DIA - emulates the Dow Jones Industrial Average
Trade at your own risk. There are 10 trades per month free if you have a minimum of $2,500 in the account. Taxable accounts have no maintenance fee, but IRAs are subject to a $30 fee at account initiation and once per year. The suggestions given are intended for a mass audience and not solely for your situation.
Aqua