As a consumer, I am always looking for ways to save money. Of course, that carries over into the investment arena, where I try to find discounts or freebies for everything that has to do with investing. Here are some ideas that every investor should utilize.
Many long-term investors like to invest in Exchange Traded Funds, more commonly known as ETFs, due to their liquidity and diversification. However, because they are traded like stocks, there is a commission involved. It may be only $8 to $10 per trade, but those commissions can add up.
Fortunately, the major online brokerage firms offer a selection of ETFs that can be traded free of commissions. For example, TDAmeritrade offers over 100 ETFs can be purchased without paying a commission. The variety is extensive, including aggressive, moderate, conservative, international, bonds, and even commodity ETFs. The only restriction is that you must hold the ETF for at least 30 days.
However, just because they are offered commission-free, doesn’t mean you will get them commission-free. With this particular broker, you actually have to enroll in the Commission-Free ETF Program. What does enrolling involve? It just involves clicking a button that says Enroll. Check what is required for your broker.
There is no fee to enroll and there is no penalty if you need to sell the ETF in less than 30 days; you would just be charged the standard commissions. Remember, if you don’t enroll, you will be charged a commission for these ETFs.
50% Return Guaranteed
This tip appears on everyone’s list of personal finance tips but it is always worth mentioning again. I hate to beat a dead checkbook, but if your company offers a matching 401(k) or 403(b) plan, you must enroll and you must squeeze out as much as you can from your paycheck to reach the maximum allowable for matching. Some firms provide 100% matching, some provide 50% matching. Even if it is ‘only’ 50%, this is a huge return on your money, and it is guaranteed.
Even if you are afraid of the stock market, have your funds allocated to a money market fund. You will earn almost nothing in interest, but you will gain a 50% return on your contribution.
If your company doesn’t provide matching, it is still a good idea to set aside what you reasonably can to receive the tax deduction for your contribution and to receive the tax deferrals of interest and dividends in the account.
Free Investment Books
Many investors forget that there are numerous books relating to investing and personal finance at their local library. If a book you want is not in your particular library, the book can usually be requested from another library that is part of your library system. Also, if a book can’t be found anywhere in the library system, you can ask your library to order it. They won’t always buy it but it is worth a try.
In many states, state university libraries are open to the public. Don’t forget to check them also, if you have a university nearby.
Free Investment Magazines and Newspapers
Check all your rewards points, especially from airlines. I noticed that I had over 5,000 points hanging around from an airline that I never plan on flying with again. They offered magazine subscriptions in return for points. I was able to get a subscription to the Wall Street Journal, Inc. Magazine, and Fortune Magazine from those points, which would otherwise have been wasted. Other magazines that I could have ordered in the finance area include Money Magazine and The Economist.
Free Investment Transactions
Many readers prefer to invest in ETFs but some like to pick and choose their own stocks. In any case, unless you only buy commission-free ETFs, you will be subject to commissions. If your online broker’s web site is ever down when you are trying to do a transaction, and you unable to sell an ETF or stock, causing a loss due to an adverse price change when the web site wasn’t working, ask your broker to compensate you with free trades. This has happened to me a couple times over the years and I was given five free trades, worth about $50.
Free Investment Events
There are plenty of free conferences or conventions around the country, which provide speakers, seminars, and booths, covering numerous types of investments. Usually in the convention hall, you can find vendors of books, newsletters, online brokerage accounts, mutual funds, stocks, and other investments. The free seminars can be great learning opportunities. One example of this type of conference is The Money Show, which holds events in California, New York, Florida, and Nevada.
There are many other types of seminars that are held on weekends, usually real estate related, but with those, be careful of the hard sell. These are sometimes referred to as ‘get rich quick’ seminars that are usually disguised sales pitches.
Become a Mini Real Estate Tycoon with Tax Free Income
Enough about ETFs and stocks; now for a little real estate. If you own your own home, you may want to generate a little extra income from it, tax-free income at that. If you have an extra bedroom or if you plan on being on vacation for a week or two, you could go onto AirBNB and rent out your room or your house. This extra income can be helpful.
So here is an important fact. You can rent your house or a room in your house up to fourteen days, and not pay any tax on the income. As a matter of fact, you don’t even have to report the income. Here is what Topic 415 on the IRS website says:
‘There is a special rule if you use a dwelling unit as a personal residence and rent it for fewer than 15 days. In this case, do not report any of the rental income and do not deduct any expenses as rental expenses.”
As you can see, in all areas of your life, including investing, there are ways to save money. Remember, the more you save, the more you can invest.