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.
Commission-Free ETFs
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.”
Final Thoughts
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.
