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MoneyMonk said:
“What happens to someone’s investment account if your broker goes bankrupt?

Say you’ve invested in a +$200,000 portfolio of Vanguard mutal funds and dabbled in some invidual stocks and bonds through a third-party broker that goes under. Is your money safe since it’s (hopefully) safely invested in other companies or does it somehow get tied up in the bankruptcy proceedings?”
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That’s a very solid concern. Brokerage accounts are not covered under FDIC. However, your principal is theoretically recovered by the government under a similar organization called the SIPC(Securities Investor Protection Program, found here: http://www.sipc.org).

Basically, SIPC tries to quickly return cash and stock quickly to customers of a brokerage that declares bankruptcy. It’s definitely a nice safety net, but it’s a lot more limited in its scope and power than the banking system’s FDIC.

Best way to find out the details is to check your brokerage account; they all have explanations and disclaimers about it.

They cost, on average, around .22% and they have all the options you could want.

This article and the feed back gives me a good resource. Hopefully, there’ll be more articles and discussions for New Investors such as myself. I’d be interested to learn more about the ongoing experiences of other investors as we get our feet wet in the investing world.

Again, great article.

I found in practice however that I didn’t like the broad “Tuesday trading block.” For $4 you get a trade, but you have no idea during the day when it will occur. I always felt like they might be skimming off the price, whether that was rational or not. And sells were expensive, although they have come down with the ING deal.

I opened a new brokerage account with Firstrade recently for an IRA. I plan to have a Margaritaville portfolio (using ETFs) so for $21/year I can have my trades and there is no IRA fee. I can’t buy partial shares, but my dividends can be reinvested as partial shares, so I can stay as fully invested as possible.

I haven’t traded yet, as I’m waiting for some of my paperwork to be approved, but I think I’ll be happy with it.

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Say you’ve invested in a +$200,000 portfolio of Vanguard mutal funds and dabbled in some invidual stocks and bonds through a third-party broker that goes under. Is your money safe since it’s (hopefully) safely invested in other companies or does it somehow get tied up in the bankruptcy proceedings?

For what it’s worth I like E*Trade the best as an overall platform. I find the user interface the most robust. But if I were just buying mutual funds I would probably go with Fidelity or Vanguard.

I’m treating the whole thing as an educational experience; I’m just playing around with small sums right now, learning my way around the site, and going through all of their tutorials.

I think that’s the best way to do it if you’re new to the game: don’t go for super fantastic returns or market timing strategies straight out of the gate. Just play around and make sure you know what you’re doing before throw money at anything.

I didn’t compare Sharebuilder to any other sites before I signed up, as I don’t really know what I’m supposed to be looking for. This post definitely helps.

Steve S – if you do your own search, you won’t miss out on one of the better businesses. As far as brokerages go, reputable ones will turn up on any cursory search.

If you’re interested in passive index investing, find the funds you want to invest in first, and then open an account with that brokerage. For example, if you mainly want to invest in Vanguard funds, open an account with Vanguard. If you like Fidelity funds, open a fund with Fidelity. It’ll be cheaper than buying one fund family through another fund family’s brokerage.

What other options are out there (particularly for investing style #2)? I don’t want to do my own search and miss out on one of the better businesses.