Monthly Archives: February 2012

E-Trade Review

E-Trade is highly recommended in today’s world of Internet and online stock trading. Many business publications have also given E-Trade high marks. Deciding which online brokerage firm to trust with investment money is a decision that should be researched, and chosen according to the broker’s reputation and services.

What E-Trade Offers Investors

Originally, E-Trade was an online stockbroker business that offered discount executed trades, and that was all. Today, it has become a brokerage firm that offers a full line of services to its clients who are looking to invest their money wisely. E-Trade handles the buying or selling of stocks for its customers, offers expert advice, and up-to-the-minute business news relating to stocks, and a varied list of features.

E-Trade For Beginning Traders

While well-suited to the active, experienced investor, E-Trade is also popular with beginning investors who might have only a thousand dollars to risk. The more active an investor becomes, the lower the commission rates. Becoming an investor is relatively simple. It requires an investor open an account, and fund it with at least $1,000. Once the money is credited to the investor’s account, trading is allowed.

How To Make A Trade

Buying and selling stocks, or making a trade, as it is commonly referred to, is in real-time. A first-time investor simply goes to their personal Accounts page, and follows the directions. Commission rates range from $6.99 to $9.99. An investor will be charged for each trade that is placed. Many times, the commission rate varies, depending on the balance of the trading account, and how often the investor places a trading order during a three-month period. The investor is responsible entirely for the buy and sell orders for stock in the investment account, as well as the choice to buy or sell bonds, futures, options or mutual funds

Products and Services of E-Trade

The services that E-Trade offers online are abundant, and comparable to much larger brokerage firms. E-Trade also offers convenient banking transactions, such as secure savings accounts, aside from trading accounts. The company also offers a wealth of references for investment research. Training seminars, and financial planning services are offered free of charge. E-Trade also offers offices in 16 states throughout the United States, if an in-person visit is preferred.

The Positives of E-Trade

While there is always up-sides and a down-sides to choosing a brokerage firm, one of the pros to using E-Trade is the easy access that common, everyday investors have to foreign markets, and the wide range of investment tools available. Also, E-Trade offers 24-hour telephone support for questions or concerns that can arise after markets close. E-Trade apps for smart phones are also reliable and easy to use.

The Negatives of E-Trade

There are also down sides to E-Trade, being that there is no live chat feature available on the website, and there are more features available to active traders than beginning traders. The fees and commissions are also higher the fewer trades an investor makes, encouraging the trader to risk additional money.

What is a 529 College Savings Plan?

A 529 plan is named after the Internal Revenue Code Section 529, and it is a savings plan created to allow individuals and families to set aside funds to be used for college expenses. The plan is operated by the State or an educational institution. The funds can be spent at any approved college regardless of where the fund was established. For example, a student living in State A with an established fund in that state or a state of one’s choosing, can attend college in State B and use the funds to cover the cost.

529 Plans and How They Work

Every state in the United States has a minimum of one 529 College Savings Plan available. It is up to each state to administer the fund and decide the rules and regulations of that fund. The rules and regulations governing the 529 Plan will differ from state to state. It is important to understand the benefits and features of each plan, and if two or more plans are available, to compare the plans to find the one that best fits the student’s and the plan owner’s needs.

The State financing authority has a program manager, usually an investment company or the State Treasurer’s office, to manage the funds. When a plan is opened by an individual, the funds paid in will be invested, much like a retirement account, usually in general obligation bonds, mutual funds and other investment options. The resulting funds are used to pay the specified percentage of tuition and mandatory fees at participating public and private colleges and universities.

The plan owner names a beneficiary, usually a family member, to benefit from the funds in the form of payments to attend a participating college. It is possible for an individual to set up an account for themselves, if they anticipate returning to college for any reason.

What are the Tax Benefits?

Under Federal Law, tax benefits are provided to tax participants who satisfy the basic tax requirements. Contributions are not an allowed Federal tax deduction on the Federal tax return, but the investment result is a deferred tax and payments to the student’s college are federally tax free. The tax-free treatment was made part of the Pension Protection Act of 2006.

Each state may offer their own tax breaks. The fund owner should research the state tax benefits for the plan and if the benefits do not fit the investor needs, the investor can choose from any 529 being offered throughout the country, as long as the application requirements are met.

Who Controls the Funds?

The fund owner always has full command of the funds. The named beneficiary cannot manipulate the funds, except for a few exceptions. The fund owner decides when financial withdrawals are made and for whatever purpose. The majority of 529 plans allow the fund owner to withdraw the funds for any purpose and during any time frame, but unqualified withdrawals will be subject to income taxation and a 10% penalty.

Are the Funds Flexible?

The fund owner has the ability to switch to different 529 plan option every year, if the plan permits such action, or the 529 may be transferred in total to a different program if no other transfer has occurred within the prior twelve months. There is no federal limit to the number of times changes can be made to a 529 plan if the beneficiary is replaced with a different family member, who qualifies, at the same time.