What am I doing wrong?

[mamasita99]

Please bear with me, I'm very new at this! I opened up a Share Builder account with ING to start investing outside of my retirement accounts. I started with $100 in SPY about 2 weeks ago, and now I am down to $94.50. I was planning on auto depositing $200/month, but now I'm freaking out! Is this normal market ups and downs or something else that I'm just not understanding?

Also, I see that there is a fee, is that taken out each time I deposit money to be invested?

[mtntigger]

Welcome to the world of investing!
Yup, it's the normal ups and downs. Last week, the market was down most likely due to the lack of a balanced budget.
You shouldn't be charged a fee for each time you deposit money, but each time you complete a trade (buy OR sell). You may want to consider saving that money elsewhere and then every year or every 6 months purchase the stocks.
Looking at the Sharebuilder's website, are you in the basic program? The trading costs appear to be $4 for automatic investments or $10 for each trade. That's where the majority of the difference went.

Don't freak out... it's only been 2 weeks.

[Bluerobin]

SBS is right on. Depositing $100 at a time is gonna cost you more than if you save up and deposit $1000 at a time. Stick to it. The market will fluctuate up and down. In the long run, you should make money.

[yclept]

Agree with those above. Even at $4, commission is too high for a $100 trade. It means your investment has to make about 8% just to break even ($4 buy commission plus $4 sell commission). You can put the monthly contributions in a regular ING savings account and invest them when they build up a bit. Personally I like to keep commissions to less than 1/2% of the total transaction. In your case, if you want to use that guideline, it would suggest 8/.005 = $1600 as a minimum investment. So your $200/mo infusions would be committed to an investment about every 8 months.

This implies that your investments will be few in number for awhile. The best way to get some diversification would be to confine this early investing to broad market ETFs. That way you won't be concentrated in a single stock that might experience a calamity, for example the pee party might pass a law making internet search illegal and forbidding search companies to engage in any other business, which would not be a particularly good thing if you were holding GOOG.

Aside from the above, I'd be watching for whatever is going to change with ING as Capitol One takes over. Some of these programs, interest rates, etc. may be changing to the detriment of the depositors. Capitol One has always struck me as a pretty sleazy operation (they were in the vanguard of most of the sleaziest credit card tricks) -- they do have some pretty funny commercials though, so I guess that's a slight redeeming quality. I have an Orange savings account and have been watching for changes with more attention than I did with ING.

[mamasita99]

Thanks for the input. I have a long-term fund at ING with all of my savings in it. So instead of $200/month I should just deposit $2400, and only get hit with the trade fees when I deposit the money (buy) and withdraw the money (sell).

I'm also keeping a close watch on ING and Capitol One merge, as I currently love my accounts at ING and won't tolerate the new guys jacking it up!

[Small Biz Owner]

If you want to overcome some of the costs there are some stocks that also pay a high dividend. >10% NLY, HTS, ARR, AGNC, GABUX. Maybe not available with Sharebuilder? Like D.I. said, try another discount broker like E-trade or Scottrade. $2,400 at 10% will pay you back at least $240.00 by the end of a year.