My experience with Etrade

In 2012 I wanted to start playing around in the stock market, so I opened up an Etrade brokerage account and transferred around 10,000$ into it. The website itself is extremely user-friendly and pretty easy to navigate. I dabbled, somewhat aimlessly, in buying individual stocks and losing on some, gaining on others. I wasn’t trying to make millions overnight, I just wanted to try to see if I could actually make a consistent, steady source of income by trading every few days. As a full-time engineer, and working overseas, it was pretty difficult to wake up in the middle of the night to make a quick decision about a trade, and I was pretty stressed out when I would see the stock I bought have so much fluctuation in just one day. Yeah, I gave up pretty quickly, but thankfully, I know it was for the best, as I know now low-cost index funds are the way to go. But at that time in 2012 I decided to give up on individual stocks and look more into investing in mutual funds., buying a fund that has hundreds of stocks inside of them.

 

Investing for investing’s sake

Even at that time in 2012, I still didn’t know / research about the expense ratios, management fees and costs I was paying for funds, like I should have done in 2009 when I bought into American Funds. Etrade has a really comprehensive mutual fund analyzer and compare tool, which will let you filter any fund available on the open market, from a fund’s distribution yield to its beta, you can search, filter and sort it all. I began investing in mutual funds that I thought had strong, solid performance for the past ten years, and really focused on growth. I consistently invested every month and, as the stock market would have it, 2013 was an amazing year to be invested in the U.S. stock market. By 2014 I had a pretty hefty chunk of change in my Etrade account, and thank God because in 2014 I met the girl of my dreams and I was able to use that money for my wedding, by the way paying cash for a wedding is a pretty amazing feeling!

 

Investing: Think long term

In November 2014 I left my job overseas and took another demanding engineering job in the U.S., so in 2015 I took a break from investing. It took me a solid year until I wanted to start investing again. So, in May 2016, after doing months of research, I kept coming back to Parnassus, a mutual fund company that focuses on socially responsible investing, and I started really analyzing their returns, risks and performance against their benchmark. In May 2016, I finally decided to invest in Parnassus funds. After the sale of a rental house, I took the proceeds and invested it in Parnassus funds through Etrade. Overall the performance hasn’t been bad, I’m actually pretty happy with it the past few months. But you can’t really judge a fund’s performance based on few months. Even if the performance is steady, I know that in the long-term, because of the fees (roughly 1%) associated with the Parnassus funds I own, low-cost index funds will prove to have a greater return, with minimal impact of my goal of early retirement. Using Personal Capital’s Fee Analyzer, you can see that I would lose 20% of my earnings and 3 years towards my early retirement goal if I kept investing in these funds.

 

PC_Etrade

 

Unfortunately, Etrade has an early redemption fee of 2% if I sell a fund within 90 days of purchasing it, so I’m waiting till September 2016 (just a month away!) to sell the funds and transfer them to low-cost index funds at Vanguard.

 

 

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