Dec 30, 2013

Stock Buy Blow-by-Blow

Pigtails wants to start investing.  I'll walk the process of opening a trading account and feeding cash so she's ready to go with purchasing stock.

We'll start by setting up an account with a trading company.,, TD and are reputable online self-service brokerage houses.  I picked E-Trade for Pigtails, here's a link for creating the new account:

Decide what type of trading account you need.  For most folks, an individual or joint account works best.  Since Pigtails is a minor, I'll open a custodial account.  I'm going with cash only and not messing with options trading on the bottom there:

After entering your name, address, SSN, favorite breakfast cereal and blood type, the account's active and ready to be funded.

We need to feed moola to the empty account so there's a balance available for purchasing stock.  I recommend hooking the trading account to your checking account, this allows immediate money transfers.  You'll need to enter details on checking account and routing number:

Once the checking account is linked, we can move money to the stock account with a click.  eTrade requires a minimum of $500 per trade.  I'll seed Pigtails' account with $1,000.  It takes a couple days for the initial bank account verification process to finish.   

Setting up the account and transferring money is straightforward and takes about 15 minutes.  The hard part is determining which stocks to purchase.  Stock selection is a cocktail mix of math, art, educated guessing and luck.  Next post, we'll talk in detail about factors to look at when researching stocks.  

Below's a snapshot of UPS stock (brown truck deliveries) I'm thinking about buying.  The junk outlined in green boxes matters and what we want to pay attention to.  The red arrow shows the buy button:

We also want to geek on the long term charts to spot check past performance, deciphering any patterns or trends:

Next post, we'll break it down to the basics and touch on these aspects of investing:

  • Dow Jones, S&P 500 and NASDAQ
  • What is stock and how can it make us money 
  • Mutual funds, money markets, bonds and dividends defined
  • Read stock charts and learn what company fundamentals to pick at
  • Risk vs. reward
  • Pigtails will purchase her first shares of stock! 

If we do it right and make smart choices, daughter's investment will double or triple by the time she's 18.



  1. Thank you so much. My daughter had a court order CD from birth. The interest on it was awful, but the courts refused to let her invest it any other way. She is now 21 and holding onto way to much money in her savings account. She has been wanting to invest and was not sure where to start. Thus is going to help her so much. We look forward to your next installment.

    1. Stock is the easiest way to make money without working. I'm glad you're daughter will put these stock posts to work, I'll get busy writing the next one!

  2. My daughter just turned 8, and we have been using "Moolah Cow" for her cash gifts. It has 4 chambers: spend, save, donate and invest. Invest is the hardest category for her to grasp, and this is a great idea to take the next step to educate her. Thanks for the detailed explanation of what you are doing.

    1. I like your cash cow and the various stomachs for spending and savings.

      The idea of investing is a more difficult concept to teach to kids, sometimes adults too. It requires patience and the opposite of instant gratification: time is needed for the multiplier effect to get busy on the investment wad.

  3. My daughter is 11 and keeps raising an interest in wanting to learn about the stock market. This will be fun to follow and give us something to go along with!


Thanks for the note, check back for my response!