New Money

Competition for your business is heating up among brokers—including the traditionally higher-end ones. According to SmartMoney's 2008 broker survey, the average commission charged by discount brokers (like Charles Schwab and Firstrade) is about 15 percent less than that of premium brokers like Fidelity. The gap was nearly 50 percent four years ago. Unfortunately, it's tougher to decipher and compare commissions these days, because they vary by frequency of trades, number of shares, and sometimes price of shares. Here are a few highlights from the survey:

• Some brokers, like TradeKing, charge a set amount no matter how often you trade, while others use a tier system that offers discounts for frequent trades. Read the fine print, though: Although TradeKing charges a flat $4.95 per trade, it also charges a penny a share for stocks priced under $2.

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Selecting a mutual fund may seem like a daunting task, with thousands on the market to choose from. Recently, I talked with Steven T. Goldberg, a former Kiplinger's Personal Finance writer (and a former colleague of mine), about how to pick funds. I figured he'd have some good tips, now that he's in the money management business. Goldberg also writes a weekly column for Kiplinger's—I particularly like this week's post on Five Great Green Funds—and he's the author of the book But Which Mutual Funds?: How to Pick the Right Ones to Achieve Your Financial Dreams. Here's what he had to say about choosing funds (tomorrow, I'll highlight a handful of his favorites):

Any new insights into the fund industry, now that you've crossed over into money management?
It's really satisfying to help people on an individual basis—I'm finding it a little more difficult than expected, mostly because of the psychology of it. Investors' portfolios are kind of like garages: places where they put all the stuff they don't know what to do with. There will be one fund someone's brother-in-law told them to buy, another stock they heard about at the water cooler, and a fund some broker sold them with horrible fees, none of which work together at all. Often, people just want to forget about it. It's also been made very, very complicated by fund-industry people telling you so many different things; it's easy not to do anything.

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When Paul Sutherland was 17, a family friend gave him $2,000 to test his investing legs with the instruction that he could keep any profits over 11.2 percent. It was the 1970s, and stocks were in the midst of a long bear market, but Sutherland made out by trading gold, silver, U.S. and foreign coins, and paper currency. Today, he's the chief investment officer of the globally focused Utopia Funds, based in Traverse City, Mich. Recently, I asked him about global investing, hot sectors, and which funds he likes. Here's his advice for investors starting out (followed by a Q&A):

• First, you learn the basics. Read Security Analysis by Benjamin Graham and David Dodd. If you don't have time to read it, just look at the pictures!

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Members of generation X aren't too optimistic about retirement, and rightly so. Among workers ages 25 to 34, just 18 percent say they're "very confident" about having enough money to retire comfortably, according to the Employee Benefit Research Institute. That's down from 31 percent in 2007.

Compared with the baby boomers, this generation has less of a safety net (think shrinking pensions and uncertain Social Security benefits), plus they'll probably be planning for a longer retirement, points out this story in USA Today.

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