beginner stock investing q's- how to minimize taxes on sale of stock? is there a limit on buy/sells?

1.) what is the typical commission that these online trading sites (ie. scotttrade, fidelity, ameritrade) take?
typical commission is $5 to $10 or something like that for regular stock. You pay commission when you buy and again when you sell. Sometimes there are deals for opening accounts like 10 free trades or something like that so you would want to take advantage of that. Ameritrade is 9.99 and Scottrade is something like 7.

3.) What is the tax rate on sale of stock and what advice can you provide on how to minimize the taxes?
you'll have to read about capital gains tax. There is short term (you hold stock less than 1 year) and long term (over 1 year). wiki [wikipedia.org]. It also depends on your tax bracket. When you do your taxes you can do it all in turbo tax, you enter your buys and sells and dates and it will calculate your tax for you. Long term capital gains tax is 15% and short term capital gains is taxed at your ordinary income rate, whatever bracket you are in, from 10 to 35%

There is no way to really minimize your tax, but you only pay tax on the profits you make. Losses are tax deductible but there are complicated rules like you can claim 3k of losses per year and if you had more losses than that you claim 3k per year until all your losses have been claimed. You can google capital gains loss for more info. I wouldn't hold something for 1 year just because the long term capital gains tax is lower, and the market is really volatile these days. It isn't like the market of the 80's and 90's where you can just buy and hold. That strategy doesn't work anymore. Taxes aren't really something you need to worry about unless you are making a very significant amout of money or you are trading professionally. You need to worry more about how to make money in the stock market first. Then you can worry about tax strategy.


4.) Is there a limit on the number of times I can buy and sell shares of Stock A within a timeframe?
The short answer is no. But, if you sell for a loss and then repurchase the same stock within 30 days this is a wash sale. See wash sale rules [wikipedia.org] You cannot claim the loss on your taxes. If you keep selling for a profit, there are no rules, you just keep paying commisison. There is no limit to buying/selling. However if you buy/sell same day, that is daytrading and the rules change. With ameritrade, you need 25k in your account and you can do unlimited day trades, otherwise you are limited to 3 day trades per week. That 25k limit could vary with other brokers but I only really know how ameritrade works.

5.) What miscellaneous fees , if any, should I expect to pay during purchase and sale of stock?
For regular stock, you just really pay commission, that's it, but you will want to read about commissions and fees before you open up an account with any broker.



6.) on Day 31 when I sell all 100 shares of stock A, is this transaction instant? would my account immediately be credited with $100,000 with same day bank wire capability?
When you sell your stock, the account is immediately credited and your broker will have different rules, but on ameritrade you can wire the money out either same day or next day depending on the time of your request. With scottrade (last time I checked) it took a few days for some reason. Different brokers have different rules.



For the most part it is pretty simple. You open an account and transfer money in. You buy and sell and pay your commissions. Then you can transfer your money out.

One thing you should look into is software. With ameritrade you get access to ThinkorSwim software, which I use and I like. Other brokers are associated with other software that makes trading easier. For example Tradestation is both trading software and a broker you can use. It is pretty popular with traders. Their commission structure is either 6 cents per share or 6.99 per trade.


Big Mike's trading forum [bigmiketrading.com] has a lot of reviews of different brokers and software packages, it might be a good place to do some of your research.