So I posted earlier about how I was trying out an account with Zecco.com. They advertised free stock trades, which I thought was really cool. It seemed great at first, and now I am a bit confused and pissed off.

A couple weeks ago I tried to log on the see how my stocks were doing. It wouldn’t let me in. I am positive I am putting the right password in, but it won’t work. I haven’t been able to call them about it because of being at work so much, but I will call them soon.

So today, I got an email from them saying that now, in order to get 10 free trades a month, you need to have $25,000 in your account with them! That is ridiculous, as they originally got people in like me, who can’t even spare $1000 as a minimum to invest with other sites.

So now I’m wonderng if this is why I can’t log into my account. Also, I realized that I can’t sell the shares I currently have without getting charged a trading fee, which is probably something like $12 a trade because that is what other discount sites offer.

Okay, so if they need to charge for trades to function, fine, but I’m mad that they advertised it as free, and have basically taken $100 of my money, and will charge me to get it back. Damn them!

In this NPR segment about “How to Weather a Rocky Economy” Melissa Block interviews Carolyn McClanahan, personal financial adviser and founder of Life Planning Partners. McClanahan says that while CDs and other savings accounts are good for very short term savings, the best place to put your long-term money is a diversified portfolio.

If you don’t want to worry about buying individual stocks to build a diversified portfolio, mutual funds can be an easy way to diversify. However, not all mutual funds are diversified. Just because your employer includes a mutual fund on your list of available investments in your 401(k), for example, doesn’t mean that it’s a good place to put your retirement money. In fact, I heard an interview on NPR once with a financial planner who said one company’s retirement plan that she had looked at had 10 funds listed. Of those 10, 3 were very high-risk funds, so an employee who just picked a fund at random might end up with their money in a more risky investment than they bargained for. (I couldn’t find the interview online, or I’d give you the link).

Don’t make the mistake of picking a fund at random! It’s not hard to do a little research, and it won’t take you much time either.

Before deciding on any mutual fund, take a quick look at its prospectus. At the very least, read the fund’s objective to determine if the fund manager’s goals sound similar to yours. For example, T. Rowe Price offers a Global Technology Fund, which invests in firms that “are expected to generate a majority of their revenues from the development, advancement, and use of technology”. This is great if you’re hoping for big returns, but it’s a very risky place to keep your retirement fund.

On the other hand, T. Rowe Price offers retirement funds specific to the year in which you are planning to retire. I think that this is pretty cool, because presumably the fund manager will change their investment strategy appropriately as it gets closer the the retirement year, so you won’t have to worry about moving your money to different accounts.

Of course, there are many other factors to consider when choosing a mutual fund, but reading the prospectus is a good place to start!

I started investing in mutual funds in September. So far, my investments have lost more than 12% of their value. So what’s my reaction? To invest even more of course!

But isn’t that throwing good money after bad? I certainly hope not. I have faith that the market will recover and I’m excited to have the chance to invest while the market is down.

If you invested a dollar in a diversified fund right before the Great Depression, you would have seen a gain on your investment just a few years after the end of the Depression. This is why young investors are advised to keep all of their money in stocks–a risky investment–becase they have enough time to ride out market turbulence before they will need to withdraw and use the money for retirement.

As an investor in the stock market, you have to be prepared to ride out big drops in the value of your portfolio. If your portfolio is diversified, you will eventually realize some gains on your investments. If I opted to cash out of my investments right now, I’d turn my paper loss of 12% into a real loss. As long as I hang on to those stocks, they will eventually regain that 12% and much more. So I’m going to continue making my monthly investments!