TD Ameritrade has a new $500 opening bonus (expired). Unfortunately, it is a bit involved. First, you must open a new non-IRA account with at least $10,000. You then get 60 days of free trades. If during the first 3 months you make an average of 3 trades a month, you then get to Apex status and get the $500 bonus after 3-4 weeks. You must then maintain $10,000 of account equity for 9 months after getting the $500, or they take the bonus back.
So to start, you need to have access to $10,000 that you don’t need for 13 months. If you don’t have that, check out this $75 bonus ($2,000 to open) and $100 bonus ($5,000 to open). Read the fine print and keep in mind your money will be tied up for a certain amount of time.
Got $10k? If you are an active trader, I’m sure you can put the free trades to good use.
If you have some of other people’s money and want to stick with a safe investment? Here’s a possible strategy based on this FW post by tedteddy:
1) Open with $10,000.
2) Make 15 trades in a week, but don’t trigger daytrader classification (4 roundtrip trades in 5 rolling days). You could make 8 trades buying 1 share of a bond ETF like AGG/SHY/TIP/IEF, and then sell 8 shares in 8 trades six days later. You could even dollar-cost average buy getting 1 share each day to minimize volatility or something.
A more fun idea would be to find eight $1 stocks and have at it. Some random ideas are ALRG, FGNT, and TCX. Worst case scenario, you lose $8.
3) Keep the rest of your money in a sweep account. Ameritrade offers (but does not advertise) sweep account options including a money market fund (RFIXX) currently yielding 3.76%.
Another option is that they seem to offer some no-transaction-fee (NTF) funds. Might be something worth buying in there.
In the end, you’re actual “bonus” is any money in excess of what you could have earned otherwise. Top 1-Year CD rates are currently 5.25%. $500 of $10,000 is already 5%, and conservatively let’s say you get another 3.75% from the sweep interest. So that’s about (500+375-525) = $350 of taxable interest for your time. You can decide if it’s worth the trouble. Thanks to Steve and Elizabeth for the heads-up.
Here is the offer fine print:
Offer valid for one new Individual or Joint TD AMERITRADE account opened and funded with $10,000 or more by 06/30/2006. Receive unlimited free Internet equity orders valid for 45 days from account funding. Offer is not transferable and not valid for IRAs, internal transfers, current TD AMERITRADE clients, or with other offers. Limit one offer per client. To qualify for the $500 APEX bonus, your TD AMERITRADE account must have an average of 5 trades per month or $100,000 total account value in the first three months. Allow 3-4 weeks after account reaches Apex status for $500 bonus to post to your account. Your account must remain open with minimum funding for 9 months after $500 credit posts to account or TD AMERITRADE may charge the account for the cash awarded. Apex qualification is reviewed every three months… TD AMERITRADE reserves the right to restrict or revoke this offer.
By Jonathan Ping | Deals & Offers | 4/24/06, 11:28pm