Dear George: I recently gave my broker an order to sell 100 shares of a particular stock at $15 a share. The stock did trade at that price later in the day but my order was not completed. Why didn’t my stock get sold?
, John, Del Mar
Dear John: Just because the stock traded at the price you requested doesn’t necessarily mean your order should have been executed. There are a number of factors that determine what trades are completed when a stock hits a particular price.
When you place an order to buy or sell a stock at a particular price you get in line behind all of the orders that are already on the books at that same price. If you are dealing with an actively traded stock you probably will get your “limit order” off at the defined price when it hits that level, but there are no guarantees. However, thinly traded stocks don’t often trade enough shares to fill all orders at a particular price.
Traders also give priority to larger orders of stock. So, your order to sell 100 shares of stock may be given second billing to an order to sell 10,000 shares of the same stock.
There is one way to beat the market when placing a limit order. Your order would have probably been completed if you have placed the sell price slightly below or above $15 a share. Most investors put their limits at rounded-off prices rather than at fractions. Believe me, the line is much shorter at $14 7/8 than it is at $15 a share.
Dear George: We need to sell some securities to pay for our daughter’s education. Our stocks are performing well and we’d rather sell some savings bonds. The only problem is I don’t know how to do it. Where should I go?
, Lynne, Carlsbad
Dear Lynne: More than 7 million people buy savings bonds through payroll deduction programs. Bank vaults and desk drawers are full of certificates that are earning interest on a tax-deferred basis. But, when it comes to redeeming those securities, like you, they don’t know what to do.
It really is a pretty simple process. Savings bonds can be redeemed at many commercial banks, savings and loans, and credit unions. You can also contact the Federal Reserve Bank for redemption details by visiting the Web site at (www.savingsbonds.gov).
Before you sell your bonds it might be a good idea to do a little work to find out which ones to get rid of and which ones to keep. Not all savings bonds are created equal and you could sacrifice six months of interest if you sell the bonds on the wrong day.
Dan Pedersen, who operates a service called The Savings Bond Informer, points out that investors collectively forfeit more than $150 million a year by randomly cashing bonds. Unlike other Treasury obligations, savings bonds do not accrue interest.
If you own a Treasury bill, note or bond you earn interest for each day of ownership. If you redeem those securities before a regular payment, you receive interest that has accumulated for that period. However, interest on savings bonds is created at the end of each six-month period and if you sell a day too soon you could miss out on six months of interest.
Pedersen suggests you consider these factors before selling: What rate of interest applies to each bond? When does each of my bonds increase in value? What is the value of each bond? How much interest-earning life is left in each bond?
These questions can be answered by using Pedersen’s Savings Bond Informer at (800) 927-1901. There is a small fee for this service. You can also use the Savings Bond Wizard that is available through the Treasury Web site. It’s a great tool and is simple to use.
Don’t forget the tax consequences of selling savings bonds. They have accumulated tax-deferred and when you redeem them there will be a big tax bill waiting for you. However, like all Treasury obligations, savings bond interest is exempt from state income taxes.
Chamberlin is the host of “Money in the Morning,” heard weekdays from 9 a.m. to noon on Ksdo.com A/M 1130. Send letters to P.O. Box 1969, Carlsbad, CA 92018, or E-mail him at (george@moneyinthemorning.com).
