Author Topic: Cost per trade  (Read 4223 times)

merlin7676

  • Stubble
  • **
  • Posts: 186
Cost per trade
« on: October 28, 2015, 08:46:52 AM »
I have a 401K and IRA I'm contributing to but I want to diversify into stocks as well.
I see on etrade that cost per trade is $9 and vanguard is $7 (after having 50K in vanguard account).
Since I won't be putting a lot in at once, does it make more sense to save up money and do it all at once?

For example rather than buying 1 share at a time, save up enough for 10 shares and then buy 10 at a time?

Most of my money is going to 401K and IRA so I won't ever be able to drop several K worth into stocks but I do want to start building up another revenue stream with dividend stocks that I can reinvest and then collect the dividend come FIRE time.

thanks

ShoulderThingThatGoesUp

  • Magnum Stache
  • ******
  • Posts: 3047
  • Location: Emmaus, PA
Re: Cost per trade
« Reply #1 on: October 28, 2015, 08:52:10 AM »
Schwab charges no commission on Schwab ETFs. I think Capital One 360 (formerly ING) does $6.95 trades on stocks if you're buying individual stocks for some reason. I'm not sure why you would want to buy dividend stocks in particular before FIRE - you can just sell what you have and buy them if your FIRE income strategy is dividends rather than selling as needed.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1340
  • Age: 46
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: Cost per trade
« Reply #2 on: October 28, 2015, 09:03:27 AM »
There are much cheaper brokers for individual stocks and ETF.  I use Interactive Brokers and usually pay the minimum of 1 dollar per trade.

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1345
Re: Cost per trade
« Reply #3 on: October 28, 2015, 09:23:59 AM »
How is buying one company at a time diversifying?

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1345
Re: Cost per trade
« Reply #4 on: October 28, 2015, 09:24:52 AM »
I pay $9.95 per trade, thus prefer to buy 3600 companies per trade.

Interest Compound

  • Pencil Stache
  • ****
  • Posts: 658
Re: Cost per trade
« Reply #5 on: October 28, 2015, 10:07:16 AM »
Are you aware of the research, studies, and backtesting showing that buying dividend stocks specifically for income doesn't make any sense?

BarkyardBQ

  • Pencil Stache
  • ****
  • Posts: 667
Re: Cost per trade
« Reply #6 on: October 28, 2015, 10:14:44 AM »
Quote
The robustness of the 4% rule is one of the main reasons I find dividend-chasing weirdos who donít want to ever sell any shares so perplexing Ė not only will they have to work a lot longer to build up a portfolio that can sustain their spending on dividends alone, they are giving up higher overall returns to obtain a level of security that is simply unnecessary.

http://www.madfientist.com/safe-withdrawal-rate/

RWD

  • Magnum Stache
  • ******
  • Posts: 2894
  • Location: Mississippi
Re: Cost per trade
« Reply #7 on: October 28, 2015, 10:26:20 AM »
I believe trading Vanguard ETFs and mutual funds in a Vanguard account is free.

merlin7676

  • Stubble
  • **
  • Posts: 186
Re: Cost per trade
« Reply #8 on: October 28, 2015, 02:33:47 PM »
I didn't say live of it...i said diversify for another stream of income. I thought from reading here and ERE that dividends are a good thing?
So I should only invest in my 401K and IRA then since rental property isn't an option?  Seems like that is the only other option available.
I'm asking for advice not criticism. We're not all experts on here which is why we come here...for advice.

johnER

  • 5 O'Clock Shadow
  • *
  • Posts: 14
Re: Cost per trade
« Reply #9 on: October 29, 2015, 06:10:09 AM »
If you're not currently living off of dividends you should try to minimize taxable dividends, especially if you will be in a lower tax bracket.  e.g. in the 25% bracket you'll pay 15% on qualified dividends but if you drop to the 15% bracket in retirement you pay nothing.

If for some reason you absolutely have to have a dividend portfolio right now you could just buy VYM or a similar ETF, or possibly better go with a fund such as VHDYX which you should be able to set up auto investment and not pay trade fees.  Both will get you immediate diversification.

GoldenStache

  • Stubble
  • **
  • Posts: 239
  • Location: Washington, DC
Re: Cost per trade
« Reply #10 on: October 29, 2015, 07:30:15 AM »
Just buy VTSAX.  You get roughly 2% dividend, and no transaction fees.

Paul der Krake

  • Magnum Stache
  • ******
  • Posts: 4439
  • Age: 11
  • Location: USA
Re: Cost per trade
« Reply #11 on: October 29, 2015, 07:48:23 AM »
Fidelity will throw a few free trades at you if you ask nicely. They gave me 10 stock trades for my brokerage and I have less than 6 figures with them.

kurtnyc

  • 5 O'Clock Shadow
  • *
  • Posts: 22
  • Location: Asheville, NC
Re: Cost per trade
« Reply #12 on: October 30, 2015, 12:32:08 PM »
There are much cheaper brokers for individual stocks and ETF.  I use Interactive Brokers and usually pay the minimum of 1 dollar per trade.

I'm also on Interactive Brokers. $1 a trade is about right though you will not find that on a webpage as they don't use a 'per trade' pricing model. but they don't do IRA's, and the platform is designed for heavy traders and thus way more complicated than say using TradeKing at $5 a trade (where I have my IRA's). Vanguard etc are free for their products, but you said stocks.
If cost is your only concern IB is great, if your placing market orders your rewarded for the liquidity, but personally it took some getting used to.


forummm

  • Walrus Stache
  • *******
  • Posts: 7357
  • Senior Mustachian
Re: Cost per trade
« Reply #13 on: October 31, 2015, 09:31:58 AM »
There are much cheaper brokers for individual stocks and ETF.  I use Interactive Brokers and usually pay the minimum of 1 dollar per trade.

I'm also on Interactive Brokers. $1 a trade is about right though you will not find that on a webpage as they don't use a 'per trade' pricing model. but they don't do IRA's, and the platform is designed for heavy traders and thus way more complicated than say using TradeKing at $5 a trade (where I have my IRA's). Vanguard etc are free for their products, but you said stocks.
If cost is your only concern IB is great, if your placing market orders your rewarded for the liquidity, but personally it took some getting used to.



IB charges $0.005 per share with a $1 minimum and a 0.5% of trade value maximum for stock trades under their fixed pricing. So it'll cost you $1 to buy 200 shares of something. There's also a $10/mo fee for having an account, but that's reduced by the amount of any commissions you pay (so $10 of commissions means $0 of fee) or if you have $100k in the account.
https://www.interactivebrokers.com/en/index.php?f=1590&p=stocks1&ns=T

IB also does do IRAs. They charge a $7.50/quarter custodial fee.

doggyfizzle

  • Bristles
  • ***
  • Posts: 324
Re: Cost per trade
« Reply #14 on: November 02, 2015, 12:08:22 PM »
I have an account with Wells Fargo where I get 100 free trades per year, with no maintenance fees on the account.  I think I needed a minimum opening balance of $25,000 across several accounts (brokerage, savings, checking) to qualify for the PMA package which gets you the free trades.

index

  • Bristles
  • ***
  • Posts: 292
Re: Cost per trade
« Reply #15 on: November 02, 2015, 02:13:43 PM »
IB is cheaper if you use their tiered pricing schedule. Most 100 share blocks are 60c to 70c. Options are about 70c per contract.

Also, sign up for their securities lending program. I make about $30/month off the program and it more than covers the quarterly IRA fee and any commissions.