Mustache those stock trading commissions!

[Alex in Virginia]

For years, I'd been paying an $8.95 commission every time I bought or sold a block of stock.  Only last week did I stop to tally the cost up.  And between my IRA account and my wife's, it's about 3600 bucks a year!  No way!

Mustache those stock trading commissions!  From now on, I'm only paying $3 instead of just about $9.  Here's how.

I just moved our brokerage cash balances from Charles Schwab to Foliofn Investments (folioinvesting.com).  We've had 2 Folio IRA accounts for 3 years, but I used them just to make it economically reasonable to trade small stock lots of around $1000 at that $3 commission.  (Even I could not see forking over $9 to buy $1000 worth of stock.)  Or to trade even smaller dollar amounts by using Folio's no-commission "window trade" system.  The first couple of years, I did not consider Folio's trading platform and execution to be good enough for the "big" trades.  But Foliofn has grown up.   So now we're going to be saving over $2000 a year by making Foliofn our primary online broker for all stock trades regardless of their size.

And that's another $2000 shaved off our annual expenses.

Cheers!

Alex in Virginia

[Cecil]

I use Questrade for all my stock trading - as of Feb 1st of this year, they offer commission-free EFT purchases.

Since all I'm doing for the near future is buying ETFs, I don't pay commissions at all!

[secondcor521]

I buy and hold Vanguard index funds for years at a time.  I average less than a trade a year and they're free.

[LowER]

Same as secondcor. See bogleheads.org.

[ivyhedge]

And that's another $2000 shaved off our annual expenses.

Cheers!

Alex in Virginia

Congratulations, Alex...

Yes, Foliofn is a great tool and the depth of the platform is substantially improved over previous iterations. I've previously extolled their low costs and substantial flexibility in previous posts. Keep in mind that, while they still caution that many OTC/pink/debt issues aren't broadly supported, *many* are: many more, in fact, than even last year. (They also have a fantastic institutional platform.)

And Folio is a resource that will allow you to DCA into dividend growing equities (and the like) such that you can deflect the standard questions such as, "wasn't the 'market' flat from 2000-2010?". ;)

Another great platform is Interactive Brokers. Should you desire increased international exposure, do try it. Commissions are still right around $1 save for $50,000+ orders and the market breadth is incredible.

Happy hunting!

Ivy (formerly in NoVA)

[MrsStubble]

I'm a buy and holder.  I use ShareBuilder - lots of the mutual funds are free to buy/sell there, plus no fees, no minimums.  Stock trades are still a little high $6.95 now, but I try not to buy often.

[anotherAlias]

I just discovered Sharebuilders automatic investing program which is $4/ trade.  So far this has been working great for my dividend portfolio.

[SamV]

This is not for traders who make lots of trades in a month, but for people who make less than 30 trades, BOA/Merrill Lynch lets you make 30 trades for free every month if you have $25K balanace -
http://www.merrilledge.com/self-directed-investing?src_cd=bac1

Like some others here, I use Vanguard Index funds for investing. But also do some trading for fun/bragging with BOA/ML.

[Alex in Virginia]

Hey, SamV and All...

I went ahead and checked out that bank of america / merrill edge deal.  There's a big catch to getting those 30 free trades per month.  You have to have $25,000 on deposit in cash with them.  The most they'll give you on that money is 0.1% per year.  You can get 1% from a lot of other banks.  So, let's analyze it.

At Folio, 30 trades in a month will cost $90.  Times 12 months is $1080.  That means I could save that $1080 per year on stock trades by going with Merrill Edge instead of Folio!  So the $25,000 BofA deposit won't be paying me interest, but it IS going to be saving me that $1080 -- and that's like getting better than a 4.3% return on that money!  (Not to mention that I will be saving $3200 a year over what I've actually been paying Charles Schwab up to now.)

What a super mustache! I'm going to do it! (Yes, I have $25,000 in cash elsewhere that I want to keep in cash for the next year at least.)

Thanks for the info, SamV!

March 27th Update: I did it.  Opened the Merrill Edge brokerage account, opened a Bank of America checking account (what a PAIN, I must tell you), funded the Merrill account, plunked $25K into the BofA checking account... and it's GOODBYE to trading commissions at least until I need to use that $25K for something in a year or two.

Alex in Virginia

[Alex in Virginia]

On my post just above about BofA, my math was wrong but the deal will still work.

For 30 trades per month, Folio costs $90.  Times 12 months is $1080.  Then also BofA pays a lot less than I said for the $25,000 deposit: just 0.01 percent -- call it nothing.  So doing my trading with BofA will save $1080 in trading fees and cost me $250 in interest foregone.  The net is $830 saved per year.  That's a net return of 3.3% per year.

Still sounds like it's worth it.  The $25,000 would be "generating" $1080 (4.3%) instead of $250 (1.0%) per year.

Cheers!

Alex in Virginia

[DoubleDown]

Ha, you have much different definitions of "net return" and "generating $" than I do! I don't consider trading costs to be returns or generated income, but I do get your analysis about saving money one place over another if you're into doing so many trades.

[SamV]

Glad to see Alex math worked out for you. I have heard from a couple of friends that Wells Fargo also has similar deal for free trades. I have not personally checked it, but you might want to check that as well and compare math before you switch to BOA/ML.