My apologies up front if this is an inappropriate question for this board. I have so appreciated what I have been learning here.
My question is related to this board and investing style. With a fair amount of trading in and out of the stocks recommended here, I am running up against increased commissions that are eating into my returns. Now, I use Fidelity which charges $4.95 per trade. Granted, it is competitive, but because I trade more now than I used to, it is driving up my costs.
Any thoughts on this dilemma? What brokers do others use here? should I just not worry about it? Are there other boards for these questions?
Thanks in advance.
John
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Any thoughts on this dilemma?
It’s not the dollar amount but the percentage that counts. Maybe your trades are too small. I’m happy paying $4.50. Overtrading is usually bad for the portfolio anyway.
Denny Schlesinger
10 Likes
captainccs writes,
It’s not the dollar amount but the percentage that counts. Maybe your trades are too small.
That’s an excellent point. What is the minimum portfolio value one should have before considering a Saul-style portfolio and its attendant trading costs?
Presumably an investor with minimal assets would be better off in a low-cost index fund rather than getting chewed up with commissions & trading costs on a small asset base.
intercst
2 Likes
I use Interactive Brokers. I am charged $10 per month (Free if you have $30 or more in commissions that month) for market data but the most I have been charged for 100 shares of anything is $1. Many times I am charged $.75 or less (many times < $.50).
So for $120 per year and about 30 trades per year, you would rack up about $140-$200 a YEAR in commissions.
If you have $4000 and your account goes up 60%+ like Saul, me and many others on this board, $150 is not that much (% wise seems a lot but dine out one or two times less per year and its a bargain).
Purchasing 50 shares of AYX or TWLO in the last 8 months would cover commissions for three years and all other gains are gravy. 
pmoncho
1 Like
One option if you are trading with small amounts is to use Robinhood. FREE trades (and now free afterhours). You can buy as little as 1 share at a time with no friction of trading costs. Initially was only available via an app on your smartphone but now they have desktop access as well. I have been using them since June 2015 with no issues.
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Hey rellek2 !
Welcome … There are many great books on investing. The latest that I’ve read is “A Random Walk Down Wall Street” by Burton G. Malkiel. Most will cover frictional costs, like commissions, and here at the Fool we recommend keeping them below 2% per trade. I use Scottrade which charges $7.00 so that means I need to buy over $350 of a company at a time, minimum. Frequent trading (buying and selling) can eat into your profits quite easily. That’s why most of us here are “long term - buy and hold” investors. For me, long term is greater than 5 years. Warren Buffett suggests “forever”.
Best,
Rich (haywool) investing since 1998 (not very long)
3 Likes
One option if you are trading with small amounts is to use Robinhood. FREE trades (and now free afterhours). You can buy as little as 1 share at a time with no friction of trading costs. Initially was only available via an app on your smartphone but now they have desktop access as well. I have been using them since June 2015 with no issues.
You will want to be very cautious in Robinhood as they only offer taxable accounts.
You should be aware and tracking short term gains vs long term gains
You should also be aware that Robinhood only offers First In, First Out tax accounting, meaning that you cannot declare which stocks you are choosing to trade for tax purposes.
I have Robinhood for taxable investing and Ally Invest for my Roth and Traditional IRA offerings. I’m not incredibly impressed with Ally’s system, but enjoy the $3.95 trades and most of my research is offline
I am charged $10 per month (Free if you have $30 or more in commissions that month) for market data
You don’t have to pay for market data - delayed data is fine most of the time.
Even if you don’t pay for market data, the current value of your holdings is shown in real time, so it is easy to work out the current price. If I am going to make a trade I just look at the current price elsewhere - such as Google or another brokerage account.
Another advantage of IB is the interest you get on cash - about 1.4% on US$ cash. I keep a $ cash balance with IB even though I live in Spain.
Ian
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You don’t have to pay for market data - delayed data is fine most of the time.
You are correct. Forgot to mention that. I trade options also and that is why I have market data.
pmoncho