commisions

Fidelity Joins Free Commissions Movement

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Fidelity Joins Free Commissions Movement 1

Fidelity announced that it too would be offering free trade commissions to its customers following earlier announcements from Schwab and TD Ameritrade. Fidelity free commission trades have some limits, but they are not onerous. While this is a newer movement among discount Wall Street brokers, it comes after many different investing apps, and services have pushed a commission free investing business model for a year or two now. Obviously, the free trade model is mostly aimed at smaller, do it yourself investors. It also works well for those doing the roboadvisor, or computer-based model investing. Fidelity Free Commission Larger investors already enjoyed “free” trades as part of an annual fee usually applied to their accounts that provided not only free trades, but investment and financial advice as well. Keep in mind that the free trades does not apply to mutual funds with loads, or other investments that charge their own fees. This new wave of freebies only applies to stock trades, ETF trades, options, and other market trades. And, of course, be sure to check the fine print where you’ll find tidbits, like $0.65 per option contract and a charge for sell orders: Sell orders are subject to an activity …

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Free Trades

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zero cost free trades

Charles Schwab and TD Ameritrade have both announced that they are eliminating their usual commission for stock, option and ETF trades, to provide free trades to their customers. In the coming days, we may see other discount brokerages follow their lead, in part, or in whole. Until now, most brokerages only offered free trades on select securities, often on company owned mutual funds. For example, Fidelity has a list of mutual funds customers can buy for “free.” Schwab has a similar list. This new move opens up free trades to the world of stocks and options. Trading vs Investing New investors often confuse the concepts of trading and investing. Trading seems exciting and romantic. While it very much can be for the right people, the average person actually needs to be investing for long-term goals, rather than slinging stock trades. For investors building a well-diversified, long-term portfolio high commissions can impose an overhead that diminishes returns. That’s why low-cost brokerages like Schwab and Fidelity are preferred for many do it yourself investors. Zero-cost takes it one step further, providing the opportunity to build, maintain, and re-balance a portfolio without the added overhead of even a low commission. Traders, obviously, will …

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A Financial Advisor Makes Money

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Today’s inspiration comes courtesy of All Financial Matters (a solid blog with good hard numbers data) who notes that a Money Magazine article called “The Mole” discusses how just because a financial advisor says he puts his clients first doesn’t mean he does.  Really?  Did I miss something?  If it says “I put my clients first” on an attorney’s website does that mean that he does, or does it depend on the attorney?  Are there doctors who over bill your insurance company to boost their income?  Does a waiter ever suggest a more expensive wine to increase his tip?  I’m shocked, shocked, to find out there is gambling going on in here! All of this, of course, is why you need a good trusted financial advisor in the first place, but that is not why we come here today.  I want to show you something from “behind the scenes” as the Mole says. Financial Advisors and Commissions Let’s make up a fake client with a $500,000 account to be invested.  Let’s ignore all taxes and legal implications for the sake of simplicity and concentrate on commissions.  We’ll also assume that the account value stays the same over the years for …

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