Saving Money On Broker Commissions Is Easy
Saving money on broker commissions is not difficult; you just need to know where to find discount online brokers. Entering stock orders and orders for other financial products, such as exchange traded funds (ETFs), mutual funds, and options, was at one time carried out exclusively by licensed full-service stock brokers. Traders and investors paid hefty fees for the services provided by these brokers. In the Internet age, there is no reason to pay the expensive broker commissions charged by traditional full-service Wall Street brokerage firms. Entering orders yourself online via discount online brokers is a great way of saving money on broker commissions, especially if you are a frequent trader, as full service brokerage commissions can quickly add up to significant sums of money.
Saving Money On Broker Commissions | Discount Online Brokers
The nice thing about saving money on broker commissions is that you do not have to sacrifice service and sign up with an unknown online broker to save significant amounts of money. Many mainstream full-service brokerage firms, such as Fidelity Investments and Scottrade, are also discount online brokers. Other discount online brokers, such as TDAmeritrade and E-Trade have established themselves as reliable low cost brokers that offer many support services that traders and investors need, without charging excessive brokerage fees.
Whereas full-service brokerage firms charge commissions in the $50 to $150 range per transaction, discount online brokers can provide the same services in many cases for just $5 to $10 per transaction. The difference is that when using discount online brokers, a trader or investor is for the most part on their own. Trading and investing decisions are made by a trader or investor, without the assistance or advice of a stock broker. To aid in these self-made decisions, many discount online brokers offer plentiful research tools and general guidance.
Saving money on broker commissions is geared towards active traders and investors that are comfortable doing their own research, making their own trading and investing decisions, and entering their own orders. If an investor is only interested in making long term investments that will grow over time that make sense in the context of their investment portfolio and goals, the investment advice provided by full-service stock brokers may be well worth the cost of their higher commissions.
For active traders and investors, saving money on broker commissions by using discount online brokers makes a lot of financial sense. The difference between executing trades and investments at $10 per transaction versus $100 per transaction can add up to a significant amount of money over the course of a trading year. For example, if an active trader or investor executes 100 trades or investment changes per year, the $90 difference between discount online versus full-service broker commissions adds up to a whopping $9,000 per year. For more active traders, the commission savings can be even greater, as many discount online brokers offer lower preferred commission schedules to active traders.
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