In this post you will learn:
- What is the cheapest online trading fee for brokerage account
- What are the online brokerage fees for option trading
- What are the trading fees for all online brokerage accounts
Investing a key in building your net worth and passive income flow. Also, I believe in passive investment (over active) and the only thing you can optimize are the fees. Over the long term, fees can make a huge difference in return.
This is especially true if you implement dollars cost averaging (known as DCA). Dollars cost averaging a mathematically proven method to reduce risk and maximize returns especially if you buy an index. The issue is if you perform dollars cost averaging every week, then you need to pay trading fees. The smaller the interval the higher the trading fees and they start become a high percentage of your commissions.
The issue is if you perform dollars cost averaging every week, then you need to pay trading fees.
Here are a list of the best online brokerage firms ordered by stock price trading fees.
|Name||Stock cost per trade (online)||Option Cost||Min account|
|Tradeking||4.95$||4.95$ + 0.65$ per contract||$0.00|
|Charles Swab||8.95$||8.95$ + 0.75$ per contract||$25,000.00|
|E-trade||9.99$||9.99$ + 0.75$ per contract||$500.00|
|TD Ameritrade||9.99$||9.99$ + 0.75$ per contract||$0.00|
|CapitalOne Sharebuilder||6.95$||6.95$ + 0.75$ per contract||$0.00|
|well's Fargo||8.95$||9.95$ + 1.00$ per contract||$1,000.00|
|Vanguard||7$||20$ + 1$ per contract||$3,000.00|
|Options house||4.95$||4.95$ + 0.50$ per contract||$0.00|
|Fidelity||7.95$||7.95$ + 0.75$ per contract||$2,500.00|
|eOption||3.00$||3.00$ + 0.10$ per contract||$500.00|
|Merill Edge||6.95$||6.95$ + 0.75$ per contract||$0.00|
|PlaceTrade||1.50$ (Minimum); 0.01$/stock traded)||0.75$ per contract (1.50$ minimum)||$5,000.00|
|TradingBlock||7.50$ (minimum); $0.001 per share||$7.50 + $0.75 per contract||$0.00|
|USAA||8.95$||8.95$ + 0.75$ per contract||$0.00|
If you look closely, the famous one are not the one with the cheapest commissions (especially if you trade options). Also, if you want to do dollar cost averaging, then you want to limit your fees for every trade.
I personally use TradeKing (I used to have Zecco which had 0$ trades). They have a good platform, good support and mobile trades. Switch to TradeKing and get up to $150 in transfer fees reimbursed.
Of this list, TradingBlock has by far the lowest commission (1.5$ per trade and per contract). It has a minimum of 5000$, but hopefully your asset should grow faster than this if you keep reading this blog.
However, I don't understand what value would you have by staying at an online brokerage account that is charging more in trading fees. Isn't economic theory tells us that executing a stock trade a commodity? So why shouldn't change to a cheaper alternative?
What is your favorite online brokerage? What do you like about it? And why aren't you moving to the one with the cheapest commissions?
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