Sunday, October 6, 2019

Bully! No More Brokerage Fees. For a Lucky Few

A bull stands looking towards the reader, to the left of the black and white bull are the words No More Fees.
Bully! No More Fees
At the turn of the nineteenth Century, the term "Bully!" was a term of excitement and cheer. Even President Theodore Roosevelt was known to cry "Bully!" at times of excitement. Well the news from some of the low cost brokers on Wall Street that from early October 2019 they would be removing their brokerage fees for many investors on their platforms would have surely raised excitement for the market bulls.

Charles Schwab was the first to announce the cut in fees, almost immediately both TD Ameritrade and E*Trade followed suit.

From October 7, 2019 I will be among those no longer paying brokerage fees on my stock and ETF trades with my broker. This makes me bullish in the short term.

Why? Because I do not trade a lot. Last quarter I did some re-balancing and several stock purchases. In total I spent over $230 in fees. Over two hundred dollars in fees! For someone who doesn't trade a lot of the time.

If those fees are spread out over the course of the past decade say I have probably spent over $10,000 in fees. Bear in mind fees have come down since the early 2000's and so $10,000 is what I consider a minimum cost.

That $10,000 would have made a huge difference to my Roth IRA or other brokerage accounts. What about yours? How might have you managed your brokerage accounts or  your retirement account differently?

Is the move to zero brokerage fees a good one overall? I think our brokers know what they are doing.

I can see that they may increase the spreads on stock and ETF's so they may lose on the fee side, but more than make up on that by the penny or two those traders among us pay per trade. I am sure that for a while I may also buy more often. It is just a product of my now thinking that the price I see will be the price I pay without thinking I have to add a dollar or two to the price to cover fees.

Anyway, from tomorrow I will cheer on the brave low-cost brokers, Schwab, Ameritrade and E*Trade. Bully for you!

What do you think about the new low cost brokerage platforms? Will no fees play out for the benefit of all traders and investors in the long run?

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