Costs Associated With Stocks
“By focusing on costs and shaving them where you can,
you’ll dramatically improve your return, no matter
what the market does.”
- Ilyce R. Glink, author of
100 Questions You Should Ask About Your Personal Finances
Stocks, unlike mutual funds, are inherently efficient when
it comes to costs because you’re not paying a money manager
to conduct the day-to-day research, analysis, and buy-and-sell
decisions. You, of course, are doing that yourself.
So the only real cost associated with stocks is trading expenses.
The more services offered by the brokerage handling your stock
trades, the higher the cost of each trade. Hence, the more
responsibility you take on yourself, the more money you’ll
save.
A full service broker will charge you the most, anywhere
from $25 to $125 a trade, or even a percentage of the amount
being invested. Discount brokers such as Charles Schwab and
Jack White have created a secondary market through competition,
where per trade fees range from $15 to $30.
Both full-service and discounted brokers may offer bigger
discounts to large volume, active traders and to clients who
maintain a specified minimum in their accounts.
The cheapest route is to open an online account and make
trades through the electronic trading system, where you can
buy stocks for as little as $8 per trade.
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