Posted on 10/02/2019 12:30:41 PM PDT by Vigilanteman
The race to the zero-bound is on. That’s not an interest-rate policy development, but an investing fee trend.
Charles Schwab Corp SCHW, -2.41% on Tuesday said it would no longer charge a commission on trades of U.S. and Canada-listed stocks, exchange-traded funds, and options, starting October 7.
That’s just the latest volley in the incredible shrinking broker fee war. Behemoth asset managers like Vanguard, Fidelity and Schwab have spent the past few years leapfrogging each other to offer lower and lower commissions.
That’s thanks in part to the rise in popularity of ETFs, funds that in most cases passively follow a pre-determined index, and charge much lower fees to do so, while also performing better than pricey active managers.
(Excerpt) Read more at marketwatch.com ...
Now everybody can get the same deal. Not to be outdone, TD Ameritrade announced they would match the same deal this week.
Since the government makes about a penny on every $400 or so of stock sales (whether you make money or not), this is going to be good for them as well.
Ameritrade (AMTD) fell like a stone yesterday, and after market close announced it would match the zero commissions starting Thursday. That's especially good news, as I've been making many more trades in my IRA lately, but the $6.95 wasn't exactly killing me. Turns out, there are stock trading apps for phones that have been charging zero for some time now (news to me, I'm still using semaphore). Schwab's move will hit it, but not as hard as it hits E*trade and Ameritrade (this is per the financial news feed on my acc't), or the other company, uh, had never heard of it prior to yesterday, um, [sound of paper rustling] Interactive Brokers Group, Inc. (IBKR), apparently highly rated, but all four took a nasty hit right in the market cap yesterday, and it hasn't improved much today. Naturally, I'm just dopey enough to buy some AMTD after the fall, to catch a little dead cat bounce.
The downside is that anybody who is really good at managing funds is going to resent the loss of income and bail for a more lucrative gig.
Some Starbucks barista could end up managing your retirement soon.
from twitter:
Will Meade
@realwillmeade
All these online brokerages are cutting their fees to zero bc they sell their order flow to hedge funds and trading firms for boku dollars. I still think 65 cents is too much per options contract, Im sure you could get 50 cents if you ask.
I doubt if they’re cheaper than Interactive Brokers.
I use IBKR. They require a minimum of 10K ..or at least used to.
It’s only inexpensive to invest if you make money.
Thanks RC.
Gee, thanks! That’s a hell of a revelation.
Why do I have three....?? Backup plan..if one goes down...I've another place to trade.
I'm a pretty active trader....
I have lots of great advice. How about this one. Absolutely 100% guaranteed to make you money!!
Buy low, sell high!
You dont understand Fund management.
I'm writin' that one down! ;^) When I was a young stock trader, my motto may as well have been, Sell low, then cry.
There’s a raft of ‘em, I wound up in Ameritrade because I’d been in Scottrade which was subsumed into Ameritrade. Very satisfactory, both of them. And back in the 1980s the discount broker I used charged $40 I think it was, but if sold within 30 days of a buy, the sale was free, or cheap. I think that practice was getting more common, and helped juice the rise of the day traders. The main reason day trading is practical is the technology of course.
http://www.google.com/search?ie=ISO-8859-1&hl=en&source=hp&q=discount+retail+online+brokers&gbv=1
Perhaps the hardest hit will be the zero-fee smart phone app brokerages, but it's just possible that those appeal to younger investors (those who can still read the effin' phone screens), and I love a good stampede.
I’ve had a schwab account since the early 90’s when the commission was $49.95 on a trade of 100 shares.
Ooooh, I've made two bucks. Can't sell until tomorrow though... steeeenkeeeeng $6.95 commissions...
Nobody gives you anything for nothing.
Schwab is being paid for order flow.
And, even if commissionless trading is not a loss leader for them, they benefit by aggregating assets. For example, stocks held in your margin account can be loaned to short sellers; or they collect the spread between what they pay on your uninvested cash and what they loan it out as; or, they have increased opportunites to sell other services.
Mutual funds have seen a major outflow of cash investments to ETFs which trade like stocks minus the fees. Yeah, of course I know that the fees are built in like the difference between ask and bid, but still a lot lower than your average fee laden mutual fund.
Vanguard and other low fee mutual funds are still doing fine, however.
And don't get me started on company managed 401(Ks). If you work for crooks, as I used to, they only match 3% (or less) and invest with fee laden outfits like the Principal Group which kicks back a little to the company.
If you work for an honest outfit (as I do now), they will match 5% (or more) and invest with lower fee outfits, which are far more reasonable.
I’ve a puter and a flip phone.........
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