broker-feesThe trend in investing today is increasingly moving towards a "do-it-yourself" approach. This is great for several reasons. First, no one will ever care more about your financial future than you do. Also, online investing cuts out a tremendous amount of overhead, which means it’s cheaper to invest online than to pay a broker to do essentially the same thing for you. Finally, online investing gives you access to the same types of investments you would want to select anyway—those without heavy (or any) investment fees attached. However, there are still hidden fees to watch out for even if you opt to do your own investing online. This guide can help you avoid some fees and reduce others.

6 Best Online Brokers

Your first step will be to choose an online broker. To that end, here’s a list of six of the most highly rated online brokers, complete with current info on trading fees and account minimums, so you can select a firm.

NOTE: This list was compiled by researching the "best of the best" lists on MSN Money, the Wall Street Journal, Kiplinger, and Investor's Business Daily.

1. Fidelity

  • 65 free EFT trades up front
  • Online trading fee $7.95 per trade
  • $2,500 account minimum balance

2. Scottrade

  • No setup or account maintenance fees
  • Online stock trading fee of $7.00 (for all shares priced at $1 or more)
  • $500 minimum account balance

3. Sharebuilder

  • Online trading fee $6.95 per trade
  • Options trading fee of base commission plus $0.75 per trade fee
  • No minimum account balance

4. TD Ameritrade:

  • $9.95 per stock trade
  • $9.95 + $0.75 per options trade
  • No minimum account balance

5. TradeKing

  • $4.95 per online trade
  • Reimbursement of account transfer fees up to $150 (for transfers of $2,500 or higher)
  • No account minimums for brokerage or finance accounts

6. E*Trade

  • $9.99 per online trade
  • 90+ commission-free investment options
  • $500 minimum account balance

5 tips to save on online broker fees

Whether you already have a broker firm or you’re still choosing, read through this list of fees before making any changes. At the end of each fee, you’ll find a tip on how to avoid paying or reduce what you have to pay.

1. Transfer fees

Transfer fees are how an online broker gets you to stay even when you want to leave. How do they do this? By charging you to depart! You can expect to pay anywhere from $50 on up to leave one broker to join another.

How to avoid paying transfer fees: To avoid paying this fee, choose your online broker wisely.

2. Trade fees

Trade fees are what you pay when you want to make, dissolve or adjust an investment. Depending on the type of trade you make, the fee may be called a trade fee, a load, a sales fee or a commission. Typically stocks and bonds will come with a trade fee and mutual funds will come with a commission or a load.

How to avoid paying trade fees: Certain stocks and funds are fee-free (obviously, these are the ones you want to choose whenever possible). Your broker should be able to provide you with a list of options and all associated fees, so consult this list before investing. Also, if there’s a mutual fund you want to invest in, but it has a pricey commission attached, see if you can find an ETF version of the same fund (ETF stands for Exchange Traded Fund)— this will permit you to pay just the stock trade fee, which is typically less than the mutual fund commission.

3. Paperwork fees

For an online broker, paperwork fees typically relate to the broker's cost for providing you with paper copies of information you can acquire online.

How to avoid paying paperwork fees: The best way to avoid ever paying paperwork fees is to think green (i.e., save the planet).

4. Maintenance fees

No matter where you go, maintenance fees will always attempt to come with you. However, online broker firms typically won’t charge fees unless there’s account inactivity or minimum balance issues.

How to avoid paying maintenance fees: Just read the fine print and this will tell you when you might be assessed maintenance fees.

5. Low money rates

Low money rates aren’t technically fees, but they represent the loss of interest income by leaving funds parked in a cash (brokerage) account when they could be earning interest through investment.

How to avoid losing interest: It’s easy to avoid this loss of income just by remaining vigilant to ensure all your money is invested.

 

For a similar article, check out Make More from Your Savings with These 6 High-APY Accounts!