Brokerage Fee


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You want to open a brokerage account but you can not seem to have a good conviction about the brokerage fee and account minimums. Yet you are certain that you want to start with a brokerage-trade. So what should you do?

First of all account minimums are (ought to be) only small ones – as low as $500 for example. However, account minimums differ with the type of brokerage account. So make sure you are aware of this and that your budget fits well with the kind of brokerage you are trying to get at. It is true that many do not have any brokerage deposit minimum at all. Now, you might be wondering why some brokerage firms require between $1,000 and $5,000 in starting-up an account. This is because of the many possibilities and reasons behind brokerage fee and account minimum variations.

One alternative is to just invest via ‘drips’ or direct investing plans or dividend reinvestment funds. This allows you to buy small amount of stocks directly from the company which is usually commission-free. The advantage of ‘drips’ is its dividend-growth. A good deal on interest-rates should also be obtained and put to good use through short-term savings instead of having interim money in stocks. Finding the best brokerage may be a little more complicated than you might expect.

As already mentioned, you can get very low commission-fees, but those commissions would not be a big matter if you do not trade very often. So, if you only have a minimum-asset then you should also have a minimum maintenance brokerage fee and avoid it if at all possible. The main idea is to look for a top-rate brokerage focusing on mutual-fund offerings and fees. Among such are FirstTrade, TradingDirect, and Brown/Co. These brokerages do not require any minimum-assets therefore also eliminating any high maintenance brokerage fee. The logic is quite simple; if you have a minimum-asset of $2,000 but failed the required two-trades-per-year then you will be charged 8% of your account-value as maintaining fee.

Ask ‘Is it still worth calling an investment?’ ‘With such fees?’. Unless you are an excellent negotiator, why bother. You can freely look for a brokerage with low or no minimum requirements, always, especially when you think your asset-size or trading habits will put you at risk of getting whopped by high account maintenance fees. The main thing is to really look around before you settle with a particular brokerage.

Milos Pesic offers Brokerage advice. For more information, articles, tools, current news, and valuable resources on Brokerage and Brokerage related topics, visit his site at Online Brokerage


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