Uncommon Cents

I hope you know what a broker is–in typical Uncommon Cents fashion it’ll be up for a Working Backwards article in the next few weeks. Suffice it to say that a broker trades stocks and other securities for investors (like you and me). By all means I hope you are using a discount brokerage account (hopefully an online one!) for your investing. Costs are such a critical part of your investment world that the lower costs are the better. But where can you go to get a great deal on your investment needs?

There are many, many options; so many it’s confusing. Some online brokers are “online only”; some are traditional brokers that have decided they must offer Internet options in order to compete on a level playing field. But when looking at online brokerage accounts, the primary factor to consider is cost.

Personally, I have a few online investment accounts–Firstrade for my IRAs, Vanguard for my 403(b), Sharebuilder for a taxable brokerage account, and Treasury Direct for savings bonds. With the Vanguard and Treasury Direct accounts, I had little choice; fortunately, I really like Vanguard (although I think for the beginning investor who wants an IRA, their fees are surprisingly high) and Treasury Direct has been decent.

Sharebuilder has IRAs as well as regular brokerage accounts; one of the things it offers that I found interesting was the ability to buy shares of stock by dollar amount rather than number of shares, meaning you could buy partial shares quite easily; they also encourage dollar cost averaging by allowing regular purchases of stock for a relatively low fee. I buy a few hundreds dollars of a single stock (right now it’s Apple) every month for a $4 fee with no other charges.

Firstrade is another online discount broker that offers brokerage accounts and IRAs; they have very low trading costs ($6.95 for stocks or ETFs, $9.95 for mutual funds) and no inactivity or maintenance fees. I have used them for years and like them tremendously.

I’d recommend shopping around, since there are so many other choices out there (E*Trade, Ameritrade, and Scottrade immediately come to mind), but I can tell you honestly that I like what I’ve gotten with Firstrade and Sharebuilder; if I had to do it all over again, I doubt I’d change a thing, and that might be the best thing an investor can say about their brokerages!

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