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What fees you to possibly expect when trading online

Trading online saves you money versus trading in real life with the assistance of a broker. Don’t expect cost free trades though. Brokerage firms carry numerous fees for online trades, too. You’ll find some standard fees at every firm, but the cost varies. Some firms tack on additional fees. Choose a firm that provides the service level you need at a reasonable price.

Common Fees
Although online trading costs brokerages less to provide, they still charge a number of fees associated with accounts and trades. Most brokerages charge fees for the following reasons:

  • per trade,
  • broker assistance,
  • fees for transferring assets into or out of an account,
  • account maintenance,
  • inactivity,
  • failure to maintain the minimum balance required,
  • interest on margin loans,
  • sales charges on some securities.

The cost of these trades varies from firm to firm. Discount brokers like Sharebuilder charge the least, but you receive little support. They are great for an experienced investor who requires little guidance, but a poor choice for new investors who benefit from the guidance of a stock broker.

An Average, Ordinary Trade
Value Penguin surveyed 15 brokerages to determine the average cost of an online stock trade. It included the following discount to high-end brokerages:

  • Charles Schwab,
  • e*Trade,
  • Fidelity,
  • Firstrade,
  • Merrill Edge,
  • optionshouse,
  • Scottrade,
  • Sharebuilder,
  • SogoTrade,
  • TD Ameritrade,
  • TIAA-CREF,
  • T. Rowe Price,
  • TradeKing,
  • Tradestation,
  • Wells Trade.

The survey found three universal fees charged by each brokerage related to trading stocks or ETFs. These fees and their averages were:

  • a fee-per-trade with an average cost of $8.90,
  • a broker-assisted trade fee with an average cost of $30.99,
  • an account maintenance fee with an average cost of $32.50.

The low of the fee range occured at TradeKing with a per-trade-fee of $4.95, while the high occured at T. Rowe Price with a per-trade-fee of $19.95. That’s still a bargain compared to a broker-assisted at TIAA-CREF which costs $55.

The Bottom Line
The bottom line related to fees is they comprise an oft ignored aspect that affects your return on investment. Although over the course of your investment lifetime they may not cause a noticeable impact if the stock performs well, it becomes noticeable when one tanks. For the bargain investor, fees can cause even a penny stock to become a major investment. That makes shopping around for a brokerage with reasonable fees even more important. Compare apples to apples when it comes to the universal fees and read the fine print before opening an account. Financial institutions love to bury fees in fine print, so conduct comprehensive research before making a decision.

Trading online saves you money compared to using a human broker. It still costs money though. Expect to pay about $30 to maintain a brokerage account, and about $9 per trade online.

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