Discount brokerage firms are waging a price war and the individual investor is the winner.
If you are like me, you are always looking for ways to cut the cost of investing in stocks and mutual funds. Most investors are also looking for ways to increase the return on their investments. One way to achieve both these goals is by paying lower fees to trade stocks, exchange traded funds (ETF) and mutual funds.
Effective February 2017, the discount brokers, Charles Schwab and Fidelity Investments both lowered their stock trading fees from $8.95 and $7.95 respectively, to $4.95. E-trade and TD Ameritrade are both $6.95 per trade, lowered from $9.99. Charles Schwab took an additional step further and lowered their mutual fund expense ratio fees to between .03% and .06% on their index mutual funds. Similar mutual funds can cost as much as three to five times these amounts.
This is great news for the individual investor looking to buy a few shares of their favorite companies. Times have changed; to put the current trading fees into perspective, when I first started buying stock in the 90’s the fee to buy stock was $19.95 per trade. With low minimum requirements to open accounts and now lower fees to trade stocks and ETFs, the fee wars among the 4 major discount brokerage firms are just heating up. This is a big win for the small investor trying to cut costs and increase their overall return on investment.