TradeKing Brokerage Review and TradeKing Dividend Payment

TradeKingLogoI once discussed that my Scottrade account was growing to the point to where it made sense to diversify brokerage accounts.

That was June 2013.

Better late than never, right? 

So here we are now almost two years later and I finally opened a second brokerage account. Truth be told, I should have done this a while ago.

Why Have More Than One Brokerage Account?

Perhaps the better question is why not?

The Securities Investor Protection Corporation (SIPC), a non-profit organization, covers individual clients for up to $500,000 in securities and cash ($250,000 for cash only) in case a brokerage were to fail or assets are missing.

Now, $500,000 is a lot of money. And it takes years and years for many of us to get to that kind of asset base. I’m certainly not even close.

However, what happens if a brokerage does fail? How long would it take to regain access to your money?

Imagine you’re living off of your dividend income and your brokerage goes bankrupt. If your assets are all in one place and that dividend income is covering a substantial portion of your expenses, that could become problematic pretty quickly. Of course, it’s a good idea to keep some cash around for emergencies – such a scenario would definitely qualify as an emergency. But if it’s a major brokerage, it could take weeks before you’d see things return to normal again. Not to mention it’d be a huge headache.

But the bigger problem is the risk of permanent loss of wealth if you cross over $500,000. The SIPC only covers you up to that level, so if there’s fraudulent activity of some type and some of your assets are missing, there’s a chance that you could actually lose money. Now, most brokerages have insurance above and beyond the SIPC coverage, but major brokerages out there have hundreds of billions of assets in clients’ accounts, and I’ve never seen insurance that covers a significant portion of that.

The odds of a major brokerage going bankrupt are low. The odds of fraudulent activity occurring and some of your assets going missing are even lower, I’m sure. But if one can mitigate these risks by spreading their wealth around, why not?

Meanwhile, there is essentially nothing keeping one from opening multiple brokerage accounts. Paperwork is almost all digital these days, which means forms can be imported come tax time. There’s basically no learning curve once you’ve already used one – they generally all operate similarly. Moreover, there’s no significant benefit to maintaining all of your assets with one discount brokerage. It’s not like they give you a check or throw you a party once you cross over six figures.

I talk about diversifying income sources all the time, so it simply makes sense to diversify brokerage accounts as well. This is especially true once you have significant assets built up with one firm.

I’m nearing the $200,000 mark with my Freedom Fund. That $200,000 will eventually grow beyond the $500,000 that the SIPC covers even if I stop contributing any more fresh capital, so the time is right.

TradeKing

I opened an account with TradeKing at the beginning of April. So I’ve had about three weeks to test the platform, take a look around, and use their services so as to give an honest review, from both the perspective of a customer and someone sharing this information with you readers.

TradeKing was founded in 2005, so they’ve been around for a while. That’s one of the key things I look for in a brokerage. There are plenty of new guys around, but I guess you have to ask yourself if you feel comfortable with potentially thousands or hundreds of thousands of your own hard-earned money with a company that’s only been around for a few months or a year.

They’ve won rave reviews from many publications like Barron’s over the years for their customer service, usability, pricing, and innovation.

The Platform

I find the platform easy to use. I also happen to like the look of it – they make use of a lot of white and grey.

As I mentioned above, most of the discount brokerages out there tend to work the same as far as their online platforms go. You have your typical main tabs up at the top. In TradeKing’s case, they’re: My Accounts, Trading, Quotes & Research, Tools, Education, Trader Network, and Client Service.

Most of this is self-explanatory. And I find myself using the first three tabs almost exclusively.

TradeKing Dividend Payment

My Accounts will show you your TradeKing divident payment, balances, positions, realized and unrealized gains/losses, account history, watch list, and any account settings.

Trading gets you to the order screen, to buy and/or sell what you need to.

Quotes & Research allows you to pull up detailed quotes on pretty much anything you’re looking for. Pulling up a quote for The Coca-Cola Co. (KO), for instance, looks like this:

TK Capture TradeKing Dividend Payment

From the quote area, you can then look at pertinent financial information like the price, valuation, yield, ex-dividend date, and market cap.

You can also pull up financial statements, detailed fundamental information, and analyst ratings/consensus.

You’ll also notice an S&P Capital IQ report for any stocks that S&P Capital IQ tracks. However, I have noticed that the platform is more geared toward traders. Whereas Scottrade makes it quite easy to find fundamental analysis, TradeKing seems to highlight technical charts and trading tools a lot more often, while leaving the S&P Capital IQ analysis, for instance, a very tiny blip on the screen at the top right.

But the platform is very easy to use. It’s fairly simple to bounce around wherever you need to be. And most everything you’ll need to know and look at is right on the home screen. There you’ll find your balance, open positions, order status, account information, and an area to quickly transfer money. It takes mere seconds to move around, find information, and buy stocks.

Fees

TradeKing is one of the cheapest players around in terms of commission fees to buy/sell stocks, especially as it pertains to those companies that offer a full, robust platform with instantaneous trades. At just $4.95 for most stock and ETF trades, they’re about as cheap as it gets.

You’ll find cheaper options out there like Loyal3 and Robinhood, but the former limits your options as far as what stocks they have available and also relies on batch orders, while the latter is brand new and doesn’t even offer a desktop platform yet (or even phone support). Price is what you pay, but value is what you receive in return. That truism isn’t limited to just stocks.

I actually used TradeKing for my most recent stock purchase of 25 shares of Microsoft Corporation (MSFT). The transaction was instantaneous and at the price I expected. The stock then immediately showed up across the account, while the cash used to fund the purchase was then deducted from the cash available to trade. All in all, everything went as expected.

Notably, the lower commission cost was one of the big reasons why that last purchase was smaller than usual. I tend to limit my commission costs to 0.5% during the accumulation phase, which I find reasonable. Scottrade charges $7 per transaction, which is why most of my stock purchases have historically averaged around $1,400 per transaction. However, with the lower fee of $4.95 at TradeKing, one could purchase $1,000 worth of stock at a time and still pay that 0.5%. So this gives one additional flexibility, especially if coming up with $1,400 or more at a time is burdensome.

I will note, however, that the $4.95 you pay comes with some drawbacks.

First off, I’ve always been one to prefer brokerages that have physical locations. I’ve only stopped in at my local Scottrade branch a few times over the course of the last five years I’ve been using them, but there’s something reassuring about knowing that there’s an office just up the road and you can talk to someone in person if you need to.

Meanwhile, TradeKing has no such physical branches. Whether that’s worth saving a few bucks compared to what some of the bigger guys charge is really up to you.

In addition, TradeKing charges fees in other places you wouldn’t expect. For instance, checking isn’t free – their Base Gold Product comes attached with a $50.00 annual fee. And a check withdrawal of your funds is $5.00. So the service is cheaper for the purposes of buying/selling stocks a couple times per month, but the other fees could very well add up depending on how you plan on using your account. I find these other fees slightly annoying.

Customer Service

In my experience, TradeKing’s customer service is more than acceptable, though I would prefer longer hours. They’re open 8 a.m. to 6 p.m. Monday through Friday via phone and chat. So no weekend hours or extended hours, and obviously nothing available in person. This is in comparison to the 6-1 M-F and 9-1 Saturday and Sunday that Scottrade is open, as well as the local branches and their respective hours. Perhaps not a big deal for some, but that is a potential drawback, especially if you notice an issue with your account and are looking for a resolution fairly immediately.

I can tell you that I discovered an issue shortly upon opening my account, which I didn’t find until just after TradeKing had closed for the night. What happened is that the funds that I transferred to my bank account immediately showed up as “Max Funds Available to Trade” on my home screen, even though I was specifically advised that there was a three-day hold on the funds. Meanwhile, that same “Max Funds Available to Trade” showed up as $0 on the Balances tab. So that inconsistency was strange to me, but I couldn’t call anyone until the following day. Even when I did finally reach someone, they had no answer as to why that was occurring and apparently no fix for it, either.

So the customer service was very friendly, but I think the hours could be better. And it seems like the technical glitch is a problem that they’re unable to solve, even though it’s really harmless.

I will note here that I was advised by customer service that the three-day hold on funds only applies to the first transfer, and any subsequent transfers that are larger. So if you transfer, say, $1,500 right after opening your account, every subsequent transfer of $1,500 or less will be available for immediate use. Transfers of more than $1,500 would then have to go through the three-day holding period once more.

Conclusion

If I were to rate TradeKing on a scale of 10, I’d give them an 8. I find the low fees wonderful, but I also think the drawbacks that come with those fees are somewhat priced in. And I find this true across the brokerage space. You often get what you pay for. I happen to think Scottrade is the best bang-for-your-buck brokerage, which is why I’ve been using them for five years. But the time has come for me to diversify outside that account. It’s a great first world problem to have.

I chose TradeKing because I wanted to see what some of the hoopla was all about regarding some of the cheaper brokerages. And I certainly appreciate spending about $4 less per month (assuming two stock transactions per month). Every dollar I’m not spending in commission fees is another dollar I can invest. And TradeKing seems to be a great compromise between cheap and quality, being the cheapest option I could find while still offering the overall quality and experience I was looking for. But I still think, however, that I’d prefer to spend just a couple bucks more for a better overall service. Others may find that $4.95 price point absolutely perfect, especially considering the quality of the platform.

My plan moving forward is to diversify brokerages much faster – perhaps opening my next account as early as hitting the $50k mark with TradeKing. I see no reason not to. Mitigating risks and potential headaches is just easy peace of mind, in my view. And most brokerages cost nothing to open an account, while funding is generally minimal (TradeKing currently requires $0 to open an account).

So I still strongly recommend Scottrade to everyone out there. However, TradeKing is a worthy option as well, as long as you’re okay with the drawbacks that come with the lower fees.

Update 7/23/15: Decided to close my TradeKing account. The customer service became increasingly poor for me. I also found the delay for fund transfers (could take hours) as problematic. The company, from what I was told on the phone, also offers no guarantees that my money will be safe in the event of electronic hacking. Will be discussing my new account shortly. 

Full Disclosure: Long KO and MSFT.

Do you use TradeKing? Why or why not? What’s your favorite brokerage? 

Thanks for reading.

Photo Credit: TradeKing

Note: Affiliate links included.

Similar Posts

191 Comments

  1. Hi Jason,

    One of the reason, that I am not using an independent broker is I am afraid of losing our money. I am using our bank broking system, it is more expensive but I am more confident.

    Below find the breakage per transaction:

    Transaction fees (USD)
    Up to 25’000 0.90%
    Up to 50’000 0.83%
    Up to 100’000 0.75%
    Up to 200’000 0.60%
    Up to 400’000 0.45%

    So this why I am always trying to have important transaction (up to 150k), even if sometime I need to use lower amount. Like today, we bought for 30k of Swiss RE during the ex-date, where we benefited from a 7.6% share drop.

    Cheers, RA50

  2. I would recommend Interactive Brokers for any serious and experienced dividend investor who has more than $100,000. You can fund this either with shares or cash. Plus you can move shares from and to Interactive Brokers.

    You can pay commissions as low as 35 cents/trade, your orders are directly routed to an exchange, you get instant fills, and the platform is easy to use and has better security features than other brokers I have used. You can buy and sell stocks selling in US , Europe, Asia etc. The margin rates are ridiculously low if you want to use that, and your option costs are not that high either.

    Since I moved to Interactive Brokers, my total commission expense is much lower than when I was with other brokers.

    You need at least $10K to open an account, and if you have less than $100K there, you pay a $10 monthly fee. But if you make more than 3 trades/month, you are better off in Interactive Brokers than in a broker like Tradeking or Schwab or Etrade.

    Tradeking is fine too, but it is more expensive than it has to. Plus the $50 inactivity fee for balances below 2500 is a rip-off.

  3. RA50,

    That’s pretty interesting. I’m guessing things work a bit differently over on your side of the pond. Over here, as I mentioned, investors do have coverage up to $500,000 ($250k cash), so there’s some peace of mind there. But it still wouldn’t be fun to have to go through the rigmarole of getting your assets back in case an issue were to occur.

    Thanks for stopping by!

    Best regards.

  4. Good stuff. Thanks for the review and I didn’t know about those additional fees with TradeKing.

    I personally use Sharebuilder right now with the Costco deal and I love it. $5.95 per trade and the advanced automatic reinvestment program goes for $10/month and you get 12 free automatic trades.

    However, I’m looking to move my assets to Merrill Edge/BoA. If you have $50k in assets (IRA, cash, taxable accounts), then they give you 30 free trades a month. Now, I’m no day trader and very much a long term investor but I do want to take advantage of dollar cost averaging and being able to buy 1-5 shares instead of having to spend at least $1000-$1500 is nice. Of course it can go against me but I think the benefits outweigh the drawbacks. There are other great benefits with Merrill Edge/BoA like their preferred rewards program as well. So i’m seriously looking into it.

  5. DGI,

    I looked into IB, but found the drawbacks too much to swallow.

    “You need at least $10K to open an account, and if you have less than $100K there, you pay a $10 monthly fee.”

    OUCH!!! I’m not sure how many people have $100k just sitting around, so it’d take quite a while to get to that level. In the meanwhile, you’re paying considerable fees ($10/MONTH!!!!) all the way along. Unless you transfer assets over from another brokerage, but you would have had to pay fees to buy the stocks in the first place. Meanwhile, that’s about the level I’d be looking to diversify out. Actually, I’d be looking to diversify out around $50k. So I guess I’d be paying a monthly fee with IB for sure, even if I’d be done using them actively. IB is not an option for me.

    “Plus the $50 inactivity fee for balances below 2500 is a rip-off.”

    I find it amusing you mind a $50 annual fee for inactivity that would probably apply to almost nobody, but yet don’t mind a $10/monthly ($120 annual) fee that would apply to a whole host of people (those who have less than $100k). That logic is beyond me.

    TK’s inactivity annual fee is unfortunate, but it’s unlikely to really affect many people. You’d have to have less than $2,500 in your account and also be inactive (no trades) over the course of 12 consecutive months. If you’re marching your way toward financial independence, you should be saving and investing fairly frequently. I actually find the checking fees more unfortunate and more applicable to most people.

    Take care!

  6. Yeah I don’t own an iPhone so Robinhood is out. Just wish even Tradeking was cheaper. Very hard for those of us starting to save $1000. It just takes a long time. Good write up/thanks Jason.

  7. Peter,

    I actually looked pretty strongly at Merrill Edge. The reviews around the internet weren’t very favorable, so I passed. I like cheap, but I also want a great service. I guess price isn’t really my bottom line. I’m not trading much, so saving $5 or something per month just isn’t going to make a big difference for me. I often tell people that if $5 or something in trading fees is going to make a big difference for you, you’re doing it wrong. Plus, I’d probably be looking to open up another brokerage account right about the time ($50k) I’d be receiving free trades from Merrill Edge. We’ll see. I might go with them for my third brokerage, but I’ll have to see if the reviews are better by then.

    But if you do end up using them, let me know what you think. I’ll probably be interested in opening a new account in a couple of years, so it’ll be nice to already have a name or two lined up. 🙂

    Thanks for stopping by!

    Best wishes.

  8. DFG,

    I hear Robinhood is trying to work on something for Android phones. But I’m more interested in a desktop platform. Maybe they’ll really do something great over there. I’d sure be interested if they’re still around in four or five years, but it’s hard to say how things will work out for them. I’d also have to have access to customer service by phone. To not be able to call someone about my money is a nonstarter for me. Brokerages have tried that free/freemium model before and it doesn’t seem to work out all that great. Loyal3 is one of the few exceptions, but they’re incredibly limiting.

    We’ll see. The more options, the better. 🙂

    Cheers!

  9. I was wondering what broker you went with. I’ve been eyeing TK because of the lower commissions. Especially since I might be investing smaller amounts each month. That’s $3 per trade less than I’m currently paying. TK is still high on my list for potential second brokerages and I appreciate the review. There’s so much to keep in mind with potential fees. It kind of reminds me how the “discount airlines”, i.e. JetBlue…, have low flight prices but then have fees on everything. As long as I can access my money, pay reasonable commission costs, have trades execute as expected, and not have to pay to get money out of the account then I’ll be happy. Thanks for the review of TK.

  10. Hi Jason,
    For the concern about the $500,000 etc, you can use for example one of the major banks. Merril Edge aka Bank of America is one of them. You can also use Wells Fargo for example. These banks are too big to fail, and if they do, the government will bail them out as it did before. I don’t see any reason to be worried if you hold millions of dollars with a bank like Wells Fargo.
    Having all your money in one place has even more advantages like better margins and better trading fees.

    Best wishes,
    Khen

  11. JC,

    Hope you found some value in the review. It’s a pretty solid service. Not perfect, but none really are. Benefits and drawbacks like anything else.

    I hear you on the fees. A lot of brokerages will advertise cheap commission fees, but then try to nail you elsewhere. DGI’s comment about IB kind of shows how something seemingly cheap can become not cheap pretty quickly. Really depends on your individual situation, however.

    Good luck finding a service down the road that works for you and your needs. 🙂

    Best regards.

  12. Khen,

    That’s a dangerous attitude to adapt, in my opinion. To assume that someone will ride to your rescue even if you exceed limits of coverage is probably not the best way to think about your money.

    In addition, brokerages aren’t like banks. They’re not tied to the greater/global economy like banks are and thus will likely not be bailed out by anyone. Furthermore, small banks fail all the time. To put more than the FDIC limit in your bank account or more than the SIPC limit in your brokerage account and just hope that someone helps you out involves a lot of risk and wishful thinking.

    You can look at MF global or MJK Clearing for recent examples. Or even the Madoff case. Firms fail. People sometimes lose money. It does happen. I’d rather not rely on a savior. That’s just me. 🙂

    Take care!

  13. I’m with MerrillEdge, where you get 30 free trades if you have more than 50K in assets. Those are more than sufficient for me.
    Also you can transfer your assets, I once moved vanguard funds from ME to vanguard and that went well.
    I’m not there yet but my plan is to just keep accumulating with ME until I hit 150K, then move 100K somewhere else and keep buying with ME.

  14. Joe,

    Yeah, I looked pretty strongly at MerrillEdge. I noticed that the reviews around the internet weren’t particularly favorable, but it sounds like you’ve had a better experience there. When it came down to it, I’m not sure how far beyond $50k I’d be regularly investing, so I’m also not sure how much I’d be taking advantage of said free trades. But it’s definitely something to consider for my next account. I guess you’d have to compare how often you’re buying/selling against how much more that $2 extra per trade (compared to TK) will cost you up until the $50k mark… and then how much you’re going to be trading after that point. But as I’ve already mentioned, cost really isn’t my bottom line. I’m after a great platform, excellent customer service, and ease of use. If costs were my main issue, I would have never started up with Scottrade back in the day and I would have given TradeKing a higher rating today. That’s just me. I don’t personally understand the logic in chasing after costs first (especially when we’re talking about a few bucks a month) when you’re talking about where you’re going to store hundreds of thousands of dollars. I would think looking at your budget and making sure costs there are rock bottom first will be far more beneficial than chasing after the cheapest brokerage account. Low-hanging fruit and all that.

    One other consideration when transferring assets is to make sure your cost basis transfers along with your stocks. I understand the nature of cost basis transferring varies from institution to institution. I imagine it’s not fun to have to manually input all of that if you have trades going back a few years.

    Best wishes!

  15. For my needs, Interactive Brokers is best. I have “portfolio margin” (5 to 1 for most securities instead of 2:1) with them. I trade options several times a month. The commissions are so low for an active trader that the monthly fees average out to pennies a transaction. I also like their very strong security with a secondary authentication device required to trade or transfer funds. Their risk management is very strong (no margin calls, a computer algorithm liquidates anyone out of compliance at EOD). I have found their ACH capability very handy (I fund my lifestyle with a fixed monthly withdrawal to my Wells Fargo checking.)

    IB also has the best deal on margin rates (I hold no emergency fund and prefer to borrow from my brokerage at 1.64%/yr if the a/c fails [I get 1.5% cash back on my credit card so with payback periods less than a year, I actually get paid to borrow from them]). IB also has the largest inventory of shares available on loan if you want to go short.

    IB is a horrible broker for a 1 trade a month, buy and hold forever investor but for me it fits the bill.

    I’ll also note I have a second brokerage with Wells Trade. With my PMA checking package, I qualify for 100 free equity trades a year (“free” is actually about 2 cents a trade as they pass through exchange fees). Their margin rate is horrid and pricing on options contracts outrageous though so most of my activity goes through IB. I’ve been told Wells has nerfed the PMA benefits but worth a phone call if you are looking for a low volume “free” option and have he 25k minimum.

  16. Spot on. That’s a huge risk in my opinion. Even placing more payable upon death beneficiaries on my bank accountants (in order to up the FDIC) scares me. I think if poop hits the fan, banks will be looking for reasons to only pay what they are obligated.

    When poop hits the fan, it’s everyone for themselves…especially banks and big institutions. They are not going to feel sorry for you or go above and beyond to pay you any more than what they are legally obligated (up to the FDIC and SIPC limits). You better cover yourself.

    I’ve noticed too that banks (generally) will not educate you on FDIC limit on various account types (unless you ask…even then they tell you to go to FDIC.gov and figure it out). In fact, before I got smart with this, I actually had two accounts (one with BOA and one with TD Bank) that had balances greater than their FDIC coverage limits. During my several conversations with both banks in prior years, neither of them ever bothered to say…”hey, you know what Chris, we need to restructure your accounts so that you are protected by the FDIC limits.” Never once….and no bank since ever has.

    PROTECT YOURSELF.

  17. FV,

    “IB is a horrible broker for a 1 trade a month, buy and hold forever investor but for me it fits the bill.”

    Right. That’s kind of who I am. It really all depends on your perspective and what you’re after. I wrote this from the perspective of someone who buys a couple of stocks per month, rarely sells, and uses no margin/options. And I find that most of the people that stop buy here tend to fit in a similar camp. If you’re after margin and options, then IB might be the better choice. I personally wouldn’t know because I like to keep things simple and find all of that unnecessary in terms of achieving financial independence early on a modest income.

    I looked into Wells Fargo’s options a little while back. I would have loved to go with them because I’m a WFC shareholder. Unfortunately, they got rid of their free trades a while ago. But those that already have that account are grandfathered in. Nice! 🙂

    Take care.

  18. Chris,

    Agreed. To not protect yourself when it’s incredibly easy to do so is just silly. Why take unnecessary risks in hopes that you’ll be rescued, especially when nobody has a legal obligation to?

    Thanks for adding that!

    Cheers.

  19. Hi DM,

    I’ve been using robinhood for about 5 months now and really like it. It’s not my sole broker (I have a 50/50 split between them and TDA, who provide much better services for a much higher price), but for what it is, it works.

    I don’t have an iphone either, but I trade through them using my ipad. I really like the no-fees because it allows me to open $500 positions and diversify more quickly than I otherwise would consider feasible.

    As you say, you get what you pay for, but I think in RH’s case you get considerably more than what you pay for. It’s nowhere near as good as TDA, but for a lot of things (like reinvesting dividends as soon as they show up in $40-$50 allotments) I find it to be the right choice.

    I’m eagerly awaiting their android service, though!

    Keep on saving,
    Charles

  20. Yeah, I see your point. I have nothing to complain about with ME so far. It works well for me also because I have my main checking with BofA and can transfer funds instantaneously back and forth. The preferred rewards for >50K also give me 2.25% on the non-fee credit card that I can use for statement credit if I’m not busy churning another card.

    Wrt to the cost basis, I asked that question both sides before the transfer and both said it will be maintained which turned out to be true. It might actually always work for covered shares but I’m not 100% sure on that.

    Tbh though, I’ve never seen ScottTrade or TradeKing so maybe I just don’t know how great those platforms are 🙂

  21. Charles,

    That’s great. Glad to hear RH is working out so well for you. I personally find the lack of ability to call someone and talk about my money as not only concerning, but a nonstarter. It was hard enough for me to try out TK considering they don’t have any branches. But no phone number? Yikes. However, some people just don’t care about that stuff. And so RH might fit the bill there.

    My old iPhone from 2008 runs fast enough for phone calls and email, but I definitely couldn’t use it for this kind of platform. Maybe they’ll come up with something for the desktop one day. And also maybe a phone number. If they’re still around in, say, 4-5 years and have those things, I’d consider trying them out. But I just wouldn’t feel comfortable with $50k or more of my money there as is.

    Thanks for sharing!

    Best regards.

  22. DM,
    probably I’m wrong here as I’m from Europe and cannot judge which brokerage or not in US. But I agree with you to diversify on different accounts once you have a higher wealth.

  23. M-D,

    Thanks for stopping by!

    I imagine your choices over there are far different than ours here in the US. But you’re definitely right in that it makes sense to diversify accounts once you get to a certain level. What the right level is is subjective and will vary from person to person, but I personally feel uncomfortable with now almost $200k all with one brokerage. I should have diversified a while ago, but complacency got the best of me. I’ll make sure to respond quicker next time. 🙂

    Best regards!

  24. Good review, Jason. I’m not quite to the point of signing up for another discount broker, Loyal3 and Robinhood notwithstanding. I’ve been with Schwab since I started because that is what my dad set me up with initially as a custodial account. Schwab’s best commission pricing at that time only applied to higher net worth people, so it was nice to take advantage of that carrying over to my account as well. Everyone now qualifies for the $8.95 commissions.

    I know you don’t do any options trading, but I was even able to call up the guy assigned to me at the local office and recently get better option contract pricing. I used my $1.50/contract pricing at TD Ameritrade to swing that.

    Sounds like Tradeking will work well for you.

    I know a few people who have a single brokerage account (including IRAs) at a brokerage firm with a value that well exceeds the SIPC limits. How worrisome is that really? Sure, you might be without dividend income for a bit until things get sorted out, but the shares that you own aren’t just going to vanish…they are still yours. The company can’t sell your shares to pay off its debts.

  25. Scott,

    I’ve heard great things about Schwab. If I were someone who lived off of my dividend income and lived overseas, for instance, I’d definitely use Schwab due to their favorable banking policies. Good stuff there.

    ” How worrisome is that really? Sure, you might be without dividend income for a bit until things get sorted out, but the shares that you own aren’t just going to vanish…they are still yours. The company can’t sell your shares to pay off its debts.”

    That’s really an individual call, but you’re only legally covered up to $500k. If you think that client funds have never gone missing at a financial institution, I’m afraid you might want to do some more reading on that. Like I said, the odds are low. But there are odds there. And it makes no sense to me to not attempt to mitigate those risks. Furthermore, stocks with most brokerage accounts are generally held in street name, not your name. If assets somehow go missing and the SIPC has to get involved, you could have a problem. Again, low odds. But it’s peace of mind, in my opinion.

    Cheers!

  26. DM,
    A little off topic here. I attended the J&J meeting today and was thinking of you since it’s your largest holding. Nice 7.1% dividend increase announced. They also created a very powerful infant commercial.

  27. Just to make things clear: IB fee is a minimum fee. So if you make 5 small trades, you still pay only $10. Or $2/trade.

    I also recommend IB. Very cheap broker (if you make at least 2 trades/month or have $100k or more assets), very reliable, has access to many markets etc.

    With IB you can easily split your trades to smaller trades (dollar cost averaging) and still pay very small commissions. Also suitable for non-US customers like me.

  28. Hbkid,

    Sounds like you had fun over there. It’d be great to attend an annual meeting like that, especially for JNJ.

    I was really glad to read about the dividend raise today. More money!! 🙂

    Thanks for dropping by.

    Take care.

  29. I’ve used Tradeking for about 4 years now and have no complaints. Sure, there are a few minor annoyances, but when you buy 1-2 stocks every month, those cheaper trades really add up. And overall they do have great customer service (responsive) and a good overall platform. Others may have more in depth research, but I know you’re doing that on your own anyway, so not a big deal I’d assume. Additionally, they offer free DRIP and it can be applied to partial shares too, so that was another advantage. Overall, I’ve been very happy. One word of advice…if you do encounter any issues, just email customer service and ask for some free trades or additional compensation for your troubles. Almost every time anything has gone wrong I’ve gotten $25 or so in free trades added to my account.

  30. Good points about SIPC. After reading this site, http://www.finra.org/investors/alerts/if-brokerage-firm-closes-its-doors, it appears that the SIPC steps in with cases of theft or fraud. Otherwise, the assets are safe as user accounts would be transferred to or bought by other brokerage firms in the case of a bankruptcy.

    Schwab does have good overseas banking policies. Additionally, free checking with (what had been really good but obviously lower now) interest rates with rebates of any and all ATM fees. They used to have an excellent 2% back credit card which also had no foreign transaction costs. Unfortunately, Schwab sold that business to Bank of America because too many Schwab clients were paying the credit card bill in full and Schwab wasn’t making any money off interest payments.

  31. Dividend Mantra,

    If you do 3 investments/month,and you can invest $10,000 to open an account, Interactive Brokers is MUCH BETTER than Tradeking.
    The $10 charge is a minimum amount you need if you have less than $100K. However, if you spend $2 on commissions, your charge will be $8.

    I am “surprised” you didn’t focus on this piece of information I provided:

    “But if you make more than 3 trades/month, you are better off in Interactive Brokers than in a broker like Tradeking or Schwab or Etrade.”

    Let’s walk through some math to see what that means. Let’s assume you open an account with $10,000. I hope this is not a problem for you. After all, when you were first starting out, and when you had your “awakening moment” I believe you had $5000 laying around.

    You make 3 investments per month with Tradeking – $1000/each. You pay $15.

    I will make 3 investments with Interactive Brokers. I will pay $1.05. Yes, I will then pay $8.95 to cover the minimum fees. So yes, I saved $5.

    And you did make 9 investments in 2015. So that’s $45 using Tradeking, or $63 using Scottrade. If you made them using Interactive Brokers, you would have paid $40.

    In 2014 you made 28 purchases and 4 sales. Using Tradking’s $4.95/trade, you would have paid $158.40 in commissions. Using Interactive Brokers, you would have paid $120. Using Scottrade, you probably paid $224 in commissions ( unless of course you received a “free” trade).

    If you like overpaying for a commodity service, be my guest. But as your online income and book income and coaching income and even dividend income increases, you will be able to invest more in dividend stocks. So with Tradeking, you will be paying a lot more than you should, despite the fact that you are aware that there is a cheaper alternative.

    Interactive Brokers is for “serious” investors. When I said that in my first response to you, I was thinking that you Jason are a serious dividend investor who can benefit But yeah, IBKR is not for everyone, same way Tradeking is not for everyone. If this is your first brokerage account ever, IBKR might not be for you. If you are a more experienced investor, IBKR is much better than any other brokerage.

    Ironically, I transferred $100,000 worth from stock from TradeKing to Interactive Brokers. I did a partial ACAT transfer out, so I paid nothing in fees. My strategy is to buy shares using IBKR, and when I reach SIPC limits, to transfer it (it is free) to another brokerage.

    And yes, Interactive Brokers doesn’t have a sweet $200 bonus or an affiliate program. But they will more than make it up with the money they save you.

  32. And with the above examples, if you already have an account worth $100K, with the 9 trades year to date, Dividend Mantra would have paid something like $3 – $4 in total in commissions.

    For the whole of 2014, Dividend Mantra would have paid something like $11 – $12 in commissions using Interactive Brokers.

  33. Paapaa,

    “Just to make things clear: IB fee is a minimum fee. So if you make 5 small trades, you still pay only $10. Or $2/trade.”

    Right. You pay your $10/month fee (if you have under $100k there), plus your commission fees. You seem to have forgot that part. It’s not like it’s $10 and that’s it. I also don’t like their fee structure at all. I had to spend 10 minutes reading through their fees and I still walked away confused. I see no reason to make things so complicated. And, like I mentioned, it depends on how much you end up with there. If you want to open a new account before $100k, you’re going to end up paying those minimums all the way through.

    For someone who’s buying stocks 1-3 times per month, then IB doesn’t seem like your best bet. If you’re doing a lot of trading, using options or margin, then it might be the better choice. Again, I’m writing this blog from the perspective of a long-term buy-and-hold investor.

    Edit to add: It looks like I was wrong there on the fees regarding the commissions. I wasn’t aware that IB wraps their commission into the monthly minimum. I suspect I didn’t realize that because of how complicated their fee structure is.

    Thanks for sharing!

    Best regards.

  34. Doug,

    Glad to her TK has worked out for you. I think it’s a pretty solid bang-for-your-buck service. Not the cheapest, not the most expensive. But it works for what I’m looking for, and I think what a lot of others are looking for.

    “One word of advice…if you do encounter any issues, just email customer service and ask for some free trades or additional compensation for your troubles. Almost every time anything has gone wrong I’ve gotten $25 or so in free trades added to my account.”

    Nice! I’ll definitely keep that in mind. 🙂

    Best regards.

  35. DGI,

    “Interactive Brokers is for “serious” investors. When I said that in my first response to you, I was thinking that you Jason are a serious dividend investor who can benefit.”

    I’m a serious investor, but coming up with $10k on the fly isn’t easy. And I really don’t have an interest in transferring assets in and out of accounts to get around account minimums and other annoying fees. I started my account with TK with $0. I find that pretty attractive. My first deposit was $1,100. Anyone can see what I save and invest every month. If you “did the math” you’d see that it takes me a few months to come up with $10k. I’m guessing that’s easier for you. Good for you. I write about approaching this with a modest income. For most people, $10k isn’t super easy to come up with. And when you write about my “awakening moment” it wasn’t that I had “5,000 lying around”. It took me MONTHS to save up that kind of money. I notice you routinely twist my words. Please try to keep it straight.

    I honestly wasn’t aware that IB charged the $10 flat, and that commission fees are wrapped into that. And that’s probably because I had to spend 10 minutes reading through their fee structure and still walked away confused. When a company approaches fees like IB does, it totally turns me off. I guess I would have saved $5 this year by using IB instead of TK – I can go out and buy an iced coffee now. But I would have also had to come up with $10k just to start, leaving a lot of capital on the table not working while I save up the scratch.

    Meanwhile, you completely forget that I said this in the post:

    “My plan moving forward is to diversify brokerages much faster – perhaps opening my next account as early as hitting the $50k mark with TradeKing.”

    So once I hit $50k with IB because I could have saved $5 this year, I’d be paying $10/month just to keep my account open with them, unless I then want to move around assets. I hate minimums like that. They force investors into trading regularly and keeping a bigger account open. What if you run into financial problems and can’t invest for a few months? You still pay your $10 regardless. I find that completely unattractive.

    Cheers!

  36. If Wells Fargo fails, your brokrage account will be the last thing you will worry about.

  37. Khen,

    And what does Wells Fargo failing have to do with TradeKing or any other discount brokerage? If WellsTrade were to have client funds misappropriated, there would be a similar process that occurs there to any other brokerage having a problem. Furthermore, I didn’t pick WellsTrade because the fees are quite a bit higher than the alternatives. I’d love to go with them as a shareholder in WFC, but it just didn’t make sense to me right now.

    Take care.

  38. Mabel,

    Glad to hear that. Glad to be a fellow client. 🙂

    I haven’t used their chat feature yet. I can say, however, that the phone response was great. No wait time, very friendly, and generally pretty knowledgeable. Apparently, the issue I ran into was some weird technical glitch. I’ll keep an eye on that.

    Thanks for adding that!

    Best regards.

  39. I will try to explain my point. Firstly, Wells Fargo failing is almost and imignary scenrio. If it does fail, the U.S. will bail it out. I am sure it will because it is one of six financial institutions that are “too big to fail”. The term was made by the Fed to describe the financial institurions that must be saved at all cost. Letting Lehman Brothers go under was mistake that caused a chain reactio that lead to the falling under of Merril Lynch, Wachovia, Citi, Bank of America and more.
    Now let’s say you are right. I put the money with Wells and Wells Fargo goes under without the government bailing it out. It will cause such a huge chain reaction that will take insurance companies like AIG down and all other major banks. Lehman Brothers will be much smaller than that.

    Therefore, I can’t see Wells Fargo or one of its too big to fail peers going under. By the way, the experience of the past shows that th government will bail out big banks before it will bail small investors like us. These banks hold over 50% of the banking assets in the U.S.

    You should really see the movie “Too Big to Fail”. http://www.veoh.com/watch/v221685298RyH4XC5
    Very interesting, and made me read more and more about the whole era. It also made me pay some more money in trading fees. This way my money is in a bank that is now havily regulated by the Fed and goes through stress tests every year.

    If Wells fails so will the other, and then my portfolio or yours will be the last thing you and I will worry about, in my humble opinion.

  40. I use Fidelity mainly, though I do have a Vanguard account as well. Mainly I just put a chunk of money into Vanguard because they have some of the cheapest index funds around, VTSAX is basically the only investment I have with them because it’s something I can honestly just set and forget with a 0.05% expense fee.

    But I really like Fidelity though, they have an extremely wide range of other products that you can use together, checking/savings accounts, credit cards and I’m sure much more. The ones that I have used of theirs link together seamlessly, for example I could pay my credit card bill with funds (let’s say dividends I’ve received) without really even having to do anything. They just know of your other accounts and give you access to use them. I really like their interfaces, they just seem to have everything I need and more in easy to find places.

    Their support is always very helpful and I think they are 24-7 (though I’ve never really checked that). Their trade fees are $7.95 each which is no discount, but I still would recommend them.

  41. Hey Jason,
    I read your above discussion with DGI about Trade King vs IBKR. The only thing that got me thinking was from a “retired” dividend mindset does, “For instance, checking isn’t free – their Base Gold Product comes attached with a $50.00 annual fee. And a check withdrawal of your funds is $5.00.” bother you?

    If you needed to draw upon money monthly in retirement (at older ages) paying $5.00 per check (assuming one check a month is another $60 + the $50 annual fee). Just wondering your thoughts?

    -Rich (27)

  42. Khen,

    I’ve seen the movie. And I understand what you’re talking about. What I’m saying is that what you’re talking about has nothing to do with what I’m talking about. I can’t really say any more on the subject.

    It’s your money, bud. If you don’t think it’s necessary to diversify brokerages, don’t. No worries from me.

    Cheers!

  43. It was a lot if fun for me but some shareholders were upset. One women (she holds 2000 Shares) was really upset. She felt the annual letter sent to shareholders was an insult. Apparently, in the past they gave each shareholder a gift bag and had lunch for everyone. They did away with both today and stated that they would donate the money to charity. She went on a tirade and blasted the CEO. She told him that he gave himself a 48% raise at the tune of 25 million and how could he do such a thing for the shareholders (couldn’t of cost much for the gift bag and lunch).
    She even told him that last years lunch sucked and the food was terrible but it was a nice gesture. Those 5 minutes were hilarious.

  44. Rich,

    Yeah, that’s honestly the one fee that bothers me, which is why I mentioned it above. But it’s probably a minor gripe. Depends on how you use the account. I plan on keeping my regular checking account open (which is free) for checking/bills and all that. I don’t even use checking with my Scottrade account. Once I’m actually living off of my dividend income, then I’ll just transfer that income to the main checking account and spend at will. You could of course set up checking accounts with all of your brokerage accounts and what not, but I don’t see a need. That said, if that’s an interest of yours, this fee is a drawback. And that’s kind of why I mentioned it.

    Edit to add: “If you needed to draw upon money monthly in retirement (at older ages) paying $5.00 per check…”

    Sorry I wasn’t more clear. I didn’t notice this part of your comment the first time. There’s a $5.00 fee for checks, but no fee for ACH transfers out of the account. So you can still withdraw your dividend income electronically for no charge.

    Hope that helps. 🙂

    Best regards.

  45. Zee,

    Thanks for the feedback there.

    I think Fidelity has a great service as well. Similar to Scottrade, except probably a bit more robust and slightly more expensive. But I’m strongly considering Fidelity the next go around in a few years. They seem to cater a bit more to long-term investors, so I’d fit in perfect over there. 🙂

    I personally don’t think the $7.95 is all that bad. Some people look at cost only, which is fine. I don’t. I think once you’re saving 40% or 50% or 60% of your net income, trade fees from a discount brokerage – be it $5 or $7 or whatever – will probably minimally impact you. I try to look at the big picture, and the fees just aren’t that big of a deal. Now, if they were $20 a pop or something, that’d be a different story. But they’re not. I like spending less than I have to for sure, but I also want to make sure I’m with the right platform.

    Best wishes!

  46. Hbkid,

    Yikes. That reminds me of a story in The Snowball where, if memory serves me correct, Buffett was shocked about the food and other benefits at executive meetings. He thought it was a total waste of money and tried to do away with it. I think he got some flak for that.

    Thanks for sharing that!

    Best regards.

  47. Hi Jason,

    This is a very timely article. Thanks for the objective review.

    I am also looking for another brokerage account, and learned a lot from your article and the fellow commenters.

    Best Wishes!

    MU

  48. Yes, you can make many, many trades with the $10 – also currency conversions if needed for foreign exchanges. And if you transferred some assets there you could exceed the $100k mark pretty quickly. I don’t remember whether the $10k deposit can be stocks or if it has to be cash. I deposited cash when I opened the account. And you can transfer it back immediately.

    The pricing structure seems quite complicated (the reason is that it is very transparent – nothing is hidden) but the bottom line is: with your trade sizes (buying usually less than 50 stocks each time) you would usually pay only the minimum for each trade, $0.35 each. So you could easily make 20+ trades each month for $10. And when you exceed (and I’m sure you would) $100k you’d pay even less.

    If you only trade 1-2 a month, then Tradeking is probably a good choice. If you trade 2+ times, then IB is cheaper. And when your portfolio grows to $100k, this is really a no-brainer. You’d be buying many more ice coffees each year 😀 I like to “diversify in time” (dollar cost average) so IB makes it really, really cheap.

    The only downside is that their user interface takes some time to get used to. But after that it is easy to use. Tradeking definitely looks simpler.

    BTW, IB was again number 1 in the Barron’s review – 4th time in row. And I don’t wonder why.

  49. Paapaa,

    Yeah, in that case it’s not too bad. Though, I still don’t like the complicated fee structure. And a more complicated platform would also be unattractive to me. That’s just my personal view on it. Some like more options. As someone who just buys stock 1-3 times per month, simple is better.

    “If you only trade 1-2 a month, then Tradeking is probably a good choice. If you trade 2+ times, then IB is cheaper.”

    I’m kind of on the line there. DGI did the math above, though I’ve traded even more often over the last, say, six months because I’ve had some free trades with Scottrade. Otherwise, I’m probably closer to two stock purchases per month. Depends on the income, obviously.

    “And when your portfolio grows to $100k, this is really a no-brainer.”

    That’s really the big issue. Like I mentioned in the post, I’ll be looking to diversify out around $50k. So I’d be on the hook for $10/month with IB in the interim. Doesn’t really make a lot of sense for me. Seems like it might be a nice platform/fee structure for those that like to trade a lot, which is why I kind of ruled it out right away. For my next brokerage, I might go with Fidelity, MerrillEdge, or something along those lines. Something that caters more to the long-term investor.

    Thanks for sharing!

    Cheers.

  50. No one has mentioned it, but the $200 sign-up fee is pretty attractive. I’m thinking that I can open $3,000 accounts for me, my wife, and both of our kids, put in $12,000 in a set-it-and-forget it kind of investment, like VTI, XOM, WFC, BRK, or similar and turn on DRIP. It appears I’ll pocket $800, never have to pay a fee, and then in 30 years can come back and grab the proceeds. I don’t know why you’re getting so much sniping about $3 more or less in trading fees and people are ignoring the $200 sitting on the table. I thank you for finding me $800!

  51. I’ve gotten good service from both Scottrade and TD Ameritrade. It’s worth taking a moment to consider how convenient all of the online discount brokerages are in today’s world. When I started investing in the early 1980s, commissions were a percentage of the total purchase/sale or else were based on the number of shares traded. Investors traded in “round lots” to reduce commissions, and NO ONE was trading stocks for a flat $7 fee. For investors willing and able to do independent research (instead of relying on a broker’s advice), the world has gotten a lot better in the last 30 years.

  52. Great post! I currently use Schwab and have used Scottrade in the past. I may consider your idea because it is a brilliant one and reopen my Scottrade account. Thanks for your post!
    LOMD

  53. Tad,

    Ha! Good point there. I didn’t really bring up the bonus because I didn’t want this to come across as salesman-y or pushy. I was just presenting my experience with them. Plus, I think that bonus expires pretty soon. End of the month, if I’m not mistaken.

    But I’m glad that works out so well for you. Free money, baby! 🙂

    Best wishes.

  54. Hi there.

    I just wanted to say that I absolutely love your site. I recently made the transition from options trader to dividend growth investor and you have provided much needed guidance.

    I have been using TradeKing since they started. They were perfect for me because I was a high-volume options trader and the fees were quite low ($0.65 per contract). After making the move to dividend stocks I saw no reason to change since it’s hard to beat $4.95 per trade (and I still might sell some puts to acquire stock). My only issue with them is their limited performance tracking capabilities. Luckily I enjoy doing that on my own…

    Always looking forward to your posts.

    Ken

  55. Jim,

    Absolutely! I wrote about how awesome buying/selling individual stocks these days is:

    https://www.dividendmantra.com/2014/11/the-golden-age-of-financial-independence/

    To look at who’s charging $5 or $7 or $4 or whatever is really forgetting that it’s fantastic in the first place. A dollar here or there will probably make a minimal difference. The key is to be investing regularly in the first place and make sure that you’re saving a substantial portion of your net income. Someone doing math and saying I could save $5 over the course of four months (about $1/month) by going with someone else is really missing the forest for the trees.

    Thanks for adding that!

    Best regards.

  56. liveoffmydividends,

    Glad you found some value in it. I only recommend what I personally use. TradeKing is pretty solid for what it is, though I still think that Scottrade provides the overall better service and value. Both are great, however. It’s really just nitpicking. 🙂

    Take care!

  57. Ken,

    Thanks for stopping by. Really appreciate the kind words and support. And I’m incredibly glad that the site and my journey have provided you some inspiration and guidance. So glad to read that. 🙂

    TradeKing seems to be working out pretty well for you. I haven’t really looked at the options stuff, but I find the $4.95 pretty competitive. That platform is super easy to use, very similar to Scottrade. Overall, I’m a happy customer, which is why I posted about it and reviewed it the way I did.

    Thanks again for stopping by. Stay in touch!

    Cheers.

  58. Hopefully this is an honest review, and not some affiliate advertising where you’re making commission from each referral.

  59. Jack,

    I see this is your first comment here. I recommend taking a peek around.

    I personally use TradeKing, as I pointed out in the article. And I only recommend what I personally use and/or find value in. If I were really trying to “sell” TradeKing, I would have given them a higher rating than an 8/10.

    Take care.

  60. Dividend Growth Investor, do you use the tiered pricing commission schedule for Interactive Brokers? I agree with Dividend Mantra in that the layout of the commission schedule is confusing. However, if it saves me money in the long run, it might be worth learning.

  61. Very timely article, Jason. I have been thinking of either switching to or at least opening a separate account with Trade King for a while. I currently use TD Ameritrade, and have for years. I really love the service and all the features they offer, especially on the research end of things, but the $10 trades really add up over the course of the year. Pretty tempting to cut those fees in half, but other than that I think Ameritrade is very good. Have been considering either Trade King or Scottrade.

    How do you feel about holding the same security in multiple accounts? For instance, if you already have WMT in your Scottrade acount and want to add to that position, would you do it only in that account since it is already there, or wouldn’t you have a problem with having WMT in two accounts?

    I have 4 different accounts with my brokerage. 3 of them are IRA’s that I only contribute to once a year at the max amount. But there have been times during the year where I’ve wanted to buy a stock that is already in one of the IRA’s, so I didn’t. I suppose it is more of housekeeping thing than anything else, but just wondered your take.

  62. BCS,

    Yeah, that’s a great question there. It’s something I thought about for a minute before opening this second account. From my perspective, it doesn’t bother me to buy the same stock in more than one account. I actually mentioned the paperwork aspect in the article specifically because of this, because it was something I thought about before moving over to TK. The paperwork is all electronic, so there really isn’t any additional housekeeping on my end. The brokerages track my positions and cost basis and everything else, so there’s no need to consolidate everything. Just my take on it. I’ll definitely end up owning the same stock in multiple accounts when it’s all said and done. The only consolidation for me will be when I report my portfolio updates here at the blog. So that’s really the only extra work for me in terms of having multiple accounts – keeping the blog current.

    I hear you there on TD Ameritrade. I looked into their service because TD Bank owns a piece of them and I always love using what I own, but the fees just didn’t make sense for me. Price isn’t my bottom line, but it is a factor. And since Scottrade already has all the research tools I need, I figured I wouldn’t mind going with a cheaper brokerage that perhaps wasn’t as robust on that side of things. The only thing that really bugs me about TK is the hours on the customer service and lack of branches. I guess I’m just weird in that I like being able to stop in at a local branch. 🙂

    Hope that helps!

    Best wishes.

  63. I have been a TradeKing customer since they bought out Zecco a few years back. I have been really happy with their website and trading platform and the fees aren’t bad at all. Previously, I had Zecco because they had 10 free trades a month for accounts with balances over $25,000. That deal really pushed me to save enough to meet the 25k minimum, and I enjoyed commission free trades for quite a while, a win-win. However, I sometimes wonder now if my commission psychologically makes me research harder and pick the right entry point rather than just trading all the time for free. It’s like the old yarn of naïve people who get everything handed to them not appreciating the gift and wasting it, vs working hard for what you get and having the wisdom to make it count. (I know a lot of rich friends who dropped out of college when their parents were giving them a full ride!). Interesting to think about at times.

    That said, I have been looking at the MerrillEdge account as well to diversify, as I have my primary checking and credit card with BOA. I am also approaching 150k in my tradeking account, and would look to transfer over enough funds to the MerrillEdge account so that I can get their free trades. Does anybody know if you can do a partial “transfer in kind” into MerrillEdge to open the account and meet their minimum? I know I had to go through an act of congress to do that before with some special paperwork and UV blacklight stamp and crap. Free trades might be worth it though.

  64. One of the great things about investing now a days is the number of choices available for investors. Unfortunately, it can get a bit overwhelming, and each one requires careful analysis. Just from the comments here there is quite a bit of disagreement betw/ seasoned investors! So, let me add another investment tool: motif investing. (http://www.motifinvesting.com). It has a high per-trade cost, but you can buy portions of up to 30 companies at a time. Dividends are deposited in to your account so you can wait until it adds up to $1000 (or whatever) and then buy some more of one, some or all. What do you think?

  65. I guess by “housekeeping” I just meant that when I log onto my TD Ameritrade account I like that I can see how everything is doing all in one place. If I had WFC at Ameritrade that I bought 10 years ago, and also had some at another brokerage that I bought 3 years ago, I’m thinking it just wouldn’t be so seemless to track the cost basis and returns of the stock. I suppose that is just nit-picking, and when I think about it a pretty poor reason to not buy a stock if it is attractively valued at a given time.

    I use TD Ameritrade because that is what my dad uses and he got me started on it years and years ago, so there was familiarity there. When I opened my last IRA a few months ago, I looked hard at Wells Trade because I own and love WFC, but I just couldn’t justify the expenses, especially since I am not a regular banking customer there, also due to the fees involved. I suppose though, that those fees go a long ways to sending those dividends to sharelholders like us, and why it is such a well run and profitable bank.

  66. Daniel,

    “However, I sometimes wonder now if my commission psychologically makes me research harder and pick the right entry point rather than just trading all the time for free.”

    I personally think that the commission fees due add a slight barrier to entry there, which probably isn’t a bad thing. You can see the analyses I post here on the blog. Would I do that 20 times per month if I could buy that many stocks for free? Definitely not. I wouldn’t even have time. So how I could I possibly know whether or not I’m comfortable with what I’m buying? I suppose you could just rely on analysts, but that’s a personal call. I like looking at stocks for myself, which I’ve done well with. I once mentioned to someone using Loyal3 that it seemed like they were overpaying. They replied that they’re dollar cost averaging. But DCA isn’t an excuse to not analyze stocks and pay whatever. Buying an overpriced stock in 12 separate lots is no different from overpaying just one time. Just my view on it.

    I can’t really answer that question on transferring some of your assets to ME. I don’t personally have any plans on transferring any assets around. Let me know what you think if ME if/when you use them. Some of the reviews were mixed, but that could be a prime candidate for me for the third time around.

    Cheers!

  67. Thanks for sharing this review about TK. Personally, I have been with Scottrade for a long time, since the late 90s and loved their platform but also opened up a Sharebuilder account when it was new because at the time they were the only brokerage to offer free dividend reinvestments and in recent years my investment focus has shifted to being exclusively dividend investing. I still have my Scottrade account and have some stock/cash there but my “real” account, the one I report on DivHut is my Sharebuilder account. Perhaps when I add assets to my Scottrade, now that they offer a FRIP, I’ll report it on DivHut as well but for now it’s not anything significant. I agree with you that having multiple brokerages can mitigate a potential disaster especially if it’s down the road and you are depending on your dividend income to live which is why I continue to keep my Scottrade open while continuing to fund my Sharebuilder.

    PS – I just opened up new SB accounts under a partnership they have with Costco. Under the new plan real time trades will be $5.95 and automatic trades just $2. That’s a great and easy way to keep costs at 1/2% or less commish.

  68. Pete,

    Motif seems kind of gimmicky to me. You get to buy up to 30 stocks all at once for $9.95, but you then have to pay $4.95 thereafter to buy/sell (same as TradeKing) any stocks within your motif. But could I find 30 stocks right at this minute that I’d like to buy all at once? Definitely not. So I’d be buying a lot less than 30 at one time. And then adding/subtracting from there is still that $4.95.

    I suppose you could find a few stocks every month you want to buy and pay $9.95 for all of them in a basket, but you’ll want to make sure you’re actually looking at all of these stocks and making sure they fit your criteria. And then once you build your motifs out, you’re still looking at that five bucks to add/subtract. To buy a big group of stocks all at once in the name of diversification but ignoring analysis/valuation would be the same as just averaging your way into a fund, in my view. And spending $10/month in that example is probably pretty similar to what you’d be paying anywhere else. Motif is really just putting a different spin on it.

    Take care!

  69. DH,

    Yeah, I’m with you. Makes no sense to me to not have multiple accounts. I guess if margin is important to you, that might be a benefit for some accounts at a certain amount, but for the intents and purposes I discuss there is no real financial benefit to having all of your assets in one place; in fact, it’s really a risk, in my opinion.

    Good luck with the new SB account. I looked into that, but TK is still cheaper for the real-time trades and seemed to be otherwise similar in all other aspects.

    Thanks for dropping by!

    Cheers.

  70. DM,

    First post for me…appreciate your work! Just a few notes for you and the readers: TK stopped reinvesting dividends for a few months back in 2011 or 12. I complained but they didn’t listen. I decided the only way to make them listen was to pull my money out…a few months later, they changed the policy back.

    I also do not use robinhood cause the last time i checked, they didn’t reinvest divs.

    Thanks,
    Matt

  71. $4.95 to buy stock that’s sick!
    In Australia we’re looking at around $20-$30 every transaction 🙁

  72. Oh, I’m so sorry to hear you’ve opened an account with TradeKing. I used them for several years and consistently had trouble.

    To give a little perspective, over the years, I have had brokerage accounts with: E*Trade, Fidelity, Loyal3, Merrill Edge, Schwab, Share Builder, Sogo, TradeKing, USAA, Zecco.

    Of those, TradeKing was consistently the worst. I never once was able to file my taxes on time because of them. They would always send my initial tax documents after March 15th. Then, they would send me multiple corrections, after April 15th. It got to where I just automatically filed extensions because I couldn’t trust them.

    Yes, their customer service is quick to respond, but I could never get past the feeling they were run out of someone’s garage.

    Last year, I was consolidating some of my smaller brokerage accounts into one. TradeKing again was nothing but trouble. They would lose my ACAT forms. They would lie and say an IRA account wasn’t an IRA, and vice versa. I had to go past them at some point and get things sorted out with the clearing company, Apex, instead. By the time it was done, I had to submit the same ACAT form over and over and over and over and over again. If I recall correctly, it took six months or more. Every other brokerage I have done a transfer with got it done within one month.

    I am not making any of this up. The transfer experience alone tells me I NEVER want to do business with them again.

    Regarding Merrill Edge, their customer service is absolutely top notch. They have treated me like a king from my first small deposit. I find it kind of funny that you dismiss their free trade options, when in your own original article you state “Every dollar I’m not spending in commission fees is another dollar I can invest.” You could have transferred over a few of your holdings and gotten free status straight away. The transfer fee will easily be subsumed by the free trades over time.

    Plus, as others have mentioned, doing so also gives you bonus cash back on Back of America credit cards. Every time I read a ‘best cash back credit card’ article I laugh. My cash back with BoA trumps them every time.

    If I could only have one brokerage account, it would be Merrill Edge hands down. They are the best ‘all around’ deal to be had. Of course, I maintain multiple accounts for all the reasons you mention and more. Schwab gives you free ATMs anywhere in the world. Fidelity is another one that has an awesome cash back card linked to their account. If you work for a publicly traded company with an employee purchase plan, it’s probably with E*Trade. The list goes on. But TradeKing? Yuck!

    I really love your website, and more importantly I respect your stock research. But on this issue, I must disagree.

  73. Matt,

    That’s great information there!

    I don’t personally use any DRIPs or anything, instead selectively reinvesting stocks. But that’s definitely good to know. Thanks for sharing. 🙂

    Best regards.

  74. CG,

    Ouch! Sorry to hear that. We’re quite fortunate here in the US to even have the opportunity to argue over one or another brokerage that ends up being $1 or $2 different in terms of monthly outlay. 🙂

    Hopefully, you guys get some better options over there over time!

    Take care.

  75. Steven,

    Thanks for sharing that!

    As you know, everyone will have different experiences with services in life. I’ve read a fair number of horrible reviews on Scottrade over the years. Meanwhile, I’ve had 100% excellent service with them. Anecdotes are useful, but firsthand experience is generally far more useful. For me, TK has been great thus far. My only nitpick with them is that the customer service hours aren’t longer, and I’d prefer that they have branches. But for $4.95 a pop, I’m quite happy.

    You state:

    “I find it kind of funny that you dismiss their free trade options, when in your own original article you state “Every dollar I’m not spending in commission fees is another dollar I can invest.” You could have transferred over a few of your holdings and gotten free status straight away. The transfer fee will easily be subsumed by the free trades over time.”

    I wonder if you actually read the article?? In it, I state:

    “My plan moving forward is to diversify brokerages much faster – perhaps opening my next account as early as hitting the $50k mark with TradeKing.”

    Not only do I not really have a desire to move around assets from one account to another, but it wouldn’t do me any good to transfer over $50k in stocks to ME to get free trades when that’s right about the time I’d be looking to diversify out and move on. Furthermore, if I were to start a ME account from scratch, it would cost me more all the way along until that $50k mark (when the free trades would start) because the transaction costs are higher there ($6.95 vs. $4.95). So, for me, ME doesn’t really work for that. Plus, I’ve read a lot of reviews on ME that state pretty much the exact opposite of what you’re stating here. Again, anecdotal evidence can go either way. But my firsthand experience with TradeKing thus far has been really positive. I look forward to seeing how it works out over the next few years.

    Cheers!

  76. I am also with Sharebuilder. I think they’re pretty good, no minimums, the trade fee is on the medium low side and they have free dividend investment. The downside is that the trade execution seems to take a while relative to other brokerages.

    i also looked at Merrill but honestly even though free trades are nice after my experience banking at B of A decided not to support them.

  77. After researching the Merrill Edge options the last couple of hours, I agree with you that it could be the very best option for those with existing BOA accounts and credit cards. The Preferred Rewards synergies are outstanding and far outweigh any negatives. I have a BOA checking and bank account, and a BOA Platinum Cash Rewards credit card. . . so, if I transfer 100k in assets to a Merrill Edge account, prospectively, I can get a Platinum Preferred status that allows me many benefits. The first is 100 free trades a month, which is awesome, and at a trade a month would equal $60 a year free money, the second is a $250 bonus for starting an account and transferring in $100K existing assets, again, more free money and should cover any costs from my TradeKing account for outbound ACAT fees, the third is random fee forgiveness-which includes out of network ATM Fees, monthly maintenance fees, overdraft protection fees, and credit card replacement fees (I don’t need any of these to much, as I am not a dumbass, but hey, any reduction in fees is good, right), finally, and most accretive is a whopping 75% bonus in rewards credits on all BOA credit cards. . . now I mentioned before that I have a BOA Platinum Cash Rewards credit card. . . this is the key point. The BOA Platinum Cash Rewards credit card is the best credit card going for payback, hands down. It has the following parameters:

    *1% cash back on purchases everywhere, every time
    *2% at grocery stores and
    *3% on gas for the first $1,500 in combined grocery store and gas purchases each quarter

    Additionally, if you link the rewards redemption to a qualified BOA Checking or Savings Account as a Platinum Preferred client, you get an additional 75% on your rewards, so think about the fact that you can get a multiplying factor of cash back on all the money you spend. If I am interpreting the terms and language correctly, this amounts to terms of:

    *1.75% cash back on purchases everywhere, every time
    *3.5% at grocery stores and
    *5.25% on gas for the first $1,500 in combined grocery store and gas purchases each quarter

    Think about that for a second, and then cross reference with your monthly budget/expenditures and let that sink in. . .
    Now I have a fairly modest, budget, but can regularly have CC monthly bills of $1,000 to $1,200 per month due to putting all my living expenses minus rent, insurance, and some utilities that don’t allow credit on this CC. Most of what I purchase are groceries. Let’s take a conservative average of 3% cash back rewards on that at an average charge of $1,100 per month. I would get back $396 dollars over a year, or roughly $36 a month. . . that is a great return on services you need to have, IMO and well worth the hassle of transferring some assets or worse customer service reviews on the internet.

    Granted, I will still keep my TradeKing account because the whole idea we are talking about here is diversification among several brokers for protection, but the pluses of the Merrill Edge benefits are quite compelling, and I think I will make a change soon to it being my primary taxable brokerage account.

  78. Scottrade purchases supplemental SIPC insurance. Subject to certain conditions, this would cover, on a per customer basis, claims exceeding SIPC coverage amounts, up to $24.5 million (inclusive of $900,000 in cash claims). This policy is subject to a total aggregate limit of $100,000,000. It is unlikely that Scottrate or any other broker like it would go out of business and take client money with them but the chance of it happening isn’t 0. It would be fraud on a massive scale. The $100M aggregate coverage wouldn’t go very far in that event anyway.

    Having funds at two brokers is probably not a bad idea for the other reason you state however. Perosnally I’d wait because having funds at multiple brokers is a pain in the butt at times.

  79. dzogen,

    Sharebuilder has the option of real-time trades and then the batch trades as well. The latter is cheaper, but I believe they’re all executed once per week. The real-time trades are quite a bit higher than TK, while the service is otherwise similar. Both seem like pretty solid options, but TK seems to be better if you’re looking for something a lot cheaper than some of the bigger guys out there with branches.

    Cheers!

  80. Steve

    Yeah, I called Scottrade a while back about that supplemental insurance. $100 million wouldn’t go very far at all, so it’s almost not even worth mentioning.

    But, yeah, I think if one has the opportunity to mitigate any outstanding risks (no matter how small), it makes sense. The cost for me to open my TK account was $0 other, and it only took a few minutes of my time. All in all, I’m glad to start putting some of my money somewhere else. 🙂

    Best wishes.

  81. BCS, you should call Ameritrade’s 1-800 number and speak to a representative. I asked my representative to lower my commission fee to $7.95 to match Fidelity and he did it – he did not need to seek any approval!

  82. Great thanks, I’m going to look to pick up a book to help support your site & financial independence. I hope to see some VERY large trade orders in the near future from your new residual income stream!

  83. dzogen,

    Thanks so much. Really appreciate that!

    “I hope to see some VERY large trade orders in the near future from your new residual income stream!”

    Me too. 🙂

    Though, the book has grossed me a few hundred bucks so far. I don’t think it’s really going to make a dramatic difference in my ability to achieve financial independence any faster. But I do hope that it helps other people achieve financial independence faster. It’ll all be worth it for me.

    Cheers!

  84. Anyone ever wonder how the super rich go about this? Where does a billionaire like Buffet or Gates invest their money? I have thought about this in the past and would have to imagine that there may be some type of insurance you can buy. Just think about how many accounts you would need with a 10 billion dollar portfolio. It would be impossible to keep up. I would welcome other views on this.

    I use Sharebuilder and only invest on Tuesday. They offer $3.95 per trade if you invest on a Tuesday. Yes, its not real time but that does not bother me as paying .10, .20 or .50 more does not make a difference to me. I’m not selling ever unless there is an unfortunate circumstance (divend cut). The trades occur late morning usually 11-11:30am. I have looked at the priced paid vs the market and they are not far off in price.

  85. hbkid,

    The batch ordering works for some. I don’t often know what I’m going to purchase until the day of, after doing analysis and looking at a few different stocks. And oftentimes I’ll just catch something when it’s down 2%+ on the day (like with MSFT and WPC recently). For the extra money, which is very little, it’s worth it to me.

    I can tell you for sure that Buffett actually keeps the physical copies of his stock certificates in BRK in a safe deposit box. He had to march down to the box when he first started donating large chunks of BRK stock to Gates’s foundation. I imagine that’s not a bad way to go for billionaires, but I can’t say how all of them do it. You’d just have to insure your box if you go that route, which is something that can’t be too difficult. For those that maybe don’t trust brokerages, anyone could do this. I just find it easier to deal with everything digitally. And the SIPC coverage up to $500k per account is more than enough for my needs.

    Cheers!

  86. Dividend Mantra,

    I used Questrade up her in Canada. It is $0.01 a share with minimum $4.95 and max $9.95. Basically, 600 shares at one time would be $6.00. If I buy an odd lot of shares (not 100 ) there is some charges added which equates like $0.10 to $0.25 usually.

    The service is OK most of the time. But I use them as when I started out I didn’t have much money to invest and other brokers charge $9.99 in Canada at that time. The platform has improved over the last few years, so I am happy to keep using them.

  87. IP,

    That sounds like a pretty sweet deal right there. I’d probably end up just paying the $4.95 per month every month for all of my transactions. 🙂

    It’s also nice they’re improving their platform instead of just sitting on the advantage of being a low-cost provider. Good stuff there. Enjoy the cheap trades!

    Take care.

  88. IB’s balance requirements, including the intial deposit, can be made up of any composition of cash and (transferred) securities, or at least that is how I read their terms when signing up late last year. I did not exercise the transfer option, though, because the transfer fees of my other broker would’ve been about triple that of selling and re-purchasing, so though I would’ve liked to consolidate all of my US stocks in one place (that being IB) for dividend currency efficiency reasons, it ended up being significantly more cost-efficient to sell a subset of them and some other assets, some at a loss for tax offsetting, fund the account with cash, and re-purchase, adjusting allocation practically for free in the process.

    The monthly minimums do sting a bit, since I’m a buy-and-holder with less than 20k USD worth of stock with them at this point, but I knew about them and IB’s pricing structures in general beforehand and weighed the ability to cost-efficiently make smaller purchases (in the neighbourhood of a few hundred USD for US stocks) regularly rather than having to save up for months for one lot, sweetened by the cheap margin rates for taking advantage of dips without having to sit on inert cash for that purpose, worth them, at least psychologically, for me.

  89. A.A.,

    “…but I knew about them and IB’s pricing structures in general beforehand and weighed the ability to cost-efficiently make smaller purchases (in the neighbourhood of a few hundred USD for US stocks) regularly…”

    Yeah, I think for someone trading fairly often, the price structure over there sounds like it’s pretty beneficial (though, still confusing). I wouldn’t find it particularly practical to spread my $2,000 or $3,000 in savings per month across 10 purchases or something crazy, but, if I wanted to trade that way, I’d probably find something that was even cheaper than TK.

    Thanks for sharing!

    Best regards.

  90. Hi Jason,

    I thought for sure you would go with Fidelity. You are aware that TradeKing and all the rest of the deep discount brokerage firms don’t offer account guarantee from potential hackers. Fidelity, Scottrade, TD, Charles and ETrade offer reimbursement if your account losses money due to unauthorized activity. I know the 5 trades are nice, I have an Optionhouse account and only pay 3.95 a trade but security is way more important. Also a lot of people seem to like IB but they also don’t offer reimbursement if your account gets hacked. That’s my two cents.

    I am up to chapter 6 of your book… one of my favorite quotes so far is: You could say success is where hard work and luck meet.

    Your book is while written and although sad its very inspiring. Cant wait to finish it so we can discuss it.

  91. Oh, and I should mention, the referral fee really doesn’t bother me either. Presumably everyone reading your blog gets something out of it. I get free stock advice. If you can get some extra money coming your way as a thank you, and it doesn’t cost me a dime, that’s even better! I don’t get why people would be so negative on you making a buck – you are very generous with your reader community.

  92. Frank,

    Good point. And really all the more reason to diversify your accounts. If your brokerage were somehow hacked and money came up missing, I can’t even imagine what kind of headache that would be – coverage or not. And from what I understand, a lot of the “hacking” has actually involved impostors sending emails to advisors asking for wires out. So that would generally involve something a bit different than what I’m doing with the account. And you’d have to have cash there, or it would involve selling stocks to raise the funds. I would be aware of that pretty quickly. But still something to be cautious about.

    Glad you’re enjoying the book. Means a lot to me! 🙂

    Cheers.

  93. Tad,

    Thanks. Appreciate that very much.

    I don’t get the flak either. I write for a living now, but most of my income actually comes from freelance writing. The blog is much less. But when I do write about services/products here at the blog, it’s only when I personally find value in it because I used it myself. It’s not like I’m pitching up stuff all the time or something. I’ve written about brokerages twice in four years. Sheesh.

    To be honest, I write here on the blog as much as I do because I truly enjoy inspiring and sharing. And I do my best to put out the best content possible. But on an income/time basis, I could do much better elsewhere. If these haters get their way, I may someday do just that. But I’m trying my best to ignore them. 🙂

    Thanks again!

    Best wishes.

  94. I’ve used Fidelity for years and find them very good. I’ve moved some of my business to Merrill and find them and their web site excellent.
    They gave me $600 to open, a no fee credit card that earns me 2.63% back. 100 free trades per month. Personal service. The legacy of wall streets TITANS Merrill Lynch Pierce Fenner Smith Barney. Much better than even Fidelity.

  95. For those of us that no longer living in the US, I have found Schwab and IB to be great. Others (Fidelity, Vanguard…) do not accept international clients, close your account, or give you a hard time once you live the US, even if you are a citizen sometimes. Customer service is generally excellent.

    I find myself operating differently with Schwab and IB. Using the local currency for buying stocks across the world in IB is great. The 10 minimum in IB is about the cost of two stock purchases in the European markets per month, so it is very cheap as it gets deducted from the monthly 10. Stock brokers in Europe are expensive and generally quite bad.

    So I can move around the world and generate cash in the local currency. Works for me.

    Best,

  96. Jason,

    I have 4 brokers I use: TD Ameritrade, E*Trade, Scottrade, and Sharebuilder. These all seem fine to me (although the fees are higher than TK), except I am irritated with Scottrade, as when I get dividend payments into my account I cannot transfer this into my ACH linked account-I can only transfer funds in and to withdraw them I need to physically withdraw the funds at a branch which is not at all convenient for me.

    How do you get your cash out of your Scottrade account, or how will you when the time comes?

    -Mike

  97. DM,

    Congrats man! That is smart, and I am excited for the day I am there. Right now I have Sharebuilder and Loyal3, but once the latter folds into the former I will have just 1. I plan on using Scott or E- Trade, but time will tell in however many years it makes sense to do that. Still, this post is about you making the market yours – good job man!

    – Gremlin

  98. Skaste,

    Thank you. That’s very helpful to me. I have my account with Fidelity. I’m presently living in the USA but am originally from the UK. I will look into Schwab and IB.

    Thank you

  99. Yes, don’t make the mistake I did. Well before leaving the country close all the accounts that will not accept foreigners and move them into those that will. Ask your broker about this and hand in the W8-BEN to keep the 15% tax on dividends from US companies when you leave.

    Note that 401K are particularly troublesome once you are not a resident alien. Best thing to do is to roll them over (no taxes involved) into an IRA at Schwab. IRAs are not the strong suit of IB (there is a maintenance fee, for example)

    Best,

  100. Hello Jason. I also diversified my portfolio with another broker last year. BTW, after much research I’ve added a couple two companies to my watchlist. It might be of your interest also!

  101. Hi Jason,

    I think it is a good strategy to divide the depot probably to three brokers. I personally wouldn´t take more. As I´m living in Europe I don´t have the same possibilities like you in the US. My first broker is (now) a big french bank. It was important for me to have a very big institute and that they are existing for a long time. But this is not 100% security, but hopefully nearby. At the moment I´m thinking about a second broker like LYNX. The main reason is, that at Consors (my first broker) the fees are too high when I like to buy American or Canadian shares. I don´t get all UK shares and for some other countries it is very difficult to work with them. I like to invest in several countries like US, Canada, Japan, Singapoore, Australia, China, Russia and several European countries. So there are two reasons for me to diversify the brokers: flexibility & security.

    I read in the T&Cs what will happen when the broker get bankrupt. The shares can´t be sold to pay debts. But you are right when you write: What will happen, if there are persons who will sell the shares before that. I don´t know, and frankly I don´t want to see what will happen :). But this is a reason not to work with new start ups even if they offer no fees like for example Robin Hood. This is the same like you invest in technical start up companies beginning at the stock market. There are obviously good chances to make a lot of money if you buy the right company. But most are not. And I think, now with all the new starting broker companies we will see the same.

    Thinking of the fees generally: If I buy for example 1 – 3 positions / month with 1.500 – 2.000 €, the fees are not that important. OK, I may save some small €s, but it´s the same like you buy products which are too cheap: You often buy them twice. So quality is my first look, not the price.

  102. Thanks for the review Jason. I use ETrade, ShareBuilder and Schwab right now. I think it is wise to invest with several brokers. Also, each broker has different tools which is a plus. For me Schwab has the most analysis of the three.

  103. Mike,

    Nice! Glad to hear ME is working out pretty well for you. I’ll definitely consider them among my options for my third brokerage when the time comes. 🙂

    Cheers.

  104. Skaste,

    Yeah, great point there. I think if I were to ever live outside the US, I’d move over to Schwab. Their international options are really great, especially in terms of refunding the foreign fees. Not sure if I’ll ever go that route – become an expat – but Schwab would be a great pick for someone who is living outside the US. 🙂

    Best regards.

  105. Mike,

    Every brokerage is a bit different. Scottrade doesn’t charge for check withdrawals (last I knew), so I’ll just request a check and deposit/cash it when I get it. As the dividends kind of add up over the course of a month or so, I’ll just collect my “paycheck” and use it to pay my bills. Pretty easy, in my view. 🙂

    Cheers!

  106. Gremlin,

    It’s definitely a first world problem to be in a position to where you’d feel more comfortable diversifying brokerages. 🙂

    Everyone is different when it comes to their money and how comfortable they are with things. I personally skew pretty conservative on a lot of things, which is why I really wish I would have done this a while ago. But I’m going to diversify a little faster from here on out, as I really see no reason not to. Works for me.

    Thanks for dropping by! Have a great weekend over there.

    Best wishes.

  107. @Skaste,

    Thanks so much for the information. I shall research further.

    @Dividend Mantra I imagine we’ll find you on some exotic island outside of the USA one day living off the wonderful money tree you are growing. Thanks for all the information. I read through your book and wonder if in a future edition you could discuss sector allocation. Thanks again!

  108. I use Sharebuilder and most recently, I also opened up a Merrill Edge account. With Sharebuilder, the site is easy to use, you have access to multiple rating agency reports, the pricing is competitive for both market trades or bundles (once-a-month cheaper purchases). With Merrill Edge, I use BofA and it is convenient, the pricing is $6.95, if you have enough assets or money in linked accounts you get free trades. The site is not bad either.

  109. Paapaa: Are you using tiered? I’ve been taking a hard look at IB since this thread began.

  110. jguerrero,

    Not a bad idea to diversify. Especially when it’s so painless to do so. Some don’t mind having all their eggs in one basket, but I like to spread those eggs around a bit. 🙂

    Cheers!

  111. olli,

    Right. I think the issue is less of a bankruptcy and more of some type of fraudulent behavior. And that’s why I wrote it like that in the article. If your brokerage goes bankrupt, then the assets should be transferred to another brokerage. Pain in the butt, but you shouldn’t lose anything (other than time). But I think if there’s anything we’ve learned over the last few years, it’s that humans sometimes don’t do well around large sums of money. And so I’d rather be safe than sorry. You just never know. And when it comes to issues where there’s assets that go missing, you’re only covered up to that $500,000 mark here in the US. Probably not a big deal for many (most) people, but I plan to eventually have quite a bit more than that. As such, it makes sense to safeguard oneself.

    “Thinking of the fees generally: If I buy for example 1 – 3 positions / month with 1.500 – 2.000 €, the fees are not that important. OK, I may save some small €s, but it´s the same like you buy products which are too cheap: You often buy them twice. So quality is my first look, not the price.”

    Right. We’re in the same camp there. If I were trading, say, 5-10 times per month or something, then price would matter a whole lot more to me. But when you’re talking about buying stocks 1-3 times per month, price becomes somewhat of a secondary matter. For me, I care more about the platform, customer service, safety of my money, reputation, etc. Price matters to me, but it isn’t my bottom line. When you’re getting to the point of saving thousands of dollars per month and you’re on pace to achieve financial independence pretty early in life, saving $2 and not being totally comfortable with a brokerage doesn’t make a lot of sense to me. If $2 makes or breaks you, you’re doing it wrong.

    Thanks for stopping by and sharing!

    Best wishes.

  112. DD,

    Definitely. I agree that it’s definitely not a bad idea to spread the assets around a bit. And it’s nice to have one brokerage that offers you some of the tools you need. I find S&P Capital IQ to be pretty solid, but I don’t even think you need a brokerage for it. But I tend to look at their fundamental stuff quite a bit, which is nice. 🙂

    Thanks for dropping by. Have a great weekend!

    Best regards.

  113. TDE,

    Ha! Sounds good to me. I’ve looked into Thailand pretty extensively. I imagine that if I were to ever live outside the US, it’d be in Thailand. Great food, great beaches, nice weather, friendly people, and very cheap. The only problem is the visa issues. Otherwise, great stuff.

    Sector allocation is actually something I plan on tackling very soon. Probably within the next few weeks. Keep an eye out. 🙂

    Cheers!

  114. David P,

    I think Sharebuilder is really nice if you don’t mind those batch buys and what not.

    MerrillEdge is one I might consider for my next brokerage. Glad to hear it’s working out well for you. Fidelity is another one I’d probably strongly consider as well. TK is great for what it is, but I think I’d prefer to go with something a bit more “premium” next time. We’ll see.

    Thanks for sharing!

    Take care.

  115. Well as in your book, I also happen to own COF, which I think is a great stock personally, and so I shop there so to speak as well. 🙂

    Just finished the book. Good read, thanks. I would say it is pretty motivating. I would have liked to see a little more handholding on some of the stock analysis portion. But all in all a good book. Thanks.

  116. dzogen,

    Thanks for the feedback!

    Someone else mentioned something similar, perhaps putting together some kind of guide or something that’s a bit more focused on the tactical side of stocks. I kind of approached the book like the blog, as in approaching it from a high level. So maybe I’ll come up with something that’s a bit more heavy and nuts-and-bolts for those interested. 🙂

    Thanks!

    Best regards.

  117. DGJ,

    Yeah, I looked at Motif and concluded that it’s a bit gimmicky. Another reader asked that, and I gave a fairly lengthy response on how their fees aren’t really all that great once you move past your initial ‘Motif’.

    As far as Sharebuilder goes, someone else asked that as well. I’m not interested in the batch trades at all, while the real-time trades are more expensive than TK. Meanwhile, the overall platform and experience seemed to be similar to what one would get with TradeKing. So it didn’t really make sense to me. But some like the batch/automatic trades, and it seems to work pretty well for that side of things. Really all depends on what you’re interested in. I like doing my analysis and buying on the spot, especially when I can catch something down 2% or more on a day, like I recently did with MSFT and WPC. Works for me. 🙂

    Thanks for dropping by!

    Cheers.

  118. Yes, I’m using tiered. Actually I can’t think of any reason not to always use tiered. It is basically always cheaper than fixed. You can always switch to the other pricing if needed.

    With tiered you can save even more: if your trade is not fulfilled immediately (ie. if you “add liquidity”) IB passes the exchange rebates to you: so your commission can be even lower – it can be even lower than the minimum $0.35. This rebate depends on the actual exchange where your order is fulfilled. (And the difference might be so small that it really doesn’t matter.)

    IB is dirt cheap, unless you buy a lot of penny stocks – and even then it is reasonably cheap. Highly recommend IB. And they accept international customers also. Good for us non-US investors.

  119. I have used IB for 2 years now. Best broker out there. They insure up to 30 million dollars against loss if they ever go kaput. It has the best credit rating of any discount broker out there. Their financial stability rating is at the same level or even better than that of JPM bank if I remember correctly. Their trading system has the best security. Not to mention all the other advantages already stated by the previous commentators.

    I have used both flat and tiered pricing. I prefer tiered with SMART set to maximize rebates. With this structure I paid half in commissions compared to the former for comparable time periods and trade volume.

    Note that with IB if your assets exceed 100k you won’t pay the $10 less generated commissions fee. You only pay commissions. And even if your assets are less than 100K you still will not pay the $10 less commissions fee for the first three calendar months.

    IB is the most advanced and best broker on nearly all measures several years in a row— see Barrons.

    I must agree that IB “seems” complicated but there is a steep learning curve. They appear so because as already mentioned, they are being transparent enough to give you the best deal and information. You just need to put in a little effort to understand IB. Being simple does not always mean best. That is what I have come to learn. Sometimes people sell you snake oil when things look simple. Let it be simple but no simpler as Einstein once said.

    Disclaimer: other than owning an account at IB, I am in way affiliated with them.

  120. Hello Dividend Mantra, I am Bermudian (and live in Bermuda). I use Schwab brokerage. I am enjoying building up a dividend investment account and find your website very informative.
    I have discovered that 30% tax is withheld from the dividends of U.S. companies (not reimbursable). However I have also discovered that nothing is withheld from the dividends of UK companies! So as you can imagine I have BP (bought earlier this year around $36), BBL (bought at $41-43.5), GSK (bought at around $42) and I will be looking for further UK dividend companies that are a good value. Perhaps UL, AZN, SBRY or NG – but of course they are not “on sale” like the beaten down energy stocks so I’ll have to be careful and evaluate. I feel like I am quite limited if I have to focus only on UK stocks. I am unsure what will be withheld for Canadian stocks. I am guessing 15% (which would be the same as if I was American but I’m not sure). I bought BNS, RY and TD earlier this year (around February I think it was) All three are up quite a bit since I bought them which is nice to see – but I will be interested to find out next week how much of the dividend I will get (dividends to be paid next week for those companies I believe). So I will wait to see the outcome before I look further into other Canadian stocks. I also bought small amount of PKX (a Korean steel company) and SBS (Brazil water utility) and I have no idea what the dividend withholding might be. I think my best strategy will likely be to focus on a portfolio of UK stocks (and maybe Canadian if withholding is 15% or less). Does this make sense to you? Over time I think it will be too much to lose 30% of my dividends if I have U.S. stocks. Thanks.

  121. DM,
    If you are looking for great service and simple fee structure then TDAmeritrade is right up your alley. Trades are $9.99 but you said yourself that you trade so rarely that $5 shouldn’t matter.

    Their website is very nicely laid out and they provide 6 (I think) professional opinions on each stock.

    I just started there last month and am very happy.

  122. Great post Jason.

    I own an iPhone, and since I’m just getting started with investing and adult life in general, the zero-commission model really makes a difference for me; I don’t have a lot of capital and savings yet, so small fees can quickly add up.

    So far I’ve absolutely loved Robinhood. Being able to make as many trades as I want on a daily basis is pretty sweet, and doing it from my phone is super convenient. I can literally invest at any time, regardless of where I am. And the app is very sleek and user-friendly, which is another plus.

    With that being said, I can definitely see how the fact that Robinhood is so new might turn off some investors, especially those who already have a non-trivial net worth. There comes a point where commissions become pretty much negligible once you have enough money, and the uncertainty that comes with a new, untested platform is definitely a risk to take into account. Furthermore as you said, until they release android and desktop versions, that also alienates many users just from a technology standpoint.

    I too plan on eventually someday opening another brokerage account once my net worth becomes large enough. In the same way that we diversify our portfolios across sectors and holdings to minimize risk, diversifying our capital among different brokers is another method of avoiding putting all our eggs in one basket.

    Keep up the good work as always bro. I’m really enjoying your book so far btw! 😀

    Cheers

  123. Robinhood lists Snoop Dogg as an investor into the platform. That doesn’t give me the required warm and fuzzies.

  124. Adam,

    You can qualify for the free trades by having “Platinum Privileges”, which requires $50,000+ combined balances across your accounts, including your ME account. So $50k in stocks will get you there. 🙂

    Cheers!

  125. Quincyjones,

    Thanks for sharing your experience. Glad IB is working out for you. I think what’s most important is that you use the service(s) that really work best for you.

    “They insure up to 30 million dollars against loss if they ever go kaput.”

    I think most major brokerages have pretty hefty insurance over and above SIPC coverage, though I don’t know of any that would really go very far. Scottrade has $100 million in aggregate, but that’s a fraction of their clients’ assets. $30 million isn’t much for IB, either. It’s more of a talking point than anything actually useful in real life. That said, I wouldn’t be real concerned over a bankruptcy in terms of financial loss, other than the headache and temporary loss of access to your funds. It’d be fraudulent behavior that I’d be more concerned about.

    “Being simple does not always mean best.”

    Agreed, but being overly complicated isn’t necessarily good, either. Depends on your perspective. I like simple more often than not, and that goes for brokerages, stocks, investments, and life. 🙂

    Cheers!

  126. Jan,

    Sounds like you’re making some good calls over there. To be honest, I’m not at all familiar with dividend taxation as it pertains to residents in Bermuda investing in US stocks. I know a lot of countries have tax treaties with the US, which allows a good chunk of that 30% to come back to you. Canadians, for instance, can buy US-domiciled dividend stocks in retirement accounts and not pay any withholding tax to the US government. So that’s pretty nice. Every country is different, but I honestly can’t give you any perspective on that. I just don’t have any information on it. I would definitely research to see if there’s a tax treaty that applies.

    I do know that US investors can buy Bermuda-domiciled dividend stocks and pay 0% withholding to Bermuda, as they have no personal or corporate income tax (last I knew). So that works out very well from our side of things. It’s unfortunate that maybe the relationship isn’t as nice on the other side. But this is really something that’s specific to each individual country. And there are way too many of them out there for me to research and become familiar with.

    Best regards!

  127. Patrick,

    Thanks for adding that. TD Ameritrade seems like a great platform. It’ll definitely be one I consider the next time around. Probably right up there with Fidelity and MerrillEdge. I like TK’s cheaper structure as I build this next account out, but I think I’ll probably go with something a bit more robust and premium next time around. All depends on what you want. 🙂

    Glad to hear you’re happy over there. May join you one of these days!

    Thanks for stopping by.

    Take care.

  128. ZTZ,

    Hey, that’s fantastic. I’m glad RH is working out for you. We need you early adopters to use those services and allow them to scale up over time. 🙂

    In all seriousness, though, I wouldn’t mind trying them out at some point. But it’d have to be a few years down the road when the business model proves itself out and they’ve got some traction. I’d also HAVE to have a phone number to call. That’s non-negotiable for me. And then of course a PC platform. Then we’ll talk.

    “In the same way that we diversify our portfolios across sectors and holdings to minimize risk, diversifying our capital among different brokers is another method of avoiding putting all our eggs in one basket.”

    Couldn’t agree more. It makes no sense to me to not spread your assets out across a few brokerage accounts. If someone feels okay with $500k+ all in one spot, more power to them. But I don’t. Besides, imagine how rich you’d feel with four or five brokerage accounts. You’d have so much wealth to where you need multiple accounts to hold it all. Pretty nice, right? Ha! 🙂

    Glad you’re enjoying the book. Really appreciate the support. So far, it seems people are enjoying it. Perhaps I’ll put something together that’s a bit more tactical here at some point. In the meanwhile, I’m happy with the book in terms of it’s inspirational content.

    Best regards!

  129. Talako,

    Ha! I personally don’t care about something like that, but I’m also not sure it’s a great selling point. I’m honestly just not sure they have a real business model there. The market will prove it out either way over time. There have been some brokerages that have tried something like that before and it hasn’t worked yet. I really hope it works for them, though. I’d love to see them scale and offer everything I need and then charge me $0 for it. But I think that’ll be tough. We’ll see!

    Cheers.

  130. I have an account with TradeKing, as well as with Scottrade. I do like TradeKing’s platform and their lower fees, but I still prefer Scottrade, even though I pay a few dollars more per trade (not that those few dollars are going to make or break me.)

    Another issue with TK that I’ve had is that processing a deposit can take a while.

    With Scottrade, the moment I request an ACH transfer, the money is in my account, and I can instantly use it to make a purchase. With TK, however, it usually takes a few hours to complete the transfer and actually make my funds available for me to use (and I always transfer the same amount of money over, so it’s not subject to the three-day holding period.)

    Also, WHAT, you wrote a book?! Do you realize how much easier Christmas shopping is going to be now, for me? I’ll just send people copies of your book, and now I don’t even have to get off my lazy butt to give gifts to people. 🙂

  131. Dividend Mantra, you do raise a valid point. When MF Global raided its clients’ accounts to use as collateral for currency trades, their clients thought that their accounts were gone forever. I believe that the client holdings were eventually recovered, although it took months for this to happen.

  132. Although the commissions are low, the cheap margin rates seem like the most attractive aspect of Interactive Brokers. Imagine if you had $100k in an account and then borrowed say $25k on the margin to buy a relatively-high dividend paying stock with a long history of raising dividends, such as MO. You would pay 1.63% in margin interest on the $25k and could get 4% in dividend income, which is likely to increase over time. From a tax perspective, I believe that you would also be able to write off the margin interest you pay as an investment expense! Maybe a strategy like this is too “risky” for many people…

  133. Seraph,

    Ahh, another Scottrade and TradeKing client. Nice! 🙂

    Yeah, I’m wondering how future deposits will go. I was advised by phone that future deposits that are the same or less than previously cleared deposits (the ones that had to wait the three days) will be available immediately. So I’ll put that to the test. But I do agree with you that Scottrade’s instantaneous availability for transfers is really nice. I’ve never had to worry about leaving cash in my bank account in fear of missing an opportunity. I could always transfer the money over and immediately buy stock.

    Ha! Appreciate the support there. Easy Christmas shopping, indeed. I hope you and/or anyone else that gets a chance to read it enjoys it. I learned a lot this first go, which will help me with the second and third editions down the line. 🙂

    Cheers!

  134. Jim,

    “…although it took months for this to happen.”

    Try a couple of years:

    http://fortune.com/2013/11/15/how-mf-globals-missing-1-5-billion-was-lost-and-found/

    Money found or not, I think it would behoove someone to mitigate the potential risks as much as possible. Not saying the odds of something like that happening to anyone using a discount brokerage account are high, but mixing human nature and a lot of money doesn’t always lead to great results. I honestly don’t have any idea how you quantify those risks (or if it’s even possible) and thus I’d rather be safe than sorry. 🙂

    Best regards.

  135. Jim,

    It seems like IB has a solid deal going on if margin is your thing. I would be careful on underestimating the “risky” nature of using margin, however. It’s easy to ignore the risks when the market relentlessly rises over the course of almost six straight years, but the risks are there. Leveraging by its very nature adds risk. I personally find leverage unnecessary to achieve great success as I haven’t used any margin since I began.

    Cheers!

  136. DM,

    Great post!

    How does coverage work if you have 2 accounts with the same brokerage? For example I have 1 account with Scottrade and 2 accounts with Sharebuilder. Would I need to add my assets up from the 2 Sharebuilder accounts or is each account protected up to 500K? Both Sharebulder accounts are individual brokerage accounts not IRA’s.

    Thanks!

  137. Hi Jason,

    Great debate going on in this thread!

    Here is what we do:

    Muni’s: Fidelity
    Wife’s Roth: Vanguard
    My Roth: Share Builder
    Taxable: Share Builder
    General Savings: Betterment 60/40 bonds stocks

    Like a few others in this thread, I use the Costco discounts with Share Builder and it really works very well. For the taxable account, I auto-invest $600 every other week in Apple. Auto-invest will pick up partial shares and it is a $2 trade fee. I do not mind the “Tuesday” trade because I am “averaging in”. Over the longer term, I do not feel this to be a big deal. Right now, I only hold AAPL in the taxable account. Everything else is in my Roth.

    I have looked at TradeKing in the past as well as Interactive Brokers and may make a move to one of them one day. Some will argue that Share Builder is too simple with not enough research tools available. I like the simple interface!

    Keep it up man! You are doing great.

    Bet regards,

    Ray

  138. I highly recommend Fidelity. I’ve been with them for 30 years and have never seen a reason to go elsewhere. Service is 24/7 and I’ve put that to the test. They also assign you an account executive by name (at least in my case) and he calls periodically just to see if I have any questions or need anything.

    Great website with research tools, and trades are quick and easy.

  139. Ray,

    I’m with you. I also like simple. Simple in all things – businesses, brokerages, and life. 🙂

    Sounds like you’ve got a nice mix there. Assets spread out across multiple accounts and multiple brokerages. I don’t think it’s a fun idea to keep one’s eye on 10 or 20 accounts, but I think it definitely makes sense to have your eggs in more than one basket.

    Thanks for dropping by and sharing!

    Best wishes.

  140. Tom,

    I’ve heard great things about Fidelity. They’re definitely on my short list for next time around. I think when it’s all said and done I’ll probably end up with accounts with Scottrade, TK, Fidelity, MerrillEdge, and probably a couple of others. I’ll then be in a pretty good position to compare them all. 🙂

    Thanks for sharing that. That’s really nice that they assign an account executive like that. Nice to have someone reach out occasionally.

    Have a great weekend!

    Cheers.

  141. Nice article that has generated a lively and informative discussion. Congratulations on your book. Your hard work, passion, discipline, and good nature make your blog both informative and enjoyable to follow.

    Is the less than kind commentary by Dividend Growth Investor what led to Dividend Growth Investor being removed from the Blogroll?

    Haters gonna hate.

    All the best for continued health, success, happiness, prosperity, and peace of mind!

  142. Dave,

    Thanks so much. Glad you enjoyed the lively discussion. 🙂

    DGI was actually removed due to some follow-up emails that went back and forth. I may put him back up there because it shouldn’t really matter if I get along with someone as far as adding value for the readership. Then again, I only include sites on my blogroll if I actually regularly visit and enjoy the content. So we’ll see.

    Thanks for all the support. Much appreciated. Doing my best to create great content and inspire.

    Stay in touch!

    Best regards.

  143. not sure if ComputerShare came up in the comments, for the newbie starting out it is a viable option.

  144. Computershare selling fees are crazy high, it cost me $76 to sell 325 shares of ARCP (market order)

  145. Floyd,

    Great suggestion there. Computershare is really solid, especially for the fee-free options they have over there. If you don’t have a lot of capital to regularly invest, Computershare is one of your better avenues.

    Cheers!

  146. Jack,

    It depends on the stock. Many stocks cost nothing to buy and very little to sell.

    For instance, it costs nothing to buy ABT stock. And then a batch sale would cost you only $0.15 per share. Quite a few stocks cost nothing to buy, which is really what’s most important for long-term buy and hold investors. Just like anything else, it pays to research which stocks work best over there.

    Cheers!

  147. Thanks for the info. Good hands on debate about several options. Of course the different firms are better for some and worse for others. If not there would be only one. There isn’t a right brokerage only the best for the individual. Some people are to concerned about being right, and it’s funny to see that when the topic isn’t a right or wrong.

    DM let the hate mail push you on not slow you down. The more successful you are the more you get.

    How do you view the TIS stock offer. It’s not a dividend cut but they don’t have the cash or borrowing power to cover their plans. Part of me wants to see it like a div cut and drop it. The other part wants me to let it ride and use it as a learning experience.

  148. Maybe I am wrong about this, but I thought that Computershare did not charge any fees to transfer shares out to a brokerage. If it is so expensive to sell through Computershare, why not transfer shares from Computershare to a discount brokerage and then sell them through the discount brokerage?

  149. Pygmycoho1,

    “Some people are to concerned about being right, and it’s funny to see that when the topic isn’t a right or wrong.”

    Right. I think that’s what it comes down to a lot of times. I try to really not debate with people. And not necessarily because I don’t like debating or don’t find value in it, but really because there’s often no point when it comes to financial topics. Personal finance is “personal” for a reason – there’s often no right or wrong with many subjects. And I get particularly bothered by the “I’m right and you’re wrong” arguments when they cross the line into disrespectful and forceful.

    TIS is interesting. I wouldn’t (and don’t) view the stock offering like a dividend cut. They’re not issuing equity to pay the dividend, but doing so to finance an expansion. The South Carolina plant will also require some borrowing. In my view, TIS has transformed over the last few years. They seemed before to be content with being a small player in the Midwest that paid out most of its profit in the form of a dividend. They’re now aggressively growing. So it’s just a different company now, in my view. That said, the dividend is becoming increasingly unsustainable while they build out. So I wouldn’t surprised to see something happen there. It’s not the stock I originally bought, but I am also still pretty excited about their prospects. Growth-wise, I think there’s more to like now than before. Dividend-wise, probably not.

    Thanks for dropping by!

    Best regards.

  150. Jim,

    I’ve never looked into that, but that would be the way to go if you’re interested in selling. I think Computershare is best for small purchases and then setting up a DRIP for long-term investors. But if you’re looking to sell and they allow free transfers out, then that would probably be the cheapest way to go. 🙂

    Cheers!

  151. Hi Jason

    Welcome to TradeKing — I started with Zecco, which then merged with TradeKing, so I’ve been a user for many years. Great platform.

    Like you, I believe in diversification also of brokerage accounts. I have accounts at FolioInvesting, Scottrade, TradeKing and Interactive Brokers. I like each of them for different reasons.

    I want to alert you to another, relatively new brokerage — ZacksTrade. You’re probably familiar with Zacks. As a ZackTrade customer, you get a free subscription to Zacks Premium from Zacks Investment Research (valued at $249 per year) with your ZacksTrade account.

    I’m not a customer of ZacksTrade, so I can’t recommend the brokerage as such. But I’m a very familiar and rely on Zacks Investment Research for my stock analysis.

    Cheers
    FerdiS

  152. FerdiS,

    Glad you’re enjoying TK thus far. I really like the platform from what I’ve seen, so I’m pretty happy. And $4.95 is pretty cheap for my needs.

    I haven’t heard of ZacksTrade. That’s pretty interesting. I’ll take a good look at it when it’s time to open a new account a couple years from now. I’m leaning toward a more premium service like Fidelity, but perhaps ZacksTrade will be even more robust by then.

    Thanks for stopping by and sharing. Glad to be a fellow client!

    Best regards.

  153. I have been with TradeKing since the Zecco merger/buyout. I have been happy with them, no major issues. I have an auto deposit made every week on Thursday and when I hit my desired trade amount I purchase a stock. I have never had any problems purchasing a stock on the same day as the auto deposit.

    I also have ShareBuilder through Costco, it only cost $1 for the batch trading every Tuesday. I don’t know if that is because I am an executive member or it is grandfathered in from when I opened my account (before it was bought out by Capital One). I have been happy with them also. I am not concerned about the batch trading because I am buying a quality company that I just want to own and the with dollar average buying, I am buying when it is low and maybe buying when it is high, it will average out over time. Just like dividend reinvesting.

    I started up with Loyal3 a couple of years ago, I have at least two full years in, if not a little more. It has been nice too. With no buying or selling fees I can purchase as little as $10 worth of stock at a time. I currently have enough invested where I am generating at least $10 a month in dividends that I use to purchase more stock in the ones that I have the lowest gain in. Basically auto purchasing my lowest gainers. Snowball effect for sure! I was even able to buy some popular stocks with fun money that don’t pay a dividend (googl and brk.b) plus get in on an IPO for Store Capital a reit (stor), that I now get a dividend for and some nice capital appreciation, if I were to ever sell it. Too bad I didn’t get in on the GoPro IPO.

    I am even looking at Motif because I can easily come up with 30 companies that I want to invest in, on a regular basis. Heck even taking 30 of the DG50 that Mike Nadel is using over on Seeking Alpha would be a good 30 stock portfolio to own averaging in at $250 intervals.

    All this goes to show is that there are quite a few decent brokerages that anyone can find what they want and be happy. And if any of it looks like a tax nightmare, it isn’t. I was able to download everything into TurboTax with ease.

    Oops forgot to mention that we have Vanguard for our Roth IRA’s, Fidelity for wife’s 401k and T.Rowe Price for mine. We’re all over the place!

  154. ed69,

    I like the way you do it over there. Some shun multiple accounts out of some kind of preconceived notion that it’s one big headache, but I agree with you in that it’s not like that at all. Just another form to import into TurboTax, which takes about 30 seconds. 🙂

    Glad you’re enjoying some of the batch buys over there. I personally prefer sticking to a few stocks that I might find particularly attractive at any given time and then kind of being opportunistic there. But averaging your way into high-quality stocks over time is a great way to do it. I look at my strategy as dollar cost averaging into the stock market, but being a bit more selective in terms of which stocks I’m buying at any particular time based on quality, valuation, and overall portfolio construction.

    Thanks for stopping by and sharing!

    Best regards.

  155. Interesting. I’ve never really considered diversifying brokerage accounts because you own shares of the companies in which you invest, not the brokerage. Thus, even if the brokerage goes bankrupt, you still have all of your shares.

    But I guess you’re right. The brokerage could be defrauding you a la Bernie Madoff. Plus, a bankruptcy could just create a huge administrative head ache.

  156. Professor,

    Yeah, I can’t see how a bankruptcy would cause you any issues with lost assets. Shares are probably in street name, but those would likely be transferred over to a new account. But, like I mentioned, it really just comes down to the hassle factor. Maybe not having access to any of your assets/income for a few weeks or so is no big deal. But it would still be a headache.

    However, I think the bigger risk really stretches beyond that. Though I think the odds are quite low that someone with a traditional brokerage account would have any issues with lost money, I’d prefer to be safe rather than sorry. The hacking scandals are something else to consider, and I’m actually in the process of finding out from TK what guarantees they have for that kind of thing. Though, many of those “hacks” seem to involve compromised emails and an advisor. Again, low odds. But easy to mitigate.

    Cheers!

  157. Thanks for the reply, and congratulations on your marriage! You mentioned that I was basically averaging my way in to a fund, which touched upon a bit of a conundrum that I am in. “Time in the market beats timing of the market” vs “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” Background: I (unfortunately) have received an inheritance which leaves me with a decision to make: should I DCA or wait for a good company to go on sale while the cash is stagnate? I could buy a mutual fund, but then I would get stuck w/ the overhead. Since I intend to invest in quality div stocks, I would gradually sell out of the fund and buy div stocks- but then I would get stuck w/ a number of transaction costs (buying the fund, selling it, buying the stock, etc). So buying a bunch of quality dividend stocks at once (granted maybe not at the perfect time) for a really low charge and then monitoring them as part of my buy-and-hold strategy seems like a good deal. Anyway, that is what I was thinking.

  158. Stay in cash. Then when the market craters you’ll have flexibility to buy things on the cheap. In meantime u can buy a few things that you like. My 2 cents.

  159. Pete,

    Dollar cost averaging is just a way to spread your risk out. You’re trying to avoid investing a lump sum at the wrong time. However, it’s really impossible to time such things, so you could go either way with it. I personally wouldn’t feel comfortable investing, say, $100k all at once right now. I just couldn’t find enough opportunities with it, unless I wanted to concentrate the investments.

    Keep in mind, however, that dollar cost averaging isn’t an excuse to buy overvalued stocks. Buying a $100 stock in five separate transactions (and averaging out that $100) when it’s only worth $80 is the same as buying it all at once for $100.

    If you think you can find a handful of stocks that meet your criteria – including valuation – then I say go for it. I was just saying that, if challenged, I doubt I could come up with 30 stocks all at once that I found attractively valued right now. Thus, I don’t really find a lot of value in Motif. And I still find it gimmicky because the additional transactions are $4.95 down the road. But if you’re looking to go after 30 stocks all at once with a bunch of cash, then it’d be cheaper to do it at $9.95 than most or all of your other options out there. Just really depends on what you’re after.

    Hope that helps!

    Best wishes.

  160. Consider using a firm like Vanguard which offers free trades in and out of their ETFs while you wait for good value stocks to show up on the market. Costs of Vanguard stock trades are $7.

    Their ETFs have no load, and the lowest expense ratio in the industry.

  161. Thanks for the input. Ironically, the best case scenario would be a non-catastrophic downturn in the stock market. I don’t usually wish for bad news, but, as you said, it is difficult to find value now-a-days!

  162. Pat, thanks, I will look in to those options. I do like their no-load, low expense ratios.

  163. jesus talk about these individuals pressing hard for their IB advertisement clogging up your thread and completely missing the entire point of the article.

  164. FreeThinker,

    Well, I think it’s great that some people really enjoy IB. However, it’s important to remember that works for one person might not work for another. Really depends on what you’re after and what you’re interested in. The margin and options benefits won’t help me at all.

    In addition, those trying to point out what might save someone a buck or two are missing the forest for the trees, in my opinion. If $1 or $5 over the course of many months or a year is what’s going to make or break you, you’re doing it wrong. I think it’s far more important to be saving and investing in the first place, and making sure you’re comfortable with whatever service you’re using. Besides, those buying and holding stocks for long periods of time and avoiding excess trading won’t be spending much, no matter what brokerage they use. Good long-term habits are far more important than comparing $5 to $7.

    Cheers!

  165. ed69-
    when/if you set up your motif account, let me know what the name is. I’d be interested to see if there is any overlap.

  166. Jason,

    I’m a little late on the conversation here. But whats your opinion on Computershare?

    Guy

  167. Guy,

    I think Computershare is a pretty solid option if you stick to the fee-free stocks. They can be costly to sell, but you’d just have to transfer out your assets at that point. And I think anyone using Computershare knows what they’re getting. They’re getting an opportunity to buy small lots of stock and reinvest dividends (DRIP) along the way, building out positions for decades on end. So it’s not for someone interested in trading often. But if you have limited capital, don’t mind limited options (it’s not a full-service brokerage) it’s a great way to go. I like having access to a full brokerage and my capital isn’t particularly limited. In addition, I don’t like the idea of a DRIP. So I go the way I go. But Computershare is absolutely a solid idea for the right investor.

    Cheers!

  168. Can you elaborate on this Velociraptor?

    “IB also has the best deal on margin rates (I hold no emergency fund and prefer to borrow from my brokerage at 1.64%/yr if the a/c fails [I get 1.5% cash back on my credit card so with payback periods less than a year, I actually get paid to borrow from them]). ”

    Do you have cash back credit card that pulls funds directly from your margin? I’m familiar with Manufactured Spend techniques, just confused as to how you are tying it to that 1.64% credit line.

  169. Hi Pete,

    I had actually set up my Motif account previous to posting here. I used one of those banner ads to get $150 cash back after I performed x amount of trades. You have to deposit $2k in the account to open and then if you do 6 trades within 30 days I believe, you get $150 cash back. The trades are a minimum of $250 so I figured I would do at least 6 trades ($60 in fees) with the opening deposit of $2k and get $150 back. A net profit of $90 once you take out the trading fees.

    The motifs I developed were:

    “Only REIT’s” by RR as the title suggests, the motif only had REITs in it.

    “Dividend Growth Investing plus” by RR This is mostly dividend growth companies that have been mentioned in the DG50 articles at Seeking Alpha. Plus I added the credit card companies (V, MC, AMEX, and DFS. Those dudes are just printing money and I wanted in.

    Last one is “Dividend Money Tree” by RR. This is a gimmicky one where I set it up to basically get paid twice every month with a dividend.

    There is some overlap, but heck O is a good company 😉

    When I have new money in the account (at least $250) I purchase the motif with the smallest gain. Hopefully buying on the lows……

    One thing I learned the hard way, the re- balance feature isn’t where you can change the weighting of your stocks in the motif for the next buy, it actually re-balances the motif to your current setting. I was under the impression that I could change the weighting of the motif and buy again with my next purchase. That is not the case, but it would be a good feature.

    My average dividend yield is 3.8%

  170. Great discussion and comments. I thought I would mention, and I’m surprised no one mentioned it, but TD Ameritrade has FREE commissions on over 100 ETFs, including a bunch of Vanguard funds/ETFs. While that may not be best for picking your high yielding individual stocks, it’s quite nice for dollar cost averaging on ETFs such as the popular VTI. You could buy a share every hour of the month and not pay a single cent in commissions. Someone also commented about being able to call TD and ask for commission reductions and I second that. Previously, before being acquired by TDA, I was with Thinkorswim. They were awesome with giving reductions. They were able to nearly match IB’s $1.00 minimum and $0.005/sh for stocks, and they also gave me great rates on option commissions. YMMV.

    It is also important to note that, “Additionally, TD Ameritrade provides each client $149.5 million worth of protection for securities and $2 million of protection for cash through supplemental coverage provided by London insurers.” Note that it’s $149.5M per client. I think that should cover most of us. Lastly, they also guarantee against losses (cash or securities) due to fraudulent activity. See: http://www.tdainstitutional.com/account-protection

  171. Escape,

    That’s fantastic. If buying ETFs is your thing, TD Ameritrade definitely has some pretty solid options there with over 100 fee-free options. I’d have to look into their ability to reduce the commission on stocks. The $9.95 is a bit of a barrier, but it’s not the end of the world. That said, I’d certainly prefer $7 or $8.

    I’m surprised they have such high insurance there. I’m guessing very few clients would need anything close to that, but it’s wonderful to have the option. I called Scottrade a while ago and they advised me their insurance was in aggregate, meaning each account actually has relatively little additional coverage over and above what SIPC allows. However, I still think that won’t really be a major problem for most people. Nonetheless, it seems to make sense to me to diversify your accounts, especially if you ever plan to have substantial assets.

    Thanks for sharing that! 🙂

    Best wishes.

  172. Jason ,

    Never got to thank you for the timely response. That is something that really sets you apart . As a regular reader of your site, I appreciate it. So I may have missed it in the article, but did you get the $200 promotion with tradeking? Was there a catch?

    Guy

  173. Guy,

    It’s funny, but I didn’t. I looked for promotions and couldn’t find anything. So I just signed up. I probably could have used my blog and stuff to contact the affiliate department and land something, but I didn’t. I just signed up like anyone else. I found out about the $200 promotion only after using the platform for a while and deciding that I’d actually feel comfortable recommending it. But it’s quite possible that they weren’t running the promotion at the time. And I think there’s some conditions somewhere about using my own links for the $200 and what not.

    I do know the $200 is a very temporary thing. They extended it out to the end of May, but I believe it’s going to end after that. So I may have timed the opening of my account poorly.

    Cheers!

  174. You should check out Merrill lynch. You get free trades on line if you have 50,000 relationship by joking the Preferred Rewards program

  175. Augie,

    Thanks for the suggestion!

    I may join them next. We’ll see. My only issue with that loyalty program is that I’ll probably be looking to diversify out of the account right around the time it hits $50k and I land the free trades. I wouldn’t mind at all having my portfolio spread out across five or so brokerage accounts.

    Cheers!

  176. After reading many glowing reviews, blog recommendations, and reputable magazine articles touting TradeKing’s greatness, I was very disappointed in my experience in attempting to open an account. I have experience with mutual funds and other brokerages, such as the former thinkorswim and TDAmeritrade. TradeKing fell short in their website quality and customer service. Right from the beginning, their website froze multiple times during the registration process. (Around this same time I accessed other sites without a problem, so I doubt it was a problem with my computer or browser. In other words, this was not “user error.”) When the registration process was complete, the final screen froze, so I had to close the browser then log in to see if everything was working. This turned out to be an omen after all, since my experience deteriorated from there. After eventually logging in, I was surprised at how slow and buggy the platform was. As for their customer service, it has been hit or miss, mostly professional and timely (but not always), but certainly not helpful. For example, on 7/9/15 they requested additional documentation to verify my residence address. I used their “upload tool” to provide the documents on 7/10/15. There was a message on the website that the documents were uploaded correctly but I did not receive an email confirmation so I had no documentation proving its successful uploading. Since I did not hear anything from them for a few days, I decided to withdraw my funds and close my account. The email I received then informed me that the reason I could not withdraw my funds was because there was an issue with verifying my address and that I needed to upload confirming documents, such as a utility bill. So the customer service rep did not bother to check to see if the documents were there from the week prior and just assumed they were not. I would not be surprised if their “upload tool” was not working and the documents were still missing. Either way, though, the rep should have checked and let me know if the documents were missing, but the rep did not bother and just sent me an essentially generic email. This is the problem with most “customer service” reps who are just trying to reply to you quickly to meet their time frame requirements or quota, but aren’t concerned about actually resolving your issue. There are also some strange requirements to their trading levels, but that is now an issue for those who can actually log on and trade. They brag about their transparency, but it is sometimes challenging to find information on their site. For example, there is no Search bar, so you have to wade through their FAQ pages hoping to find what you are looking for, such as information on trading levels. Overall, a very frustrating experience. Certainly not what I expected from reading many positive reviews and 5-star ratings from magazines and broker-review websites. I certainly hope I am the exception and not the rule.

  177. Mr Seattle,

    Thanks for sharing your experience!

    I’ve been increasingly more disappointed with TradeKing as time has passed. I haven’t experienced the issues you have, but my overall opinion of the company and platform has deteriorated somewhat over time. I think I gave them a fair review – an 8/10 isn’t glowing – but I’d probably lower that to a 7 if I were to do it over.

    I’m probably going to be moving to a new brokerage here pretty soon. Fidelity is at the top of my list. Meanwhile, I’m also back to adding fresh capital to my Scottrade account. I still view Scottrade as the best discount brokerage around, all in all.

    One of my biggest gripes about TradeKing (and something I wasn’t aware of until very recently) is that I don’t see my dividends until the following day. You can call in and get the money that day, but who wants to do that? I see my dividends generally at midnight the day of with Scottrade. Meanwhile, TK takes an entire day to do the same thing. I find that unacceptable. So I’ll be moving on.

    The good news is that this field is crowded and competitive. There are plenty of other high-quality options out there. No sense in working with someone you’re not completely satisfied with. 🙂

    Cheers!

  178. Jason,

    Could you update your affiliate links with a link to Tradeking? I’ve been wanting to open an account but I no longer see your banner. They have a promo going on right now where they credit your account for $1000 worth of trades for the first 60 days.

    I hope you get notification of new comments on your old posts so you can see this 🙂

    Cheers bud!

  179. ash,

    As I noted in the update toward the bottom of the article, I no longer use TradeKing. I found the service there increasingly poor/frustrating and decided to close my account. Because I only recommend what I personally use and find value in, I took down all banners off the site.

    Sorry I couldn’t be of more assistance!

    Cheers.

Leave a Reply