4 ms·

If someone with $30,000 in savings makes 30 stock transactions per year at $10 a trade, they’ve lost 1% of their total to fees, $300. If they’re expecting 7% an

by laser 8y ago

If someone with $30,000 in savings makes 30 stock transactions per year at $10 a trade, they’ve lost 1% of their total to fees, $300. If they’re expecting 7% annual returns that ends up reducing earnings by 14% per year. The math for the masses is pretty straightforward.

tehlike 8y ago
Interative brokers charges considerably less https://www.interactivebrokers.com/en/index.php?f=1590&p=stocks1 https://www.interactivebrokers.com/en/index.php?f=1590&p=sto... They also have super cheap margin loan rates.
- ucha 8y ago
  They charge $10 a month if you have less than $100k though.
vonmoltke 8y ago
Someone with only $30,000 total invested should not be making 30 charged transactions a year.
- dmcy22 8y ago
  Out of curiosity, if there are no fees, why not? That lets you theoretically diversifying your risk by investing $1,000 in 30 companies rather than say $5,000 in 6 companies.
  - tripletao 8y ago
    An index fund would be yet more diversified, and that's one trade. Very few individual investors have any reason to believe they can pick stocks in a way that outperforms the market. The zero fees might still be nice if you want e.g. to contribute every paycheck; but an old-fashioned Vanguard mutual fund would be just as good for that, or many brokerages have zero fees for specific classes of ETF. The only advantages that I'd see to Robinhood are (a) no minimums, and (b) pretty UX.
    - dmcy22 8y ago
      That's a fair point. I use Robinhood to diversify my porfolio so it's not just tracking against the market. So far, whether due to luck or skill, or both, it's been working out pretty well. So to put it another way, I don't see Robinhood as a replacement for the traditional brokerages (yet), but as a supplement.
    - peterbraden 8y ago
      A good reason would be dollar cost averaging. If you have a monthly transaction split across 3 index funds, you're over 30 trades per year.

by laser 8y ago

tehlike 8y ago

Interative brokers charges considerably less https://www.interactivebrokers.com/en/index.php?f=1590&p=stocks1 https://www.interactivebrokers.com/en/index.php?f=1590&p=sto... They also have super cheap margin loan rates.

ucha 8y ago
They charge $10 a month if you have less than $100k though.

vonmoltke 8y ago

Someone with only $30,000 total invested should not be making 30 charged transactions a year.

dmcy22 8y ago
Out of curiosity, if there are no fees, why not? That lets you theoretically diversifying your risk by investing $1,000 in 30 companies rather than say $5,000 in 6 companies.
- tripletao 8y ago
  An index fund would be yet more diversified, and that's one trade. Very few individual investors have any reason to believe they can pick stocks in a way that outperforms the market. The zero fees might still be nice if you want e.g. to contribute every paycheck; but an old-fashioned Vanguard mutual fund would be just as good for that, or many brokerages have zero fees for specific classes of ETF. The only advantages that I'd see to Robinhood are (a) no minimums, and (b) pretty UX.
  - dmcy22 8y ago
    That's a fair point. I use Robinhood to diversify my porfolio so it's not just tracking against the market. So far, whether due to luck or skill, or both, it's been working out pretty well. So to put it another way, I don't see Robinhood as a replacement for the traditional brokerages (yet), but as a supplement.
  - peterbraden 8y ago
    A good reason would be dollar cost averaging. If you have a monthly transaction split across 3 index funds, you're over 30 trades per year.