There are two basic methods for paying your
broker: through commissions and
Keep in mind that commissions
and fees are
negotiable within limits set
by the firm.
This means that if you do a lot
with a firm, you have some leeway
for discounts off the standard
and fee schedules.
- Commissions - This traditional method of
payment normally is best if you are a "buy
and hold" type of investor who trades
infrequently. At full-service firms, around
30-40% of the commission becomes compensation
to the broker. Beware, however, that your
broker is incented to encourage you to trade.
- Asset-Based Fees - Both full-service and
discount brokerage firms offer the option
to pay a fee that is a percentage of the
value of assets in the account. With this
fee comes the right to make a certain number
of trades during the course of a year with
no per-trade commissions. There are inevitably
exceptions and exclusions, which you should
be careful to note. If you trade often, this
may be a more economical alternative to pay-as-you-go
commissions. This method also removes any
incentive for a broker to induce you to trade
excessively (commonly called "churning"
|To Learn More (click to visit)
To advertise your web site here,
go to CliqueRouter Ads.
Topic contents © Mark Kolakowski and CliqueFriends,