Get a Discount on Your Investments

by Kristina on May 5, 2011 · 1 comment

Some of us invest in Real Estate and some of invest in Mutual Funds.  However, some of us DINKS love to buy individual Stocks of small companies and big corporations.  If you like to research, trade, buy and sell your own investments then it is a smart financial idea to open a Discount Brokerage Account.

Most financial institutions and investment firms offer a Discount Brokerage Service for self serve investors. A Discount Broker Account is a cost efficient way to buy currencies, precious metals, stocks, and bonds for investors who prefer to place their own trades by internet or by telephone.

Discount Brokerage Accounts allow us to purchase bonds directly on the market, as well as exchange our money directly into foreign currencies as well as purchase shares of stock in a company.  One thing that we should never buy in our Discount Broker Account is Mutual Funds.

It is not a good idea to buy Mutual Funds in a Discount Brokerage Account because of the additional transaction costs associated with Discount Brokers.  Financial Institutions offer Mutual Funds with No Loads.  This means they do not charge a Front End Load when we purchase our Mutual Funds, or a Back End Load when we sell our Mutual Funds.  Both Front End and Back End Loads are usually 2% of the total amount of our transaction.  Sometimes Back End Loads, also known as Trailer Fees, can be a progressive percentage that decreases over time with no Back End Load being charged if we hold our Mutual Funds for 7 years.

New Investors and Knowledgeable Investors usually choose to invest in Discount Broker Accounts because the transaction fees are lower than Full Service Broker Accounts. When we invest in a Full Service Broker Account our Investment Broker trades on our behalf and actively manages our money.  Investment Brokers are paid by their clients, and therefore they charge each client 1% to 4% of their total investment portfolio in annual account fees.

We have to be aware of trading fees and annual fees associated with Discount Broker Accounts. Discount Brokerage Services are less expensive than Full Service Brokerage Services, but there are still fees involved.  We may have an annual fee in our Discount Broker Account if our total investment holdings are less than a certain amount, usually $25,000.  Each transaction in our Discount Broker Account can cost $19.99 to $24.99.  The great thing about Discount Brokerage Account is the more we trade, the more we save.  For active traders transaction fees can be as low as $6.99.

If you like to buy stocks and you don’t need the advice of an investment professional then get a discount on your investments and open a Discount Brokerage Account.


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