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Investing/Strategies / Retirement Investing
|Subject: Re: Full Serve or Per-trade||Date: 11/17/1998 9:43 AM|
|Author: GeekFoolBoy||Number: 6641 of 76078|
<<For a $20,000 sitting in a Money fund in a plain IRA account. Let's say I'm going to trade it into F4 mix
like: price amt shares
CAT Caterpillar $47.00 $5,000 106.38
GT Goodyear Tire $53.00 $5,000 94.34
GM General Motors $58.94 $5,000 84.83
T AT&T $60.44 $5,000 82.73
with say 4 trades per year. How do full-serve commissions compare (where it sits today) with say, Waterhouse at $12/trade for this kind of activity?>>
Well, it's hard to answer this definitively, but Phil is right, the full service broker is going to cost more - maybe a lot more. I think most full service commissions range from about $45 - $100/trade for this type of activity. Also remember, trading commissions for IRA's must be paid from within the account which can eat away at your returns.
The Fool typically recommends keeping trades below 2% of your portfolio per year (Phil recommended 2.5% - roughly the same), which means for your $20k portfolio, you should keep trading costs below $400/year. So in theory, at 4 trades per year, you could use a full service broker, but why? The FF method is mechanical - you don't need a full service broker's advice or help in executing the trades, why pay for it?
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