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I will like to know the average cost of trading services for a portfolio of my size. Currently I am using Folio Financial and they have provided great service. However every year I end up paying about 1.5% of my balance to keep my portfolio there. I have no real startegy, but it has been working providing positive results every year.

It is time for renewal and I wish to look at other services to see if they will provide something better. This is how Folio Financial works:

  • Unlimited "Window Trades" — commission-free trades at either of two specific times per day.
  • Market trades for $3 per stock
  • Cost is $290 / year or $29 / month

One thing that I am interested in having but this company doesn't provide is access to the bond market.

Is 1.5% cost too much? What else could provide the same service for less cost?

Update:

My investment style for the most part is buy and hold. I am still learning on investment tactics, since I know I am not following the right approach. Joe's comment below is quite true. I am making in average about 8-10% returns every year, so if I am able to make the same return with an ETF - then why I am spending the extra time and money selecting stocks for my portfolios.

Even if I stick with Folio FN, and I choose ETF fund instead of individual stocks, then I can drop the unlimited plan and just pay for the ETF purchases every month. If I select 2 ETFs funds, and I put money into each every month, then the cost will be around $8 per month or $96 per year, really saving me about $200 a year.

Also this gives me the ability to also put money into the stocks that I really really like.

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1.5% is high if you are a buy and hold. A $10 commission on a $5000 purchase is .2%. But if you are trading often, it's not tough to hit 1.5% or much higher. When you say "end up paying" what exactly does the $290 cover? And how many trades did you make? When you say "I have no real strategy" you frighten me. Just saying. – JoeTaxpayer Jan 27 '12 at 16:09
$290 covers unlimited window trades. I have about 80 securities in my portfolio, and I invest a little every month. I have no real strategy from the standpoint I am just diversified to avoid risk. However I am trying to adopt other priorities, but that is becoming challenging with their cost structure. Seeing it from your standpoint, I am paying a lot more than .2%, but I am also able to do all transactions that I want. Is that worth it? I need to analyse that. Thanks Joe – Geo Jan 27 '12 at 18:07
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The last I looked at Folio they provide a unique service, the ability to effectively create your own ETF. I dare say that on the right sized account, say $500K, this approach may be more cost effective than the similar EFT you duplicate. It reads to me as though your account is $20K or so. If that's the case, it's amazing that you can have 80 stocks that you've chosen. If this enables you to beat the performance you'd see with individual purchases, you're doing fine. – JoeTaxpayer Jan 27 '12 at 18:51

1 Answer

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It sounds for the most part you are a 'buy and hold' type investor and continue to contribute monthly. I follow the same philosophy and continue to contribute monthly as well. I use Questrade.com as my online broker.

For trading it costs a penny per share with a minimum cost of $4.95 (so if you only buy 100 shares you will still pay $4.95) up to a maximum of $9.95 per trade (so if you buy 10,000 shares you only pay $9.95.

Three trades at $4.95 per month across the year would be $178.20. This is assuming you are trading less then 495 share each trade. So switching to Questrade would save you an additional $111.80 per year! Multiply over number of year before you retire plus compound interest which could accrue and that can quite a bit of extra savings.

You pay nothing else to Questrade either. No management fees, etc. You manage the accounts.

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Questrade doesn't allow U.S. citizens to have accounts per their FAQ. That doesn't mean your answer isn't good, though! The question doesn't specify any country. Also, something like Questrade, even if it isn't them per se, is a good example of what to look for in an online broker. – Feral Oink Jan 28 '12 at 12:08

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