I'd like to start making more investments throughout the year to maximize earning potential with the goal of long-term financial growth. I've gone through the process of setting up a portfolio on TD Ameritrade, but now I'm running into some concerns.

Each transaction on Ameritrade costs $9.99. If my portfolio consists of 10 funds and I wanted to invest $1,000 each month into my funds, I'll be hit with $99.90 worth of fees every single month, which is almost a 10% loss, per month, before that money even hits the market. That's ridiculous given any return I can expect.

I think my problem is that I'm treating it more like a 401k plan in that I make monthly contributions to any number of funds and the fees are annual, regardless of the number of transaction I perform throughout the year (at least this is how it works for my 401k plan, but I'm not sure if this is an industry standard).

My reason for going with stock trading over a brokerage account is because I wanted to limit the fees I give to the broker. The broker I spoke with, for example, wanted 3% of annual earnings each year, but that's obviously lower than the guaranteed ~10% loss by going with the plan I mentioned above. The other thing I considered was queuing up the transactions and doing them all in bulk every 6-12 months. The problem with this approach is I'll be missing out on earning potentials throughout the year.

At present, I'm very strongly reconsidering the brokerage account, but I wanted to seek advice before I make any moves. I should mention I'm not necessarily interested in day trading (I plan on growing my current portfolio for 10-15 years before slowly starting to lean into lower-risk investments). Any suggestions on this are greatly appreciated.

  • 2
    Have you considered no-transaction fee funds instead of those that would charge a fee?
    – JB King
    Commented Dec 29, 2013 at 23:34
  • @JBKing, I have not...I didn't realize those existed! Please excuse my potentially stupid question, but where would I find those?
    – senfo
    Commented Dec 29, 2013 at 23:48
  • 3% of annual earnings? What if you have a loss? I think this offer, as phrased, is illegal for a regular brokerage account. Many brokers offer ETFs with no fee, and access to mutual funds. Why do you need 10 different funds? There's a point where I've seen so many funds that you might as well have a single index, such as the S&P 500, and call it quits. (or Vanguard Total Stock Market ETF for .05% expense) Commented Dec 30, 2013 at 1:30
  • @senfo every broker has a list of funds they don't charge fees for, they differ from one broker to another. Check with TD Ameritrade for their list. Usually it requires for a certain (1-3 months) holding period.
    – littleadv
    Commented Dec 30, 2013 at 5:49
  • @JoeTaxpayer yes, 3% of annual investment earnings. If the funds don't make any money, the broker doesn't get paid anything. It's essentially incentive for him to work for my benefit (the more I make, the more he makes).
    – senfo
    Commented Dec 30, 2013 at 19:58

1 Answer 1


First off, I think you are on the right path not paying 3% to a broker; that sort of fee reduces the money you earn significantly in the long term.

For your fund investing approach, 10 funds seems like a lot; one of the point of funds is that they are diversified, so I would expect that the 10th fund would give relatively little diversification over the other 9. I would think about targeting only 5 funds.

To invest in the funds, rather than trying to invest in all funds every month, put all of the money into a single fund, and rotate the fund month to month. That reduces your transaction costs significantly.


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