When I learned about E*Trade selling their banking business to Discover, I knew my days with them were numbered (I later learned that only bank accounts with no brokerage relationships were moving… but alas the ball was already rolling). Brokers are finding it increasingly difficult to differentiate themselves and when you can get good customer service at a cheaper cost elsewhere, even the pioneers are going to find their businesses suffering. Those who have been reading for a while may remember me mentioning my investments at E*Trade and how I’ve been doing any new investing with TradeKing. My original approach was to leave my assets at E*Trade until I sell them, but a recent offer changed my mind.

TradeKing has a promotion where they will reimburse new accounts, defined as opened in the last thirty days, up to $150 in transfer fees. My account is far older than that but I asked a CSR if they’d be willing to extend that offer to me and they agreed! (had they not agreed, I wouldn’t have transferred…) E*Trade has a $60 full account transfer fee, much less than the $150 reimbursement limit, that is paid using account assets. I’m not sure what would happen if I had $0 cash, but the simple solution was to transfer $60 into the account prior to initiating the transfer. If you plan on doing this, be sure you have the amount of the fee in cash or you might not like what the brokerage does on your behalf!

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Charles Schwab announced today that they would be charging a flat $8.95 per online equity trade regardless of the customer’s account size or the number of shares traded, down from $12.95. Schwab has been marketing itself as the broker of the average Joe, with their “Talk to Chuck” marketing, and moving to $8.95 a trade is certainly going in the right direction.

I’ve always thought of Schwab as a full-service broker along the lines of a TD Ameritrade, who charges $9.95 a stock trade, and less of a discount broker, like TradeKing ($4.95) or E*Trade ($12.99). As the lines between services that discount and “full-service” offer gets blurred, the only differences will come down to the commissions. Right?

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Before investing in the stock market was opened to the masses with brokers offering cheap stock trades, Sharebuilder was the only one with a commission in the single digits. Four bucks was all it cost to buy a stock, as long as you were willing to schedule your purchase ahead of time (the following Tuesday). Real time trades cost you $9.95, which puts it on par with the more “expensive” discount brokers. Any sale of stock was considered a real time trade so the total round-trip commissions would cost you $13.95.

Since then, there are close to a dozen brokers offering stock trades for less than $10 a trade, buy or sell. The slight competitive advantage Sharebuilder once had was now gone and I’m wondering why anyone would choose Sharebuilder?

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OptionsHouse is offering 100 commission free trades for new accounts with promotion code FREE100. You must deposit at least $3,000 within 45 days and the 100 free trades expire after 60 days of funding. This offer expires December 31st, 2009.

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Bargaineering.com relies on a mixture of advertising and affiliate marketing to generate income. Part of the affiliate marketing piece is that we get paid when someone signs up for accounts, such as a trading account with Zecco.com (not everything, just some things). A lot of personal finance bloggers pay the bills and generate income this way. Until about a month ago, no company has tried to influence my opinion until Zecco.

About a month ago, Zecco’s affiliate manager notified me that I would no longer be compensated for leads sent to Zecco because I had negative reviews about them on Bargaineering.com. I was told that I had to “remove any negative reviews of Zecco and [I] can resume promoting and sending orders.” They phrased it in a way that seemed like I was unfairly picking on them, so I said I’d take a look if they told me which posts they found to be negative.

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TradeMONSTER is a relatively new online discount broker in an industry that hasn’t seen a new entrant in a few years. I believe TradeMonster’s strategy is to offer relatively low pricing (not rock bottom) and a powerful suite of browser-based analysis tools. TradeMonster is owned by optionMonster, a financial media company that publishes market news and commentary on options and stock trading. If you’ve ever watched CNBC then you’ll recognize a bunch of the faces behind optionMonster (Jon ‘DRJ’ Najarian and Guy Adami are on Fast Money).

The aspect of TradeMonster that really jumped out at me is the first thing I’m going to review – paper trading.

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I’m not sure how much it costs to execute a stock trade but it doesn’t appear to be all that much. When I first opened up my first brokerage account, it was with Vanguard. Vanguard has two main types of investor accounts, one where you invest in their family of mutual funds and one where you can invest in stocks, bonds, ETFs, etc. When I opened up my Roth IRA as a teenager, I did it with Vanguard and paid a then staggering $20 a trade. Twenty bucks! Nowadays, you can buy and sell a stock twice with TradeKing and still have twenty cents left over to get some Bazooka Bubble Gum. That’s a cheap stock trade right there.

So what defines cheap? Ultimately it comes down the dollar amount because you’d have a difficult time arguing that $12.99 is cheaper than $4.95. However, I think that just looking at the cost of the stock trade may be a mistake. Certain brokers charge you less but they offer you less in terms of tools, service, or both. Sometimes you have to review all the factors to make your decision.

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When Zecco first appeared on the discount broker scene, everyone celebrated their $0 stock trade commissions. I know it caught my attention, there are very few things that beat free. Even when reports of customer service woes rolled in, I still thought their offer was the best of the bunch. If you are paying $0 per stock trade, you can’t expect them to have an army of customer service reps there to answer your every call. You get what you pay for and you pay nothing.

Then I learned about TradeKing, which charges $4.95 a trade. $4.95 isn’t free but it’s certainly cheaper than E*Trade, where I was paying $9.99 a trade. Not only were the trades cheap, but TradeKing had been winning best customer service awards and best discount broker awards for years. So when Zecco stopped offering no-strings attached free trades, I knew we needed to compare the two straight up to get a better idea of which one was tops.

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Did you know that National Friendship Day was August 3nd? Since 1935, Congress declared the first Sunday in August to be National Friendship Day.

I didn’t, but that’s because my friends never told me! (I just lobbed a softball, someone crush it out of the park already…)

Well, my friends at TradeKing (har har, I think they just like my money) just sent me an email telling me about a promotion where if you refer a friend to TradeKing, both of you get $50.

Here are the important details of the $50 referral promotion:

• It must be a new account opened between July 31st and August 31st,
• The referred friend has to fund their account with at least $1,000 within 30 days,
• The referred friend has to execute at least one trade (trades are $4.95 a piece) within 180 days of opening the account,
• The funds must remain in the account for at least 180 days.

Is this a good deal? If you don’t have a TradeKing account and have been thinking about it, now’s a good time to do it. If you just want the money, trades are $4.95 a piece so you’re talking a round-trip cost of $9.90, plus your trade is at risk in the market, for a promo of $40.10 on a $1,000 six-month deposit (puts the interest APY, if you like to think in those terms, at ~8%+ APY).

Want in? Shoot me an email with this contact form and I’ll send you a referral. (or directly email me at: )

My wife’s Roth IRA currently sits at a TD Ameritrade account, where it’s been sitting for the last three or four years. With the majority of it in cash, mostly because we lost track of the account, we want to invest it in our retirement investment of choice, an index fund. Our index fund of choice happens to be the Vanguard 500 Index Fund because most of our retirement funds are with Vanguard. Vanguard does not have the cheapest index fund, I believe that title now resides with Fidelity’s Spartan 500 index. Paying the extra 0.08% seems reasonable considering we can manage it all in one place.

The only downside about this entire process is that TD Ameritrade has a $75 outbound full account transfer fee. Fortunately Vanguard does not charge you to transfer in an IRA (to my knowledge, no one does).

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