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.

(Click to continue reading…)

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.

(Click to continue reading…)

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.

(Click to continue reading…)

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).

(Click to continue reading…)

Another year, another Smart Money broker survey! We’ve been reviewing SmartMoney’s best broker series for several years now (here’s 2008) and it’s always valuable to see how the different brokers fare from year to year. In the 2009 broker survey, we didn’t see too much change compared to 2008.

Unlike last year, which featured a merging of the discount and full service broker lists (in which TradeKing lost a #1 ranking they enjoyed for several years), they didn’t make any big changes to the way they analyzed the brokers. (here’s the list if you want to take a peek)

(Click to continue reading…)

On The Money, the personal finance show on CNBC hosted by Carmen Wong Ulrich, recently had a little web extra spotlighting Consumer Report’s list of best brokers. In their brief piece, they talked about the top three: USAA Brokerage Services, Vanguard, and Edward Jones.

(Click to continue reading…)

One of the most frequent questions I get is “Where should I open an IRA?”

Short answer: Anywhere, just open one! If you want mutual funds, open an account with the company that offers the funds you want, like Vanguard, Fidelity, etc; because they will let you buy and sell the funds for free. If you want stocks, open an account with a company that offers the lowest fees.

(Click to continue reading…)

Zecco just sent out a message to their account holders – Starting March 1st, to qualify for 10 free stock trades per month, you need to have an account balance of $25,000 or more. This is a ten-fold increase from their prior requirement of $2,500, which was itself an infinite increase from their initial offer of unlimited free trades. Another way to get ten free stock trades is to have 25 or more total trades a month, which cost $4.50 a trade.

When your balance gets above $25,000, you immediately get ten free trades you can use until the end of the month. Should your balance fall under $25,000, then you still retain your ten free trades until the rest of the month. With the 25 trades qualification, once you make 25 trades, you get ten free until the end of the month. That next month, you get ten free trades to start and need only 15 more to retain the ten free trade status for the following month.

Zero Cost Commissions, the meaning being Zecco, is slowly losing its meaning. It used to to be unlimited free trades. Then it was lowered to ten free trades if you had a $2,500 balance. Now it’s ten free trades if you have a $25,000 balance or if you make 25 trades ($112.50 in commissions). If all things were equal, I’d say that Zecco gave a pretty good offer, but things aren’t equal. Zecco has consistently been rated as worst in customer service! Smart Money’s 2008 Best Discount Broker survey rated Zecco 14th out of 16 and there are a slew of negative comments about Zecco’s customer service. This is amazing considering TradeKing, rated amongst the best discount brokers, has had stellar reviews and they charge only 45 cents more per trade, only $4.95 a trade.

(Click to continue reading…)

One of the things I’ve learned during this credit crisis is that despite all the stock market losses, despite all the foreclosures, and despite all the doom and gloom… someone had to have benefited from the carnage that has been the last year. In listening to one of the most well know This American Life stories, The Giant Pool of Money, and how these mortgage lenders were making bank ($75k a month!) doing liar loans, I knew I could find a few more winners in the ugliness that was (and still is).

So who won?

CEOs & Investment Firm Bonuses

Everyone who got a bonus in the housing boom did so on what essentially were lax rules. The rules were changed so home values could be inflated, people got rich off bonuses for financial wizardry, and those that pulled out of the system are the real winners. Morgan Stanley, now dead, gave CEO John Mack $40M in stock and options for 2006, the largest bonus awarded to a Wall Street CEO. Not to be outdone, Lehman Brothers, also now dead, gave its CEO, Richard Fuld, a $41M bonus in shares and a $18.8B bonus pool for the entire staff. While many of them don’t have jobs anymore, how many million do you really need before you retire?

In all fairness, there was a measure of clawbacking going on – such as WaMu cutting their CEO’s 2007 pay package by 66% to around $5.25M (oh the horror!) amidst rumors of its own demise.

Small Indiscriminant Mortgage Lenders

Let’s say you know a guy down the street who absolutely loves apples. He’ll pay you fifty cents for any apple you have regardless of the condition. He’ll pay you fifty cents for an apple other people would only pay you a quarter. You also know this other guy who will sell you all the rotten apples from his orchard for a nickel a piece. What are you going to do? You’re going to get as many garbage nickel apples as you can so you can sell it to the sucker willing to pay fifty cents.

Freddie Mac and Fannie Mae were those suckers and companies like Golden West Financial Corp. were those sellers. In fact, Golden West Financial Corp. did so well, Wachovia acquired them for $25.5 billion (you know someone made out on that deal)… then collapsed this year under mounting mortgage losses. Wachovia is now owned by Wells Fargo. (Check out this This American Life story about the housing crisis, it’s an hour long audio but well worth listening)

Net Home Sellers

Anyone who sold a home during the boom and didn’t buy a new one was a winner. Home prices were ridiculous, everyone knew we were in a bubble, and some people cashed out either because of prudence or life changes. Retirees were downsizing, trading in a single family home for a smaller, more manageable condo or apartment. People moved. Whatever the reason, if you sold your house in the boom and didn’t get yourself into a new one, you were a winner and kudos to you. You won’t find anyone bitter and upset over your good fortune.

Stock Brokers

Brokers make money when the stock market is up, when the stock market is down, and when the stock market is sideways. In fact, the more people talk about the stock market, the more brokers make. Brokers love activity, whether it’s stories about the market breaking 13,000 or the market breaking 8,000 – brokers win when people trade. The biggest winners are probably the discount brokers catering to the cost conscious individual investor like Zecco, TradeKing, and E*Trade. They’re the house, they win when there’s action.

President-Elect Barack Obama & Democrats

Barack Obama probably would’ve won the 2008 Presidential election even if the credit crisis hadn’t reared its viciously ugly head, though it was certainly very poor timing. President Bush’s approval rating was abysmal, political sentiment had already swung towards the Democrats after the mid-term elections, but the margins were probably helped by the timing of the collapse. John McCain stating that the “fundamentals of our economy are strong” didn’t hurt the Democrat’s chances either.

There are certainly other winners but those were the first five that came to mind.

(Photo: Barack Obama by bethcanphoto)