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Trying Zecco and Free Online Trades

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It’s been a couple months since Zecco announced they’d be offering free online trades (you’re limited to 10 a day, 40 a month, then $3.50 a trade thereafter) so that’s been ample time to sniff off if it’s a fraud, which it isn’t, so I’ve decided to sign up, throw some money into an account and start trading. In the next few days I’ll write some reviews about the interface, compare it to the other accounts I have that charge me for trades (Charles Schwab, TD Ameritrade, Vanguard), and basically give you my take on Zecco and what they’re all about.

I think the temptation is to start thinking that because the trades are free, you should start making a lot of trades. Well, you can make a lot of trades if you don’t mind gambling with your money. When it comes to stock trades, the biggest expense isn’t going to be the transaction costs, it’s probably going to be either your own ignorance or taxes. Long term capital gains tax is 15% or 10% depending on your tax bracket, short term capital gains tax is your marginal tax rate, which could be over twice as much as the 15% LT rate; by waiting a year you cut the amount of tax you pay on gains in half, which will make the $8 or whatever transaction cost seem like nothing in comparison.

Anyway, if you’ve thought about trying these guys and were interested in my humble opinion, keep an eye out because it’s on its way.

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8 Responses to “Trying Zecco and Free Online Trades”

  1. Prateek says:

    Are capital gains taxed if you reinvest the money in stocks? Or is every sale subject to them?

  2. John Wilks says:

    Excellent. Could you also post in your upcoming review how long it takes to execute a transaction when you buy and sell. Is it instantaneous, or does it take a while?

    Thank you.

    -Wilks

  3. Zook says:

    I really dont think folks understand the royal pain in the butt it is when you trade often come tax time. I am young and have been buying much more than I have been selling [call it good luck as of late] but every year come tax time, trying to gather up all of my stock sales and getting the numbers right and on and on. And what’s worse is they take a nice chunk of my gains….

  4. Glenn says:

    I opened a Zecco account in March and enjoy the free trades. I am just buying stocks. I am very happy with the execution of my trades with Zecco.

  5. Weekly Roundup – 05/24/07

    It’s been a busy week fraught with tax quandaries and boxes full of bricks. And now… Guess what? School’s out for summer ’round these parts as of today! In other words, we have a couple of ecstatic kids that are just days away f…

  6. As Zook says, come tax time a lot of trades become really annoying. Beyond that there’s the wash rule to worry about. The biggest thing that Jim didn’t mention is that you still pay the spreads between bid and ask prices – on a lot of trades and shares, this can really add up.

  7. Zecco Editor says:

    Good to have you all with Zecco.

    To give you the full experience, you may want to join a select group of myZecco members who are Beta testing our brand new social networking application named ZeccoShare.

    With ZeccoShare you too can be a better informed investor. How? Show your personal profile and investing style. Share your actual portfolio holdings, as well as recent trades. Find and make friends with investors who share your interests, investing style, and real trading behavior. Shout out to other users, or send a private email.

    Would you like to participate and shape future releases? Reply to editor@zecco.com to find out more.


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