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Trying Zecco and Free Online Trades

Posted By Jim On 05/23/2007 @ 8:24 am In Investing | 8 Comments

It’s been a couple months since Zecco [3] 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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