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Zecco Minimum Opening Balance Drops To $0
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I just received an email from Zecco that they’ve lowered their minimum balance from $2,500 to $0. I still haven’t opened the account (and provided a review) like I said I would, a bit busy lately with some other projects and haven’t had a chance to dig up the necessary documents, but I still plan on doing it. Those who want to trade on margin, a risky endeavor, will have to have a minimum balance of $2,000.
For comparative purposes, TradeKing requires no minimum balance, ETrade requires a minimum balance of $1k, TD Ameritrade requires a balance of $2k, and Charles Schwab requires a balance of $2.5k.
I’m not yet advocating you open a Zecco account, I haven’t myself, but their offering is getting more and more tempting.
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Nice $0 minimum balance.
I’m just wondering if there are any stocks / funds I can buy for $0.
I’m not surprised. Zecco generates most of its revenue from margin accounts; And the margin trading market is a multi-billion dollar one. It’s similar to America’s addiction to credit cards, so in the long run, Zecco will prevail.
But I still wonder how much it costs the average broker to execute a normal online trade. Considering the advancements in technology, it probably costs pennies per trade. However, margin accounts earn 10%+. Who do you think will win in the long run?
TJP, I don’t know where you get your information. But Zecco does not receive much of the interest it charges on margin accounts. Instead, Zecco’s clearing firm, Penson, is actually extending the margin loan and keep almost all of the interest charged to Zecco’s clients. Zecco collects a approximately 50 basis points. That’s it. And it costs Zecco approximately $2.00 to execute every trade. Penson also collects that $2.00 as their charge to execute the trade on behalf of Zecco. As such, Zecco in my view is NOT a sustainable business. They are literally losing money on every trade. They are a short term play to acquire accounts and then flip those accounts to a larger broker. Their clients will be hurt in the long run. Penson is a public company. Check their 10k, 10qs and prospectuses for more information on how they manager their relationship with correspondent brokers like Zecco.