Do you like many other trade US stocks, then you might have noticed that stock trading fees vary a lot with different online brokers. Stock trading has become cheaper and cheaper in this decade but there are still money to be saved by spending a bit of time choosing the best online stock brokers. But how do you do this? We have made it very easy for you with our online comparison tool.
But first lets play a bit with the math. Lets put up a few criteria on your trading, and see what fees do to your returns:
Lets say in example number 1 that you have an account size of $50.000.
You trade approximately 10 times pr. quarter – where every trade has a value of $5.000.
You use a normal online broker to trade US stocks and here you pay 0.15 % pr. Trade.
With these criteria you would pay $7.5 Pr. Trade which adds up to $300 In trading fees the first year.
Lets say that you have a trading buddy who has the exact same account size and also trades 10 times pr. quarter with a value of $5.000 he also trades US stocks, but instead he uses a specified online stock broker for US stocks. He only pays 0.05 % In fees pr. Trade. If we do the math that would mean a trade for him would only cost $2.5 in fees, which adds up to $100 in trading fees the first year.
That might not seem like a hugh difference, but over time these fees stacks up and accumulate as your account grows.
If you invest in the stockmarket, and you both earn a 7% return on your investments before fees over the 20 year period, the amounts you would end up with are very different from each other. We have made an illustration of this in the graph at the top. Here in this illustratin we have also added a broker, that is not specified in online trading/investing, and here you pay 0.5% in fees pr. Trade, this is not uncommon with some brokers/banks that are not specialising in online investing.
The actual differences over the 20 year period:
Example nr. 1 who pays 0.15% in fees, ends up with: $162.492 in his account.
Example nr. 2 who pays 0.05% in fees, ends up with $174.503 in his account.
Example nr. 3 who pays 0.5% in fees, ends up with only $126.343 in his account.
This is worth the small effort you have to do! So go in now and compare the best online stock brokers – Browkers.com