Commissions are an extremely important part of an investment program today. The commissions I was paid as a stockbroker seem exorbitant today in the world of internet discount brokers. Still a customer today can pay $10 or more per trade. These higher commissions could really do damage to the long term track record.
As a client, I negotiated commissions with brokers far below their published rates, because of my high volume. However, in the recent past, since the MF Global fiasco, I have been diversifying my activity amongst many brokers. I have found that even smaller accounts can get commissions lower than I previously paid. For instance, I now trade 200 shares of SPY ($27,400 amount) for $.14. Yes that’s 14 cents, due to rebate trading, which only a few discount brokers allow. These trades are with Interactive Brokers (they have a full page ad on page A3 of tomorrow’s Investor Daily)(Click here to see the ad). This is not a special negotiated rate. It is available to any $10,000 account. To get the rebate, you need to provide liquidity, which simply means placing orders at the bid or lower or at the ask or higher. Interactive Brokers calls it a Cost Plus Aaccount. I believe Interactive Brokers is the best broker to use for the GoldBondStocks system. Other rebate brokers include Lightspeed Trading and Cobra Trading.
For smaller accounts, a broker that trades ETF’s for free is best. These programs vary and free never lasts forever, so be prepared to transfer your account or slow down your trading. Know the normal commission of the broker before you open these accounts and read the fine print. The current brokers with free ETF’s are TDAmeritrade, Vanguard, Etrade, Schwab, Fidelity, Scottrade, and Firsttrade. I believe Ameritrade is the best for the GoldBondStocks system, although it does not does not include GLD. I substitute VNQ for GLD at Ameritrade. Also, Merrill Edge has an account that provides 30 free trades per month if you maintain $25,000 in a Merrill or Bank of America deposit account.( check the fine print).
At the moment, Merrill and TDAmeritrade have excellent bonuses for funding new IRA accounts. A Maximum of $500 at Merrill and $600 at Ameritrade.(more fine print). Combined with their ETF and free trading benefits, the two are also good for diversification purposes. The size of the firms themselves provides peace of mind when the market crumbles. Just be careful to comply with their rules.
Finally, the decision as to how often you rebalance your account is not mainly based on commissions, but on your own desire to get involved. When I travel, I scale back my trading. It’s one of the major benefits of the GoldBondStocks system that you can walk away for awhile without worry.