It’s Not Free: Why You Need to Take a Closer Look at Commission-Free Trading

If there are no costs for a product you use, then you are no longer the customer. You just became the product.

On October 7th, Charles Schwab started offering commission-free trading. TD Ameritrade nearly fell over themselves to follow suit and match their competitor, but neither brokerage was the first to make this offer to their customers. Vanguard, J.P. Morgan, and Interactive Brokers all beat them to the free trading deal. And while everyone cheers the parade of discount brokerage firms dropping trading costs to $0, I'm wondering whether this is really a victory for retail investors. From a business perspective, removing trade commissions creates a large, splashy headline – but that might be about it. It used to cost hundreds of dollars to buy or sell a security, but discount brokerages have been slowly lowering costs for investors over time. This is not something companies do out of the goodness of their hearts. This is business. Going from charging between $5 and $10 a trade to providing free trades is unlikely to materially impact the earnings of discount brokerages in the long run. Trade commissions are a small percentage of their revenues. But I'm concerned those revenues will be replaced with less transparent costs. Read More: It's Not Free: Why You Need to Take a Closer Look at Commission-Free Trading My thoughts on a hot financial topic... Will the next recession destroy millennials? When you enter the workforce has a huge impact on your lifetime earnings, and Millennials suffered greatly from the last U.S. recession in this respect. But I don't think we can draw too many conclusions from comparing Millennials' wealth to their Baby Boomer parents because inflation played a huge role in the nominal wealth of the Baby Boomer generation. Similarly, debt is cheaper and more easily available for Millennials than previous generations, so it would make sense for them to be more indebted by comparison. READ THE FULL ARTICLE: The Next Recession Will Destroy Millennials Have you ever been stressed about money? 😖 I'm going to guess your answer is YES! In my latest interview, I discuss "Stress & Money" on Thom Underwood's Wellness podcast. If you want strategies for making money less stressful, check it out here. To making money simple, Peter

Sent to: 247translationwork.dailywork@blogger.com

Unsubscribe

Peter Lazaroff, P.O. Box 440113, Saint Louis, MO 63144, United States