Well, you are most likely charged a brokerage fee each and every time that you purchase stock, right? These fees may range from $7.95 to $19.95 in some instances, depending on which brokerage firm that you use. These fees hurt your ability to grow your dividend stock portfolio into a money making income machine. You not only take a financial hit when you are charged a brokerage fee but you also lose money on the interest that could be compounded on that $7.95 to $19.95. Here is a quick analysis to show you what I'm talking about:
Let's say you purchase stock each week, once a week. That's $7.95 per week.
$7.95 x 52 weeks in a year = $413.40 x 30 years (i.e. 2012 to 2032, typical working career) = $12,402.00 in fees!
If you had invested those funds (aka fees) into Johnson & Johnson (stock ticker JNJ), with an average of 3.48% dividend yield you would have all of those fees, $12,402.00, in your Roth IRA stock portfolio and also all of those dividends paid based off of that $12,402.00 reinvested!**
**Current principal of $7.95, annual addition $413.40, years to grow: 30, interest rate 3.48%, compound interest: 1 time annually at the start of the compounding period).
Additionally, these figures do not even include whether JNJ increases in value or not. Just think of all the money left on the table in fees, fees, fees!
**Current principal of $7.95, annual addition $413.40, years to grow: 30, interest rate 3.48%, compound interest: 1 time annually at the start of the compounding period).
Additionally, these figures do not even include whether JNJ increases in value or not. Just think of all the money left on the table in fees, fees, fees!
That being said, here are four ways that I try to avoid brokerage fees, or greatly reduce my exposure to those pesky FEES!
1) Sharebuilder by ING. I am not being paid to talk about this company. They are just fantastic. They offer a $4.00 weekly, bi-weekly, monthly, yearly Automatic investment plan. Each investment occurs every Tuesday and hey $4.00 is better than $7.95!
Click HERE to learn more.
2) DRIP - Dividend Reinvestment - A DRIP is an excellent way to increase the value of your investment. Most DRIPs allow you to buy shares commission free and at a significant discount to the current share price. Great video from YouTube below.
3) Charles Schwab ETFs - I am not being paid to talk about this company. They are just fantastic too! Schwab offers $0.00 online trade commissions through their Schwab Accounts.
Click HERE to learn more and hear about ETFs from the man himself below!
4) Direct Stock Purchase Plans - Click on the links below and read up on how to buy stock FEE FREE! You probably won't hear about these plans from your stock broker! Enjoy!
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