Wednesday, February 28, 2007

To Zecco Or Not


$0 commision for any (well...almost any) kind of trade sounds pretty good. Specially when all you care about is individual stocks, index funds or ETFs.

So lets analyze before I dive into opening an account and do all my future investing (I use the word "investing" instead of "trading", because that is a core part of my investing belief; more on that later, probably later posts), lets see if we can analyze it:

The Good

Nothing beats not having to spend the $9.99 or the $14.99 every time you identified a good ETF to add to your portfolio. Say I have a $1000 currently saved ready to be invested. I generally buy ETFs and hate to shell out $9.99 on my Ameritrade account and would rather wait till I get my balance up a bit so that I can buy a bunch of these shares at a time. It has happened to me in the past and I have lost out on an opportunity to get in on a big temporary low in the market be it with fewer money because I didn't want to pay the trading fees (again later).

The Bad
A lazy investor should never be tempted to trade. The basic rule is, unless you need to, why ever sell what you have bought? You did all the hard work, you did the research, waited for the right time (a low, a pullback) to buy and now you let your portfolio be that way. When you sell from your diversified portfolio, you are forced to re balance. A lazy investor never sells unless re balancing or needs the money. I believe $0 commission trades sound too tempting and might make me trigger happy.

The Ugly
Do I need one more account? I am already guilty of treating my 401k, my RothIRA and my investment account as totally separate entities which is kind of a kick in the nuts as far as having a "balanced" portfolio goes (I am already working towards changing this). Do I really need one more account to save me around $9.99 every few months?

Adding another investment account would not be as bad though since I can always think of my combined Ameritrade and Zecco accounts as one. Just with two totally different interfaces and all that.....

And So
The odds are in favor of having a Zecco account, so guess I will be opening one later today. I have browsed around the website (in case you are still wondering, it's http://www.zecco.com), and the blogs and forums pages are kinda nice and interesting. That helps!

2 comments:

Unknown said...

Liked your post so much, I excerpted and linked from Zecco home page. I hope that's cool.

RD said...

Cool. Thanks.