Posts Tagged ‘Options’

Schwab Options Commissions – How to Purchase Stocks Without a Broker

Schwab Options Commissions – How to Purchase Stocks Without a Broker

Many traders and investors still buy and sell stocks with the broker as the middleman. However, if your concern is how to purchase stocks without a broker, then you will find the answers below. Schwab Options Commissions

Of course, this presupposes that you have the necessary knowledge, experience and information about the stock market. Add in the willingness to pour in the time and effort to arrive at logical decisions and you will make good profits.

Direct Payment Plan

If you have already identified the company you want to invest in, then the direct payment plan is the most cost effective method. There are many popular companies like Walt Disney that offer this option for interested investors.

Keep in mind that each company will have different policies on the direct payment plan. You will either be permitted to apply online or be required to fill in documents or be asked to invest in a minimum amount. Some companies waive the minimum amount on the condition that your bank account will be automatically debited every month.

Although a broker is not involved in a direct payment plan, your investment will be handled by a transfer agent. You are usually informed of the amount of shares and the time of purchase according to company rules. The transfer agent may or may not charge a fee for his services.

Now you know how to purchase stocks without a broker, but that does not mean that you have escaped the equivalent of the broker’s commissions. If you are an employee of the company, you may be able to own shares of stocks through an Employee Stock Purchase Plan. Usually, small discounts are offered.

Dividend Reinvestment Plan

If you do not have the financial resources to own bundles of shares in the company, you can avail of the dividend reinvestment plan. Basically, you must own at least one share to enroll in the plan. You will then deposit fixed amounts of money to the program in order to buy more shares.

This way, you can purchase fractions of shares each time payment is made. In time, you would have accumulated bundles of shares with your small payment increments and, hence, build up on your wealth. You actually have the benefit of dollar-cost averaging.

Specialized Service

There are also brokerage companies like Charles Schwab and TD Ameritrade that provide for online direct stock investments services. You will be charged fees for most transactions. However, you have the benefit of buying and selling stocks on your own instead of going through the brokers. This way, you save on the hefty commissions.

You can also buy a single share of stock from specialized services like One Share. Said share usually comes in a frame, which makes for a great gift. Beyond its gift-giving aspect, this is one way to enroll in a dividend reinvestment plan. Enrollment takes just a few minutes. After that, you can start building on your investment portfolio without the hefty broker’s commissions taking away huge chucks of your profit.

New animated Charles Schwab commercial. Watch the commercial and let us know what you think. To learn more about Charles Schwab, visit
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8 comments - What do you think?  Posted by admin - September 19, 2010 at 8:01 pm

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Thinkorswim Options Commissions – How to Compare Online Brokers’ Commissions

Thinkorswim Options Commissions – How to Compare Online Brokers’ Commissions

Thinkorswim Options Commissions

Are you trying to save money on your trading commissions by considering a new online broker? If so, then you’ll need to sit down and compare their plans in a practical way. Thinkorswim Options Commissions

Here’s how I would do the math:

I would start out with my trading results from 2009. I’d be looking at my profit & loss numbers for the year, and what I paid in commissions.

Let’s say my profit for the year was ,000, and that I paid 00 in commissions on 100 stock trades ( per trade). Note: I’m using round numbers here to keep it easy.

If potential new online broker X charges a trade – I’d save a trade times, 100 trades. That’s 0.

But is it enough to move the needle? After all, that would improve my profits for the year by just 1% (0 divided by ,000). That’s not worth switching for – unless you are experiencing customer-service hassles.

On the other hand, if you make 1,000 trades a year and could save a trade, you’d save ,000. That could feed a family for a year And if you’re a megatrader moving thousands of trades a month, the savings could easily go into the six figures.

So for active traders, the decision may seem pretty easy – go for a cheaper broker because they savings could be meaningful.

However, there are other issues to consider, like execution quality. Will your trades be completed in a timely fashion at the best possible prices? Thinkorswim Options Commissions

This is a tough issue to figure out, especially when it comes to highly-liquid markets like equities where orders can be placed and filled in the blink of an eye.

My rule of thumb is that on stock orders, you should get a slightly better price than the one you specify on limit orders at least some of the time. If I had to guess, I’d say that Thinkorswim gives me price improvement on one out of three stock trades – pretty good. On options trades, it happens occasionally – not nearly as often as I’d like.

If you never get price improvement, then you can do better elsewhere.

So how can you calculate the potential effect of crappy executions? Here’s one way, albeit a rough one:

Take your trading results for 2009, and subtract a minuscule amount – 0.2% or less.

Then, randomly select a few of your trades from 2009, and do the following to your profit or loss on each: hurt your results by 5%. Either add 5% to your loss or reduce your profit by 5%. This is intended to simulate the impact of the broker not being able to get your most important trades done during busy periods.

Take these numbers, and factor them into your estimates on how a new online broker impacts your P&L. If you’d save 0 on commissions with a possible negative impact on the execution side, you really have no reason to switch unless you are dissatisfied with customer service, or are getting hit with silly service charges.

If it seems like I’m overemphasizing customer service, it’s because I am. Customer service should be your number-one concern when choosing an online broker. Fancy charting packages and cheap commissions are great on their own – but you won’t care about them if you’re left on hold for 45 minutes. Thinkorswim Options Commissions

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