A discount brokerage firm is another way you can invest your money.
A discount brokerage firm is a DIY approach. Here, won’t need an advisor to work with you. Instead, you are going to be able to research and buy and sell stocks, bonds, mutual funds, and ETFs yourself.
If I need to change the oil in my car, I have a couple of options. I can take it to a Jiffy Lube or maybe the car dealership and get it serviced. Here, I’m paying for someone to do the job for me. Or, if I’m good with cars and don’t mind spending some time and getting a little dirty, I could change the oil myself.
And this is the big draw with using a discount brokerage firm. It’s the least expensive option because you are doing it yourself.
If someone does it for me, I’m probably going to pay more than if I did it myself. And this is the big draw with using a discount brokerage firm. It’s the least expensive option because you are doing it yourself.
But, it’s not called a “free” brokerage. It’s a discount.
That means there are still some fees involved. Just like if I wanted to change my own oil, I’d still have to buy the oil and would probably have some fees to get rid of the dirty oil. It’s less expensive than Jiffy Lube, but there is still a cost.
Usually, the cost is when you buy or sell an investment.
For example, if you want to buy 100 shares of Toys R Us, you might pay anywhere from a flat $8 fee to maybe $50. Yes, there is a cost, but in some cases, it is much less than if you used a brokerage firm or an RIA.
If you enjoy investing and think you would be good, it’s certainly an option that puts you in total control and is less expensive.
Some common discount brokerages you may have heard of are Charles Schwab, Fidelity, and eTrade.
So what’s a discount brokerage?
A firm where you can deposit your money and where you make your own investment decisions and pay a fee whenever you want to buy or sell a stock or mutual fund.
The proceeding blog post is an excerpt from Get Money Smart: Simple Lessons to Kickstart Your Financial Confidence & Grow Your Wealth, available now on Amazon.
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Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.