If you haven’t heard, Zecco.com is an online broker that offers commission-free online stock trading. It does have some fees, but the fact that you can do the basics for free is a game changer. Suddenly, I can re-balance ETFs without having to worry that it’s going to cost me a hundred dollars in fees.
I had been waiting to for Zecco to open up IRAs so that I could rollover some significant amounts of 401k as well as my Roth IRA. I had been waiting over three months for their IRAs asking, Where’s the IRA Offering, Zecco? It seems they finally heard me as earlier this month they did introduced exactly that.
Some may be worried about investing with a relatively new company. Fortunately you need to go through strict licensing requirements to be a brokerage, so I have confidence that it won’t be an issue. I’ve already started to set up a couple of accounts (it seems to be quite a process).
Update: A couple of people in the comments below clued me into the $30 annual fee for IRAs. It doesn’t look like I’ll complete the process of signing up after all.
Update, Update: It looks like the IRAs used to be $50 annually and then they went to free and now they are back to $30 (see this post AND comments). I was under the old thinking that they would be free.
The only thing that slightly disappointed me was the $30/yr fee Zecco is charging on IRA accounts. I guess its better than paying $7/trade every time you want to purchase more ETFs or rebalance though.
My Financial Journey says
Sweet I’ve been waiting for this too!
Why ETFs? Why not a solid low cost index fund (with no load and no fees)?
My Financial Journey says
Did you know that they charge an annual maintenance fee on their IRA accounts ($30)? Obviously it’s not the end of the world when you got free trades, but still it’s worth noting
Here’s a list of what’s not free http://www.zecco.com/trading/FreeTrading.aspx?tab=WhatsNotFree
Lazy Man says
Good catch, Chuck and My Financial Journey, I didn’t realize that. I’m going to have to think whether it’s worth it now. I usually just make one trade with my current account – buying an ETF. That would make my yearly maintenance fee around $10.
Kevin, I like ETFs because they have lower expense ratios. Looking at Vanguard’s Total Stock Market Fund (VTSMX), it’s expense ratio is 0.19. The ETF version, Total Stock Market (VTI) is at 0.07. That adds up over 30 years, but I’m not sure if it’s enough to offset commissions and bid/ask spread. I think it could be a toss-up.
I go with E*Trade low cost index funds: https://us.etrade.com/e/t/investingandtrading/mutualfundsandetfs?fundfamily=0&fund_fee_code=0
S&P500 – 0.09%
Russell 2000 – 0.22%
Internation Index Fund – 0.09%
Tech Index Fund – 0.60%
The Travelin' Man says
I have read their fees pretty closely, but I can’t seem to find where it says it is free (or not) to add or withdraw money via ACH transfer. I use Sharebuilder (small potatoes over here!) now, but this looks like a very realistic alternative. I do my best to avoid fees and taxes as best I can – can’t do much about the latter, but this sure looks like one good way to avoid fees.
Re: $30 annual fee for IRA. This account makes a lot of sense if you make a lot of trades in your account for the year. I know of some folks who do that – basically, taking advantage of the tax efficiency of the account type.
The other negative is that they only pay a 1% interest on any cash balances held. That is significantly less than Sharebuilder, for example.
Travelin Man – I have been with Zecco since they opened. I can’t speak for IRA accounts, but for regular accounts they do not charge for ACH transfers. I would assume this also applies to IRAs.
Lazy Man says
Looks like E-Trade has some decent funds there.
I’m just not sure they offer the breadth of what I’m looking for (no health care index or Wilshare 5000 equivalent). I could probably mix in an Etrade fund or two. That International fund would be interesting at that expense ratio. I may have to look into it.
They could use a few more funds… I would buy other funds at those expense ratios. I use those as the core of my IRAs. I have other retirement vehicles at fidelity (I like the investor class indexes 10K Minimums, but great expense ratios)
Yesssssssssssss, woot! The wait is over