When investing in any security, investors can maximize returns by cutting down on costs. With exchange traded funds, some may find commission-free options in their brokerage accounts, diminishing fees that can slowly eat away at an investment portfolio over time.
Trading costs add up. Investors who want to dollar-cost average or regularly invest a certain percentage of their paycheck will find that the trading fees will chip away from their total investments, writes Sheyna Steiner for Bankrate.
“Without commission, you can buy as few as one share at a time whenever you get some spare change in your brokerage account,” Bankrate’s chief financial analyst Greg McBride, CFA, said in the article.
Additionally, investors can reinvest diviends for free in most cases.
“Free dividend reinvestment facilitates the compounding that can turbocharge long-term returns,” McBride added.
Among large brokers, investors can trade a number of ETFs for free on Fidelity, Vanguard, E-Trade, Firsttrade, Ameritrade and Charles Schwab platforms, and all the brokers offer free dividend reinvestment as well. [Six Popular Commission-Free ETF Trading Platforms]
Fidelity offers 76 commission-free ETFs provided by two fund sponsors. However, investors are required to hold the ETFs for at least 30 days to avoid a short-term trading fee. [BlackRock, Fidelity Partnership Paying Off in Spades]
Vanguard offers 67 ETF options to trade for free with no minimum holding period.
E-Trade has 108 ETFs options taken from three fund providers. The broker also requires a 30-day minimum holding period.