Markets

“Homing” in on brokerage fees

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Westend61-Getty Images

I rented my first apartment while attending college in Providence, Rhode Island in the 1990s. What seemed like a stretch then feels too good to be true in today's dollars. The rent was $350 per month, utilities included! A rental agency broker helped me find the apartment. Much to my chagrin, the rental broker's commission-the charge for her services-was one month's rent. The yearly rental payments totaled $4,200 ($350 X 12 months), but my first year really cost me $4,550. That's almost 10% more, just to tip out the broker for combing local listings. I didn't know any better. I later learned about no-fee brokers when I moved to New York after college. That ignorance cost me $350. When you consider buying stocks, bonds or exchange-traded funds (ETFs) for your investment portfolio, you are faced with similar decisions. An ETF is traded like a stock but is a professionally managed, diversified portfolio, which means there's generally a small fee involved. That expense ratio is like the annual rent. But, there can be an additional charge to buy an ETF: a brokerage commission. Brokerage commissions on investments can make rental agent commissions look tiny.

A better deal

ITOT commission rate TD Ameritrade commonly

Bottom line

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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