Fee-Free Investing: Strategies To Grow Your Money Without Charges

Investing Without Paying Fees

There are many ways to invest without fees, and it's easier than ever to get started. You can use online brokers, apps, or even direct purchase plans to buy stocks, ETFs, and other financial products without paying transaction fees. Here are some of the best options:

- Zero-commission brokerage firms: Webull, E*Trade, Fidelity, Schwab, and TD Ameritrade offer real-time, zero-commission trades for stocks and ETFs.

- Online brokerage firms: Many online brokerage firms offer no-transaction-fee, no-load mutual funds, which are passively managed and track specific indexes like the S&P 500.

- Special investing platforms: Platforms like M1 Finance offer free trades, fractional shares, and long-term investing options.

- Robo-advisors: These platforms, like Wealthfront, offer automated investing with low fees and tax benefits.

- Employer-sponsored plans: Enrolling in a 401(k) or similar retirement plan at work is a great way to start investing with pre-tax dollars, and some employers even match your contributions.

- Fractional shares: Some platforms, like Robinhood, allow you to buy fractional shares of stocks, so you don't need a large amount of money to get started.

- Direct purchase plans: You can buy stock directly from the company offering it, sometimes with low or no transaction fees.

Buy stocks and ETFs from zero-commission brokerage firms

One of the most significant developments in investing is the real-time, zero-commission trade for stocks and ETFs. Webull led this revolution, which was then followed by brokerage giants E*Trade, Fidelity, Schwab, and TD Ameritrade.

With zero-commission brokerage firms, you can take advantage of free trades at limit prices in real-time. Previously, free trades were typically available via a batch-processed method, so you couldn't take advantage of good buys during the trading day.

• Webull: Webull offers advanced charting tools and a customizable layout with over 55 indicators and more than 60 technical signals. However, to get unlimited day trades, you need at least $25,000 in your account.
• Robinhood: Robinhood was one of the first brokers to offer a zero-commission trading platform, and it doesn't require any minimum deposit to open an account or to start investing. They offer a variety of investment options, including stocks, options, ETFs, cryptocurrency, commission-free fractional shares, and IPO shares.
• Firstrade: Firstrade is a straightforward platform that charges no commissions on stocks, ETFs, mutual funds, or options. It's a great choice for investors who don't want a large learning curve with a new online broker.
• Interactive Brokers: Interactive Brokers offers $0 commission trades on U.S. stocks and ETFs and competitive fees across the board. They provide access to global markets, allowing you to trade in 150 markets across 200 countries. Their Trader Workstation (TWS) desktop platform is popular among professional day traders, offering advanced charting, technical analysis tools, scanners, and more.
• Ally Invest: Ally Invest offers commission-free trading on stocks and ETFs and has no account minimums. They have partnered with top ETF providers such as Vanguard, GlobalX, and iShares. They also offer investment education resources and access to streaming quotes, charts, and calculators to help you make informed decisions.

When choosing a zero-commission brokerage firm, consider factors such as the range of investment options, user-friendly technology, educational resources, and customer support. Additionally, look for promotions and bonuses, as many brokers offer account bonuses based on the size of your initial deposit.

Buy mutual funds through online brokerage firms

Buying mutual funds through online brokerage firms is one of the ways to invest without paying fees. Many no-transaction-fee, no-load mutual funds are available through online brokerage firms. These fee-free choices are often index funds that are passively managed. This means that they track a specific index, such as the S&P 500, so fund managers focus on maintaining positions of stock in the S&P 500 rather than devising strategies to make money.

You can locate these funds using the screening tools found in the log-in area of a brokerage firm's interface. Filter your selections by "Fee" and specify "No Load & No Transaction Fee" offerings. To completely avoid fees, check for any fund redemption fees, which are often charged to investors who sell shares less than 180 days after buying them.

These fee-free mutual funds usually have minimums set by the mutual fund company or the brokerage firm. Minimums may range from $100 to $3,000 for initial investments and up to $1,000 for additional investments. However, some brokers, such as Schwab, have introduced no minimums on certain funds.

When choosing an online brokerage firm to buy mutual funds, consider the following:

• The range of mutual funds available on its platform
• The broker's charges, including early redemption fees
• Whether you want an actively managed account or a passive index fund
• The broker's reputation, services, amenities, and products
• The ease of use and functionality of its trading platform

Buy commission-free ETFs through online brokerage firms

Exchange-traded funds (ETFs) are a great way to diversify your portfolio and implement a variety of investment strategies. Many online brokerage firms offer a roster of commission-free ETFs to their customers. These can usually be found using ETF screening tools.

When choosing an online brokerage firm, it's important to look for a good fee structure along with other features you want, like strong customer service or powerful research tools. Some brokerages that offer commission-free ETFs include:

• Interactive Brokers: Offers over 150 exchange-traded funds (ETFs) that reimburse clients for commissions paid on ETF shares held for at least 30 days.
• Ally Invest: Partnered with ETF providers such as Vanguard, GlobalX, and iShares to bring investors commission-free ETFs.
• Fidelity: Offers a discount online trading platform with no account minimum and commission-free trades on US stocks, ETFs, and options.
• Firstrade: Charges no commissions on stocks, ETFs, mutual funds, or options.
• TD Ameritrade: Charges no commissions on all online trades of US-listed stocks, ETFs, and options.
• Webull: Offers commission-free trades on stocks and ETFs with no account minimums.

It's important to note that some of these commission-free ETFs may have a short-term trading fee. This means that if you buy and sell shares of a commission-free ETF within a certain time period (usually 30 days), you may owe a fee that is typically equal to the brokerage firm's standard fee for stock and/or ETF trades. Additionally, an ETF may be commission-free when you purchase it, but its status may change, and you'll be charged a fee for future purchases and/or sales.

Buy mutual funds directly from fund companies

One of the easiest ways to avoid paying fees when investing in mutual funds is to purchase them directly from the fund company itself, rather than going through a broker or other financial intermediary. Mutual fund companies offer a direct purchasing option, which allows investors to buy fund shares without incurring any transaction fees or sales charges. This can be a great way to save on costs, especially for those who are comfortable managing their own investments and don't need the advice or services of a financial professional.

When you buy mutual funds directly from the fund company, you are purchasing shares from the source. This means that you are cutting out the middleman, which can result in significant cost savings. Many fund companies offer this option and make it easy for investors to set up an account and start investing. You can typically find information about direct purchasing on the fund company's website, or by contacting their customer service team.

The process of buying mutual funds directly from the fund company is quite straightforward. You will need to provide some personal information, such as your name, address, and social security number, to set up an account. Once your account is established, you can typically choose from a range of fund options, including equity funds, bond funds, and money market funds, among others. You can then decide how much you want to invest and set up a purchase plan that suits your needs.

One of the key benefits of buying mutual funds directly from the fund company is the absence of sales charges or commissions. This means that you won't incur any additional costs when purchasing or redeeming fund shares. Additionally, many fund companies offer lower expense ratios for their mutual funds when purchased directly, resulting in even greater cost savings for investors. These expense ratios represent the ongoing costs of managing and operating a mutual fund, and keeping these costs low can have a significant impact on your investment returns over time.

When considering this option, it's important to remember that you may not have access to the same level of advice and support that a financial advisor or broker could provide. Therefore, this approach is best suited to those who are comfortable making their own investment decisions and managing their portfolio. However, many fund companies still provide a range of resources and tools to help direct investors, including research materials, educational content, and customer support to answer any questions or concerns. By taking advantage of these resources, investors can feel empowered to make informed decisions and manage their investments effectively.

Buy stocks and ETFs through special investing platforms

There are special investing platforms that allow investors to trade for free. One such platform is M1 Finance. The catch with this type of platform is that you can't place a real-time order when you buy for free. Generally, orders from all customers are combined and then placed at one time. This is referenced as the trading window by M1 Finance. If you're investing for the long term, this may not matter. However, if the price of a stock you're buying goes up on a certain day by more than the cost of a typical fee-based trade, then you're not really saving money.

The advantage of some of these platforms is that you can trade for free, buy fractional shares (partial shares), and ignore market fluctuations in favour of long-term investing.

Frequently asked questions