Advice for a low fee brokerage for individual stocks?

[firehawkocean]

Hi y'all.

Vanguard will cost me $7 a trade to buy my oldest some stock (get her ready for adulthood) in Disney.

However, I see that Robinhood has zero fees for trading.

If this is for LONG term holding, is there a downside to using a brokerage like Robinhood?

Furthermore, are there any hidden fees that Vanguard/Fidelity charge for individual stocks (besides the trading fee of 7.00/4.95?

Thanks!

[james.hendrickson]

Firehawk, I don't know if this specific to Vanguard, but evidently Robinhood has less flexibility than some of the full prices brokerage services when it comes to tax efficiency.

The Motley Fool outlines it pretty well.

...freebies have their disadvantages, some of which aren't as obvious as they may seem. Forcing users to use FIFO when selling stock makes it more difficult to harvest losses to save on taxes and eliminates opportunities to minimize taxes on winning investments. To my knowledge, it's the only online broker that doesn't allow its users to choose which tax lots they sell when placing a trade.

Here is a link to the Motley Fool article:

[Jluke]

You are worried about one $7 transaction fee to buy. And then well into the future another $7(?) fee to sell.

Hmmmm

[disneysteve]

You are worried about one $7 transaction fee to buy. And then well into the future another $7(?) fee to sell.

What’s wrong with that? Why pay $14 when there are cheaper options. In fact, some brokers will give you a number of free trades when you open a new account. I’d look for one of those.

[Thrif-t]

Check with Schwab. My kids have Roth IRA's that we rolled over to Schwab when Scottrade went away. They gave us 10 years of free trades.

[Jluke]

What’s wrong with that? Why pay $14 when there are cheaper options. In fact, some brokers will give you a number of free trades when you open a new account. I’d look for one of those.

I’m all for free trades.

OP seemed skeptical about Robinhood so I went with their statement of LONG term holding (assumes infrequent buying) to say what’s ~$14 over a 5-10 year period.

[msomnipotent]

Firehawk, I don't know if this specific to Vanguard, but evidently Robinhood has less flexibility than some of the full prices brokerage services when it comes to tax efficiency.

The Motley Fool outlines it pretty well.



Here is a link to the Motley Fool article:

Unless I am using the website wrong, Ally doesn't allow it either.

[bjl584]

I have Fidelity. $4.95 per trade. I've never run into any hidden fees

[firehawkocean]

Firehawk, I don't know if this specific to Vanguard, but evidently Robinhood has less flexibility than some of the full prices brokerage services when it comes to tax efficiency.

The Motley Fool outlines it pretty well.



Here is a link to the Motley Fool article:

Ahhhh. Interesting. I had a feeling there would be issues with something like that.

[firehawkocean]

You are worried about one $7 transaction fee to buy. And then well into the future another $7(?) fee to sell.

Hmmmm

Every dollar counts. LOL

[james.hendrickson]

Every dollar counts. LOL

As a parent of two children, I can attest to the truth of this statement.

[amarowsky]

My active accounts were (in order of size):
1) Capitol one (Now E-Trade). = I think the fee's are right around $7 each. But since it moved to E-trade, they offer some cool options. I typically default to index funds. VTI by vanguard (passive index of total domestic market) is on E-trades list of "commission free ETF's". I was very happy to see that, as it will support my DCA'ing in this taxable account. (Overall, GOOD prices and OK interface!) (I Recommend)

2) Vanguard : also offer plenty of free funds (mostly vanguard or related). No issues w/ vanguard. (I Recommend)


3) Fidelity : about the same as Vanguard, plus cheaper regular trades. Solid choice. (I Recommend)


4) Ameriprise: I inherited this smaller account (Roth IRA from my late mother). My account is fixed to a financial advisor currently, so trades are expensive @ $40 each w/ $75 yearly account fee. I would not recommend.
*note - I would switch this account, but there are weird rules because it is inherited. I have to take RMD's now (I'm only 31), and the account is only like 14K. So they distributions are like $250 ish. I'm losing out on the trade commissions, and am not allowed to contribute to it b/c I already have my own Roth IRA. I'm approaching my 5th year, where I think I can cash out and just pay taxes on gains. So I THINK i can kiquidate this year and redistribute into my accounts. If I can, I will do so, and just entere these into the wife and I's Roth IRA's, and be RID of Ameriprise!

[firehawkocean]

Thanks yall for the responses. Definitely going to just go with Fidelity. Dodged a bullet by coming here and asking. Don't want Robinhood.

Had a follow up question.

Are international stocks like BP subject to high foreign tax paid? How do their respective countries figure out the tax rate paid on the dividends?

[james.hendrickson]

FFO - in some cases companies have tax treaties which avoid double taxation of dividends. Unless you are running a hedge fund, its not generally not a big deal.

[JBinKC]

I don't know anything about Robin hood but each broker screws you one way or another unless you limit your trading to higher priced domestic stocks. My biggest complaint is most brokers don't offer a fair return on cash balances without tying up your money.

The drawback to Fidelity is they charge an extra 1/4 cent fee per share on forex conversions compared to Ameritrade but Ameritrade charges $15 for foreign stocks purchased with exception to Canadian or domestic listed firms. Interactive Brokerage charges a fee to alter a limit order. For bonds Fidelity is always .1 or more lower in an ask price from other brokers for secondary bond transactions.

And this excludes issues I have had in regard to ignoring FIFO rules on bids and even occasionally filling orders at lower prices than an unrestricted bid and filling orders of 50 shares of a penny stock in order to charge a full commission fee

As for foreign tax withholding a UK firm has to be incorporated in Jersey to avoid it. If the stock is held in a regular account you can recover the withholding on Form 1116. If you own an IRA in many cases there is no way to recover it or if you can like in Canada on Form NR7R the brokerage will charge an exorbitant fee to do so.