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By Jason Zweig | Updated Oct. 4, 2019 4:47 pm ET
Freedom isn’t free, and free trades aren’t either.
Charles Schwab Corp. shook the brokerage industry this week when it said it will cut commissions to zero on Oct. 7. Schwab’s move, which followed a similar cut by Interactive Brokers Group Inc. and has already been matched by rivals TD Ameritrade Holding Corp. and E*Trade Financial Corp., is likely to be copied by other big brokers.
You no longer will pay a few bucks in commissions to buy or sell a security at these firms. But Schwab and other brokerage firms are in business to make money, and one way they often do that is by milking clients’ cash. When you trade for free, you still pay—at a different tollbooth.…
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For further reading:
Benjamin Graham, The Intelligent Investor
Jason Zweig, The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money
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