Is Online Stock Trading Getting Cheaper?
Online stock trading is an essential tool among many investors these days but recent news reports suggest that buying and selling from home is getting cheaper. In 2004, Charles Schwab Corp, the biggest online brokerage firm, lowered fees and other online brokers are following suit.
The lowered online stock trading prices from Schwab came in the wake of several of its rivals offering budget fees including massive discounts for its most wealthy clients. Experts agree that there could be big changes afoot in the ways in which charges are levered to online investors. Fees are being lowered to attract new clients and stop attrition from seeping into their companies. However these lower fees mean brokers will need to make money elsewhere.
As commissions drop, online brokers need to find more consistent ways of charging for the benefits they provide. Companies stand to lose as much as 2 or more percent of their income by dropping prices. Lowering company expenses may recover these losses. How will this affect your online stock trading?
Waterhouse Group and Fidelity Investments have made similar price cuts for all or select customers and Harrisdirect has also dropped prices. ETrade Financial Corp. has recently followed suit. Does this mean online stock trading just got cheaper? Yes- at least as far as basic fees are concerned.
It may also be getting better, but will probably see you paying for the improvements. Analysts say that online stock trading services are set to improve. For example streaming stock quotes might be enhanced or re-packaged as a pay service. Stock research and financial may also see extra charges being levied. Charts that plot prices are another pay service that may be implemented.
So, while brokerage fees may be decreasing other services are likely to move out of the free zone and into the pay per service model. Online stock trading may be getting an overhaul that isn't in the investors best interest overall.
