Commission Free ETF Investing

Fidelity, Vanguard, E*Trade, TD Ameritrade and Schwab offer commission free ETF investing for their customers. The number, ETF company, and ETF sector vary by brokerage firm, but include many of the popular ETFs. Companies Add to Lineups of 'Free' ETFs by The Wall Street Journal does an excellent summary of the ETF offerings and the trading restrictions for each brokerage.

I plan to use commission free ETFs as a cost effective way to create a diversified portfolio, using primarily broad market index ETFs.   Here's how commission free ETFs will minimize my cost and expenses.

No trading costs.  I can periodically purchase small lots and incur no additional costs above the ETF expense ratios.  This will enable me to make small initial investments and dollar cost average without trading costs reducing my returns.

Low expense ratios.   The commission free ETFs include companies that offer the lowest expense ratios for index ETFs, as low as .04%.  That would be only $4 of expenses per $10,000 invested on an annual basis.

Low expenses mean higher investment returns. Therefore, I'm going make commission free ETFs a significant part of the investment portfolios in our retirement accounts.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC