I’ve found two ways to buy stocks commission free. I’m always looking for ways to cut costs and maximize my investments. Here is how I do it:
#1. LOYAL3
If you’ve been following my blog, you should be familiar with LOYAL3. They provide commission free trades and allow you to purchase fractional shares starting as low as $10. For example, McDonald’s (MCD) is currently $100 per share. With LOYAL3, you can buy as little as $10 worth of MCD which would you give 0.1 shares of MCD. Not a bad way to go if you can’t execute large trades or don’t want to see your money go to fees.
#2. Dividend-Paying Trick
Technically, this isn’t a free stock trade unless you can handle delayed gratification. What I do is purchase enough shares of a stock so that my first dividend payment will cover the commission fee. I use OptionsHouse because they only charge $4.75/trade which helps me recoup my money quickly.
Here’s an example:
1 share of MCD is currently $100. Its quarterly dividend is currently $0.81. To earn enough money from its next dividend payment to cover the commission I need at least $4.75 in dividends from MCD. Some simple division of $4.75 by $0.81 gives 5.86. I need to round 5.86 up to 6 to determine how many shares of MCD I need to buy. If I buy 6 shares of MCD, my first dividend payment will be 6 x $0.81 = $4.86 which covers the commission fee of $4.75.
Like I said, technically this isn’t free but I look at it as a rebate that I have to wait for in order to be repaid for my trade costs.
Using these two methods, I can trade with peace of mind and not have to worry about getting raked over the coals by fees.
Dear Dividend... 
Great opportunities there for people living in Canada or the USA.
I’m living in The Netherlands and we can’t use these brokers.
However, we have DeGiro, a relatively new broker for consumers (for business it runs 3 years now) which only costs about $0.75 per trade.
Downside of this is that you cannot trade fractional shares. This is a pity, but I ‘solve’ this issue by finding cheap non-blue stocks and put my last bit of money to work through these dividend paying cheap stocks.
It has a very basic ordering website as well, but I’ll get my information through so many valuable websites and blogs out there, like this one, so that’s not a downside to me.
Keep up the good work!
Kind regards, DfS
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DFS,
Thanks for pointing out other options available outside of the U.S. DeGiro sounds like a good deal at $0.75/trade. At those rates, it would be easy to “repay” your initial costs using method #2 that I described. I’m like you when it comes to research. My online broker provides some basic research tools, but I use a lot of free online resources for my research.
Thanks for stopping by!
Regards,
Dear Dividend
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I will check into Loyal website. Thanks for sharing!
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wow 0.75 per trade sounds great! 🙂
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Loayl3 Sounds pretty awesome for a brokerage account, but disadvantages I found is they don’t operate in an IRA or as Joint-Tenants.
OptionHouse does allow investing inside an IRA or ROTH IRA so I will have to keep a note about them.
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Loyal3 has its limitations by not having an IRA option. It has its pros and cons but I enjoy using it to augment my Roth. Whenever I feel like throwing a few bucks (at least $10) at a stock I’m able to due it without waiting to save up larger amounts like I do for my OH account. Plus, with no fees all of my money goes directly into my investment.
Thanks for stopping by.
Regards,
Dear Dividend
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Hey do you have a referral link? It looks like they are doing like a $150 referral deal right now.
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Frankly Frugal,
I haven’t tried it yet but this link should work:
http://oh.tellapal.com/a/clk/1dyGCF
I didn’t read all of the fine print but it looks like for me to receive credit for the referral the new user needs to start with $1000 in funds and stay active for 6 months.
I haven’t done a review yet since I’ve been with OH less than a month but so far I’m generally satisfied. For $4.75/trade I can’t complain. It takes 4-5 business days for funds to transfer from my savings account but I can live with that. Also, the user interface wasn’t the most intuitive for me but I’m getting the hang of it. To have dividends automatically reinvested you have to email customer support with a request. If you use their FAQ it tells you what info to send. I did it and had a response the next day and my first set of dividends was reinvested within 1 business day of the stock’s dividend date. The only thing I haven’t done is sell stock or withdraw money but I don’t plan on doing that anytime soon. Overall, for the price I’m happy so far. It just took me a little getting used to the site after using my other brokerage firm’s site.
Regards,
Dear Dividend
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