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:
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.