Zecco and ETFs

[success108]

Hi all,

Zecco.com offers 10 free trades per day (40 max per month) for different account types. If you were able to buy ETFs without paying commissions, wouldn't that be the ultimate in expense minimization?

Maybe they have hidden fees that I'm missing.

 

[LOL!]

All ETFs have an expense ratio, but that is not hidden. What is more insidious in a brokerage account is what happens to your cash. Are you getting a good interest rate on the cash that sits around in the account? I imagine that zecco won't let you buy partial shares of an ETF, so any cash you have leftover just sits there, right? Any dividends paid by the ETF have to earn interest or be reinvested right away as well. So cash can be a drag on your expense minimization after a fashion.

With a typical mutual fund you get free dividend reinvestment if that is what you want and you can buy any dollar amount and get fractional shares. Therefore, you can avoid having idle cash lying around.

That written, I use ETFs with my WellsFargo account that gives free trades and very good cash sweep interest rate.

 

[Olav23]

I heard WF changed their sweep option after Jul 1 to something quite lousy. Did you find a trick to get a better sweep?

 

[success108]

Good point. You get a paltry 1% for cash. However, if the average management fee in your porfolio is .1% for ETFs and .3% for mutual funds, who cares if you have $100 that is just sitting there, not making (or loosing) money?

 

[LOL!]

I heard WF changed their sweep option after Jul 1 to something quite lousy. Did you find a trick to get a better sweep?

Yep, the trick was to make more money that would put me in the 33% tax bracket. In that bracket, a tax-free MM fund is better for me. And the TFMMfund is available even with the new rules. Better yet, I called WF on the weekend and my sweep was changed on Monday without any hassles whatsoever. Superb service!