Transaction fee question

[redduck]

It's occurred to me that I don't nearly have as much money to invest as I once did. That, and I've become real skittish regarding the stock market. Anyhow, my transaction fee is $7.00 per trade. What's a reasonable minimum amount to be spent on a trade and still get value as per the $7.00 transaction fee? (e.g. does it make sense to make a $300 trade if the transaction fee is $7.00)?

 

[jazz4cash]

I recall commissions many many yrs ago at 'full service' brokers were about 1-2%. I don't think anyone would bother with a $300 trade back then...not me, anyway. There were odd lot premiums too which were 1/8 or 1/4 of a point premium for less then 100 sh. Stocks traded in 1/8ths, not pennies. Things are so much easier now! I pay $7/trade also.

 

[redduck]

I remember "back- in- the- day" (college days) my first venture into the stock market. I bought three shares of Chicago and Northwestern Railroad. (I think that's correct). Anyhow, the brokerage fees were more than I paid for the three shares of stock. And, when I sold, the brokerage fees and the gains from the stock sale, almost, but not quite, allowed me to break even.

 

[ERD50]

$7 is cheap if you make money. But w/o a crystal ball, I would compare to a buy & Hold low cost index fund, generally less than 1%/year.

So, for a trade that you hold for a year, $14 buy/sell, is 1% of $1,400. So that is one reference point.

-ERD50