We’re now buying 30 stocks per month which means we should be incurring pretty significant transaction costs based on your average broker charging anywhere from $4.95 to $9.95 per trade. Even the cheapest broker out there, Interactive Brokers, would cost us $30 a month to buy all these stocks. We’re holding our stocks with a variety of different firms so we thought it was time to see exactly what we’re paying and optimize our transaction costs. Here how much our transaction costs are presently.
Completely Free Trades
This means that we pay nothing to buy shares monthly and nothing to reinvest dividends. One firm we use to trade for free is Loyal3 which does not support DRIPing but does allow us to buy any amount of stock at any time for free. Below are the stocks we are holding with Loyal3:
Several of our companies allow us to buy shares via a company built and managed interface which charges us nothing for buying shares monthly. The companies we hold that offer this are:
Then we have companies that pay all charges associated with trading via your usual transfer agents (Computershare, Amtock, etc.). Companies that we are holding with various transfer agents that cost us nothing to buy or DRIP are:
These companies incur transaction costs of just $1 per trade so our monthly purchases would cost us $12 per year, per stock. Of course if we wanted to DRIP we could just include the dividend payments with the monthly investment and the transaction costs stays the same. Stocks we’re holding with Interactive Brokers are as follows:
We pay $108 per year to Interactive Brokers.
- LOW: $1.50 per monthly buy, DRIP free
- PG: $1.09 per monthly buy, DRIP is $3.03 per trade
- MDT: $1 per monthly buy, DRIP free
We pay $55.20 per year to Wells Fargo
- T: $2.75 per share for monthly, DRIP $3.30 per trade
- CVX: $2.05 cents per monthly purchase and 10 cents per trade for the DRIP.
- BEN: $3.20 per monthly purchase and DRIP is free
- IBM: $1 per monthly purchase, DRIP is $2.00 per trade
- JNJ: $1 per monthly purchase, DRIP is free
We pay $141.60 per year to Wells Fargo
Presently we’re paying $304.80 per year for transaction costs which equates to $25.40 per month to buy 30 stocks. We’re going to make the following optimizations to our holdings:
- Move SHW to Wells Fargo Free Plan (Yearly Savings: $12.00)
- Move PH to Wells Fargo Free Plan (Yearly Savings: $12.00)
- Move NEE to Computershare Plan (Yearly Savings: $12.00)
- Change PG DRIP to pay in cash (Yearly Savings: $12.12)
- Move T to Interactive Brokers (Yearly Savings: $34.20)
- Move BEN to Interactive Brokers (Yearly Savings: $26.40)
- Change IBM DRIP to pay in cash (Yearly Savings: $8)
Doing the above we can save $116.72 per year bringing our total transaction costs to $188.08 per year or $15.67 per month to buy 30 stocks. It pays to optimize your transaction costs.