What Is a Commission-Free Brokerage, and How Can It Help You Invest?
Years ago, paying commission fees to brokerages was an inescapable reality of investing. If you wanted to buy stocks, you went through a broker, who found a seller, processed your transaction and collection a commission payment for this service. Utilizing a brokerage's services can be a valuable way to learn some of the ropes with investing, and it's important to compensate brokerages fairly for their expertise. But if you're just getting started, you might not be ready to hand over the profits on your returns so quickly — and you might also want to practice on your own to build your independence.
While many brokerages still do charge commissions, there are now also plenty of commission-free brokerages that don't. We'll take a look at the commission-free trading movement, what it's meant for investors, and the pros and cons of commission-free trading. We'll also look into how commission-free brokerages maintain their ability to make money after waiving these payments.