Not cheap, Fiscally concerned

I put on a great post yesterday and expected some traffic, unfortunately blogvis.com were in the process of getting a new server. So you couldn’t read about it. Just FYI to those who would like to read my content in the future - if this site does not load, I will try to export/import my content at some rate to this site:
withinmymeans.freehostia.com

Cheers!

I could just write each one of the monthly free trade as one of the 10 great reasons, I’ll try to go deeper.

I have been a client of ZECCO for more than a year now and know a thing or two about the good and the bad. I’ll list 10 great reasons to sign up to ZECCO, then I’ll give you a link (I’ll make a small commission if you sign up there…), then I’ll list a few negatives.

Here goes:

1. 10 commissions free trades are more than enough to purchase new positions, liquidate a few positions or rebalanced once a month. This is just the right amount to limit you, the investor, from over-trading and foolishly destroying your capital. If you must trade more than 10 times a month, the cost of the trade is still very cheap. Transferring your individual account is free. Transferring your IRA account is cheap, and the yearly fee of the IRA account is relatively cheap.
2. Their interface and infrastructure has matured over the last year, it is very useful and much more reliable. To compensate for September’s shortfalls in accommodating the overload of trades - we, the investors, got October with unlimited free trades. They listen to us and take actions when action is needed.
3. Trading records are now available online. They used to send us snail mail for every day we traded, which is wasteful and annoying. Now you get email alert and get to download the trade confirmation in PDF format.
4. I’m not an options trader, nor will I use their Mutual funds service - which had greatly improved. Reason #4 is to state that these services are available and the options trade is very cheap (compared to other brokers). ZECCO also provides low interest on margin, which I don’t use - so I won’t comment on.
5. Premium tools. Again, not a subscriber (I’m not cheap - just fiscally concerned…), but I did get a free trial of the performance tools provided by gainskeeper and those are pretty useful (if you don’t use other offline tools to trace your performance). For the same reason, I can’t comment much on the active trader service with the streaming quotes except to mention that it’s there.
6. Excellent customer support. You call or email and always get polite and on the point response. Enrollment and cash transfer mechanisms also have greatly improved.
7. Quick orders mechanism, ultra fast execution. I have another brokerage account, when the market is overloaded (like in September), many brokerage houses had problems. ZECCO had increased their capacity and have fared well since. You need to remember though, it is always smart to sell when you can, not when you must - you just don’t want to be looking at a panic sell and be the one that needs to participate.
8. Nice and useful real-time charts, watch lists and positions screen. The default screen for an investor/trader is the “Account Overview” which gives you total account value, positions, orders and a frame for quick quote. Like I said, nice.
9. Maintaining a free commission account is much better than holding your portfolio in mutual funds. You have parallel potential investments in the form of cheap ETF-s, and you have a huge selection of such investment vehicles to go long, short, or commodities based on your strategy. You, the private investor get the chance to be much smarter and more diversified starting with only 2500$. You will not get kicked out of a position in a mutual fund because that mutual fund just lost 60%, and your 4000$ went below the 2000$ minimum as is the case with mutual funds and mutual funds brokerage. In addition, the only way to invest in a bearish mind set with a retirement account is to buy bearish ETF-s (or mutual funds), most retirement account providers don’t provide you with that option.
10. ZECCO is SIPC insured, that’s not FDIC, but it does mean that your positions will remain your positions in case something would happen to ZECCO, the value of those positions would rely on the market though. For more (and better) details, see here.

If you have any question about my experience with them, feel free to comment below.
Open an account, you won’t regret it (you might regret your investment choices though)

Like I promised, here are a few negatives:

• The first negative has nothing to do with ZECCO, but with novice investors (like I am). Recklessness is often unnoticed until huge and painful losses get compounded. The most important thing a person with no experience should do before starting to invest is to think about his exit strategy and about his defensive moves. ZECCO gives you the freedom to be extremely successful or extremely reckless, you need to avoid the latter.
• I’m not a fan of “ZeccoShare”, that’s all I have to say about that elective and free service. “Community” is just not what I’m looking for. There are a lot of other resources you could use to do research, use them.
• There was no 3rd party research reports. Like I mentioned before though, there are ways around that. Last I checked though they added S&P analyst reports. Like mentioned before, they keep improving their services.
• When you have no margin, you have to wait a day or 3 days for trades to clear before having access to your cash. This could be the same as with other brokers, but it’s something to keep in mind. You can’t be very quick with your trades if you are fully invested in a retirement account. Should you trade like a maniac in a retirement account? Let’s leave that debate to another post…
• In both positions and balance view, you will get wrong real time data after trades or when you put an order to buy something. You need to maintain your total balance calculations off line or at watch lists.
• To track dividend payments, you need to enter the “Funding and Transfers” tab. Sometimes you need to reenter password. Then click on “cash history”, then manually enter a date range that includes today.
• The login sequence could be faster. I believe they are still working on improving that.
• I don’t know who still uses a live, personal broker. You don’t get that at Zecco, nor almost anywhere else unless you are extremely wealthy.

I hope I provided you with useful info, comments are welcome, spread it around.
Cheers!

Zero commissions, free research and professional analysis. I want to introduce you to my personal free loading investment style. I spend no money or very little for premium services and you can too. I somewhat mentioned before how I had setup my financial accounts so that I pay as little as possible for investing, while repeating some of that - I will touch a bit on which free sources on the web I often use for investing purposes and why.

• ZECCO - where I trade once every couple of days - using no commission trades - with my roll over IRA account. I have a small sum which is large enough to invest with that I have rolled over from a horrible “Simple IRA” account. This is where I practice my investment ideas.
• Fidelity - where I keep my Roth IRA and my Individual account. I use free trades and auto-investments into income based mutual funds. Since I am a customer I get access to quite a bit of research reports from known analysts including my personal favorite - Zacks.com
• MISaves.com - As a resident of Michigan I save money for my kid’s future in the low cost and tax efficient Michigan Education Savings Plan.
• UPromise.com, discounts, rebates and credit card points - not the only source on the web for discounts, coupons and rebates, but an efficient one for saving for college. Every cent counts.
• Capital One High Yield Money Market - FDIC insured, no fees, much like ING Direct’s Money Market
  . That’s how it should be, banks should pay us for keeping our money and not vice verse.
• Zacks.Com profit from the pros news letter - daily stock tips and smart analysis for free from the professionals at Zacks.com. One of the analyst companies I value the most.
• CAPS at fool.com - Unlike Fool’s main site which tries to promote their paid services more than provide in depth free analysis, their portfolio tool is a great way to test your stock picks and compare to others. Another great use is to measure the amount and quality of bears a company has before investing in it. Unlike Yahoo’s message board, most comments on caps.fool.com’s stock picks are somewhat useful.
• Tradingmarkets.com - free newsletters - Get a daily review of technical issues currently in the market as well as highly marked stocks for timely trades.
• topgunstrading.com and daily state of the market audio - Take a no obligation trial of one of their services to have a peek into some insightful analysis. Once you are registered you get a daily email in the morning linking to an audio recording by David Moenning. It’s a great way to get up to date quickly without trying to collect all the data by yourself.
• Think B.I.G - Bespoke investment group offer great daily statistics as a teaser to their great paid services. I’m not a paying customer - because I’m not an active trader. Check out their ETF summery PDF-s.
• chart of the day - Once a week recieve an intresting perspective of the market from different indicators as presented by the pros of “chart of the day”.
• stock market mentor’s chart of the week - Dan Fitzpatrick, a well experienced technical trader shares weekly videos in which he analyzes charts.
• TheStreet.com video section/3 stocks I saw on TV - Here’s Dan Fitzpatrick again, on his daily contribution to the-street.com video section. One of the only videos I enjoy watching there.
• Minyanville’s 5 things you need to know - a daily collection of news items that you might have missed but bare importance for the economy and the market. This was a great source to see the financial storm before it arrived. It also made me assume bearishness before it all began. My inexperience though, made me make some wrong moves.
• Mish’s and Random Roger blogs - I discussed these blogs in my previous post. Notice how Roger got the timing exactly right and Mish is still not wrong in his review of the market.
• Libraries and Amazon.com marketplace for investment books - When my wife and I decided to change our financial path we decided to read together. Since then, I try to keep at least one or two books about investments on my reading queue. The cheapest source for that is the Library (which we pay for with our taxes anyways) and used books on Amazon. The best thing about buying through amazon is that you can read the reviews first.
• MergerInvesting.com - While this site is not free, you can peek into it once a week and continue your own research from there. Some investments are just “easy money”, especially upcoming cash buyouts. In a market like we are experiencing now, I’d take a safe 2% a month over the gyrations of the market any day.
• Yahoo charts - simplest, easiest yet very powerful and free.

Happy frugal greedy investment to you.
Cheers!

After beginning our odyssey to improve our financial stance starting with reading financial books together, I wanted to study some more and learn about investments and went ahead and read a few more books and websites on the subject. I had an IRA from a previous employer I barely paid attention to over the years. Only then did I observe the high fees and low performances of the mutual funds there. Running a projection into how much it would grow in comparison to my current 401k I decided that this sum would be a perfect candidate to begin practicing real life stock investments with – assuming that this sum will not be accessible for at least another 30 years and if it doesn’t grow – it will be meaningless by that time.

Still I waited. Although I had made my mind about doing this move I took another 8 months to practice “paper investments” on various online services. I started reading financial websites and peeking every now and then to CNBC. I was scolded once or twice for doing so at 6pm – family dinner time (a discussion about that show and that guy at some other time). During that period I also began searching for a discount broker. I had made my mind to use Zecco who were already open for business for almost a year. “Lucky” for me I got just in time, before they reduced the monthly free trades from 40 to 10. I would address that level of “luckiness” later.

I’ve been doing this for a year now and the results are not staggering. I continuously compare to an index benchmarks and while outperforming it by nickel or two, I’m not beaming with pride. That’s not what I want to talk about right now, what I do want to discuss are the pros and cons of holding an IRA at discount stocks broker like Zecco vs. a retirement account providing you with a limited set of mutual funds and a rebalancing tool. (Are you guessing where I’m going with this?)

1. Fees, and some more Fees. The fees mutual funds and investment houses pile on your money are much higher than a free trade on an ETF with 8 basis points fee. Zecco won that argument hands down.
2. Free trades? Gimme’ more?! I must say it sure sounded nice. They initially gave the inexperienced amateur investor 40 trades to make a complete mess of his equity day after day. Although I wrote down a goal of not over-trading, I couldn’t help myself. I exceeded those 40 trades each month over the first 3 months. After that the gift was taken away and all traders were given only 10 free trades a month. I actually did well, it was a short term bullish recovery period and I had many good selections. I learned my lesson only later…
3. No margin. No margin and the 3 business days requirement to settle trades sets a situation where a decision to reallocate assets takes a few days, in comparison to employer sponsor IRAs where a rebalancing tool usually acts within 1 business day.
4. A wide selection of investment choices. The current flood of ETFs and ETNs gives you choices you can only dream of with those limited mutual funds; Inverse stocks, commodity indexes, CEFs etc.
5. Just more of a chance to lose your money. Face it, more choices - more bad selections. Getting some help might cost you big time, and still not get you there. I once gave an advice to a friend to avoid this market until the end of 2009, should have taken my own advice.
6. But do you really have the time for this? You really shouldn’t have the time, but if you do I’m pretty sure it’s not a great idea to sit and watch that money too often. Perhaps “forgetting” about your retirement account for long periods is a safer choice for those who can’t help but trade in and out on a whim.
7. Zecco are new, keep changing and have a somewhat odd interface. This is both good and bad. The interface is usable but you just don’t know what to expect as far as the company changing the terms on you. One very good recent development is that they stopped sending me letters after each trade, now it’s just emails and online PDF-s. Finally.

There’s another choice to compare and evaluate and that is rolling over an IRA to Fidelity. While not providing free trades, you can buy mutual funds and trade those “for free” within limits. Unlike Zecco, there’s no annual fee. It’s a better choice if you’re a “one mutual fund” kind of a guy. I am that kind of a guy for other purposes but I wanted to gain some experience in the stock market.

I should also mention that Fidelity gives their customers access to many 3rd party research reports and I did make use of that in conjunction with my Zecco trades.

To sum it up, I still do believe Zecco is a much better choice for my goals here; Trade an insignificant sum of money, money I cannot use anyways right now to gain the experience. I’m not against getting rich but I’m realistic, each and every trade I lose money on is a lesson for me so I would do better in the future.