Commission-free trades are single stock trades or motif that do not carry any commission or fees when executed. In a Motif trading account, all professional motif and single stock trades (outside of built or community motifs) are commission-free when you select the option to trade at the next market open.
A more relevant definition for commission-free stock trading involves the concept of commission-free ETFs (Exchange-Traded Funds). Commission-free ETFs are exchange-traded funds that do not have any trading costs associated with them.
What are ETFs?
An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities or bonds, and generally operates with an arbitrage mechanism designed to keep its trading close to its net asset value, although deviations can occasionally occur. Most ETFs track an index, such as a stock index or bond index. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features.
Platforms for commission-free stock trading?
There are various apps for commission-free stock trading which provide free stock trading platforms and provide a great opportunity to maximize your returns and keep your trading easy and simple.
Although E*TRADE (ETFC – Get Report) accounts aren’t always free, there are some promotions and accounts that allow investors to invest for free. Currently, E*TRADE is offering a promotion on new accounts. The promotion offers 60 days of commission-free trading for up to 500 trades with a minimum deposit of $10,000 or more. E*TRADE’s commissions usually hit just under the $7 mark for normal (non-promotional) trades. The site is still very popular for its ease of use and retirement services. (www.thestreet.com)
This free stock trading app has seen a meteoric rise in popularity in recent years, accumulating 6 million users in 2019 – and with good reason. Robinhood seems to be the darling of commission-free trading as a fin-tech startup founded by Baiju Bhatt and Vlad Tenev in 2013 with their free stock trading model. Although there has been some speculation over how Robinhood makes money (given their free trading model), the app is very popular for its easy and free trading and a variety of investment vehicles including options and even cryptocurrency. (www.thestreet.com)
- CHARLES SCHWAB
Ideal for investors looking to get into ETFs, Charles Schwab (SCHW- Get Report) has an impressive array of 200 ETFs to choose from, all commission-free. Schwab also has around 4000 no-transaction-fee mutual funds available for its users. Their regular trades will set you back around $5 apiece. There is no minimum balance requirement (although normal accounts typically come with a $1,000 minimum requirement). (www.thestreet.com)
Acorns specialize in micro-investing, that is, investing your spare change in stocks. There is no minimum requirement to create an account, but there is a $5 minimum to start investing. The app takes the spare change you’ve got from linked debit or credit cards to invest in commission-free ETFs. There are no fees for inactivity. (www.thestreet.com)
Boasting around 1,800 commission-free ETFs (just shy of Robinhood’s 2,000), Vanguard offers a wide selection of free trading options. The platform offers over 3,000 transaction-free mutual funds to boot, including S&P 500 index funds. The trading platform doesn’t have a minimum account requirement, but they do charge $20 a year as a service fee. (www.thestreet.com)
Bottom line, we can say that while platforms like E*TRADE offer short-term commission-free stock trading through new accounts or promotions, they also include industry-leading services. Whereas, platforms like Acorns and Robinhood provide authentic commission-free stock trading experience, including a formidable range of services and offerings such as cryptocurrency. Ultimately, one should be very focused and well-planned about where and how one wants to invest with due consideration of one’s personal goals.
Content: Kaif Ahmed
Graphics: Pradatta Nigamanshu
Editor: Prachi Prafull