Beating Your Broker's Commissions

Fees are one of the greatest enemies to your investments.

High fees will erode your earnings... take a little bit of your money at a time... and add up to tens or even hundreds of thousands of dollars over the years.

When you're looking for a good broker, you want low commission costs so you're only paying out a tiny percentage in annual fees.

And the good news is that the state of investing today is much, much better than it was even a few decades ago...

An investor 10 or 20 years ago was at a remarkable disadvantage compared with you. Broker's fees were much higher – some charged upward of $100 for a simple stock trade.

I used to have to pay $75 to a full-service broker to put on trades of less than $5,000. That means you lost 3% by entering the position (1.5% to buy and 1.5% to sell). Today, it's easy to find a broker that charges as little as $7 a trade, or even less.

And in today's Q&A, we're sharing a reader tip on how to cut your commissions (a longtime favorite strategy of ours) even more.

Plus, we're answering questions on the best coffee filters to use and another simple, medication-free way of relieving back pain...

Q: I enjoy reading all your work. Here's a tip you can share with your readership.

Brokerage houses want your business, and they will even give free trades to get it. I just switched one of my IRAs from TD to Fidelity. They gave me 250 free trades that are good for two years. I realize some people get in a comfort zone with a brokerage and the new website might be a deterrent. I make at least 15 options trades a month in the account, so switching will save me over $2,000 dollars in commissions. As they say, it isn't what you make, it's what you keep.

By the way, it might not even take changing brokerages. Make a call to your current broker and mention "the other guy's" deal, and they may give free trades to keep the account. – J.D.

A: These are two great tips. They're tips my team and I have used, and I've recommended them to my Retirement Millionaire subscribers – especially when a great offer comes up.

In general, I recommend buying individual stocks through discount brokers where your commissions and transaction costs are lower than 1%... and the lower the better. With a discount broker, you interact mainly with their websites.

In exchange for accepting less human contact and spoon-feeding, discount brokers lower your transaction costs considerably. The fees and charges are small, which means more money for you.

Usually the number of free trades will depend on how much money you're transferring to a broker – and sometimes they even offer cash bonuses. Thanks for sharing, J.D.

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Q: As a boarded physician who treated several thousand back pain patients in my practice for over 37 years... This article is GREAT!

One thing I would suggest is that not just stretching, but particularly stretching hamstrings is vitally important. Approximately 95% of all males and about 85% of all females ever referred to my pain practice have excessively tight hamstrings. On physical exam, my average back pain patient could not pass 70 degrees of hip flexion. Those willing to follow directions concerning stretching generally improved and over 50% eliminated their pain. – A.D.

A: Thanks for writing in A.D., and fantastic point. I make sure to stretch a little every day...

Stretching gives you similar benefits to some types of exercise, like walking. It's also, as you mentioned, a great pain reliever. And pain in your back might not have originated from a problem in your back.

One of my favorite positions is great for your lower back:

Simply lie on the floor next to a wall. Then slowly lift your legs up and rest them so that the back of your legs are against the wall. You should be at a perfect 90 degrees, with your back and neck flat on the floor, and your heels and knees straight above your hips on the wall. Relax your arms at your side, palms up or stretch them up over your head. (It's called "viparita karani," or imagine this... the legs-up-the-wall pose.)

Stay in this position as long as you can, from two to five minutes. Make sure to roll out of it slowly and wait about a minute before standing. The stretch helps your hamstrings and lower back, and it helps drain fluid that builds up in the lower legs. Plus, it helps relax your body and relieve stress.

For readers who don't know how to stretch, the best book on the topic is Stretching by Bob Anderson.

Q: You have written about the benefits of moderate coffee consumption which is good news. I was curious about the mesh/paper filters used to brew drip coffee.

Is it true the paper filter absorbs oil (alleged to be unhealthy) from the brewed coffee that metal mesh filters not? If true is there any difference between natural vs. white paper filters in terms of how they are processed? – F.B.

A: Instead of wasting your money on throwaway coffee filters (paper or plastic), try using reusable ones.

If you have a single-cup brewer, my research assistant brews her coffee with reusable, fully BPA-free pods made of metal and Class 5 recyclable plastic (the same kind recommended for baby bottles). These reusable pods are not only more environmentally conscious, but you can use any kind of coffee to fill them. She likes to grind the beans immediately before putting them in the pod for a fresher flavor.

Reusable pods also save money. Right now, it costs her about $0.25 per cup of coffee. Keurig cups, sold in packs of 12 or 24, generally come out to about $0.67 per cup (sometimes more). So if you drink one cup of coffee every day, you'd spend $6.70 per month on the refillable cups versus the $22.50 you'd spend on disposable cups. If you're closer to the average of three cups per day, that's $20.10 versus an incredible $67.50 per month.

If you use a multi-cup brewer, look for reusable stainless steel filters. Many coffee makers come with reusable or permanent filters, saving you the hassle of looking for a filter that fits.

What do you want us to write about next? Let us know at [email protected].

What We're Reading...

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Retirement Millionaire Daily Research Team
Buffalo, New York
February 24, 2017