Investor Profile

Practical Advice For Other Beginners

Tracy's experiences can also help new investors learn how to choose the right online brokerage for their particular needs. She says one of the things investors should do is learn the commission they will be charged before they trade. She says, "E*trade charges either $14.95 or $19.95 per trade - always a big surprise to new investors after all those '$14.95' ads they run. The $14.95 is for big board stocks [like] IBM, 3M, Compaq. But [NASDAQ and other] stocks like Microsoft and Dell cost $19.95 per trade. Ameritrade advertises $8 trades and ScottTrade advertises $7 trades but read the fine print. There may be exceptions, such as you have to trade a certain number of shares, perhaps as many as 500."

In addition to the differences in commissions charged by various online brokerages, Tracy has also noticed differences in their levels of responsiveness as well as overall client care and handling. "You can also get what you pay for in terms of customer service. For instance, the big name brokerages [like] Charles Schwab charge $30 an online trade. But their customer service is flawless. In my early days with E*trade, I sent an e-mail to customer service asking that a correction be made to my account. Three days later I received a canned form letter response that had little to do with my request. I replied to the letter, leaving the text of the previous conversation attached and stormed, 'This did not answer my question. Please pay attention.' The next e-mail I received from their customer service department began 'Dear Charles Watson,' which was the name of the customer service representative who had answered me previously."