This Is the Only Feature I Care About When Looking for a Brokerage Firm

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When it comes to picking a brokerage firm, my primary focus is on being able to buy commission-free ETFs with low fees. Read on to learn why that’s my only criteria. 

There are a lot of great brokerage firms out there, many of which offer amazing features like advanced research tools and full-featured trading platforms.

But, when it comes to picking a brokerage firm, there is only one thing I care about. Here’s what it is, and why it’s the only thing that matters to me.

This factor alone determines what brokerage firm I use

After I had funded my emergency fund in my savings account and was ready to start investing, I started looking for a brokerage firm. And, the one criteria I had was that the broker had to have a wide selection of exchange-traded funds with low expense ratios, which I could buy commission free.

See, my absolute biggest concern when I’m picking investments is how many fees I will have to pay. That’s because I know, over time, investment fees can really eat into your returns and end up leaving you with a lot less money than you would have if you had picked more affordable investment options.

To understand how big of an impact fees could have, just consider what would happen if you paid a 2% investment fee on a $50,000 investment over a long period of time. If the investment earned an average 10% return, you’d end up with $336,381 after 20 years without fees but only $233,051 with that cost impsed.

I’m not willing to give up hundreds of thousands of dollars in fees because I have to pay my broker to buy investments or pay high expense ratios on the things I invest in. So, I focused on finding a broker that made it as cheap as possible to get my money into the market.

What is most important when you pick a brokerage firm?

Fees and costs were most important to me, and they should be important to everyone who wants to buy stocks because, as the calculations above demonstrated, you really can’t afford to pay high investing costs if you want to make a lot of money.

But, you may also have other things you want to focus on. A lot depends on your investing style. If you tend to buy shares of individual companies rather than sticking with exchange-traded funds as I do, then research opportunities with your brokerage firm may be most important to you. You may not care if the broker offers low-cost ETFs if you don’t plan to buy them.

Of course, if you are an active trader and you buy and sell often, you would want to especially focus on making sure you can do so without incurring commission costs — which is the case with most brokers now.

Ultimately, you can (and should) add to your list of features to make sure you have a brokerage firm that is well-aligned with your investing methods and goals. But, at a baseline, you should always pay attention to how much you are going to have to pay to invest and consider this above all else because getting stuck with high fees just isn’t worth it — especially since there are a lot of brokerages out there that won’t make you pay a fortune.

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