Why The Individual Online Broker Is Getting Screwed
Not sure if you all have noticed or not. I just did. My glorious and once unstoppable online broker Tradeking has become just another great broker destroyed by corruption, misleading emails, and a new system that has made many loyal customers like myself looking where to go from here. Tradeking used to be awesome. It was $4.95/trade and very straight forward. Customer service was awesome. The interface was up-to-date and clear. Then a little something happened that made the broker go down the drain. What was that little something? Well while they were doing the conversion process (which has now gone on for over 3 weeks and this doesn't include the numerous alerts in previous months about when it would happen), they decided that the DRIP program was going to be changed forever.
Before DRIPS were awesome at Tradeking. They let you DRIP on practically any stock and even let you do fractional shares for the small individual shareholder that isn't ballin like Bill Gates. When Jim Cramer on Mad Money would shout DRIPS, I felt like "yeah Jim, I'm with you on that!" I can't say that anymore. Tradeking has removed their fractional shares. What does this mean? Well let's take a solid big time company like JNJ. Since you can't invest fractional shares, how much do you need to invest just to even get a solid 1 share to show up? Based on today 10-11-10:
JNJ Share Price: $63.12, Div Yield per Quarter $0.54 --> $63.12/0.54 = 116.888 shares or $7378.03!
Yes that is right boys and girls. To make JNJ work for you, you need to invest at least $7378 just so you can get DRIPS to work. And heaven forbid you want that extra share, just invest $7378 more. Now you understand the seriousness of where online brokers are heading. It just isn't Tradeking either. Here are some other top online brokers that have really ruined it for many individual traders:
OptionsHouse, Scottrade, thinkorswim, Zecco, and more.
Luckily I have Vanguard also and they haven't screwed me over yet. My MO holding there is great and still soaring.
Bottom line, next time you think about an online broker, look into the fine print. Great things aren't always as great as their first appear to be. Good luck!