Reducing fees on small transactions

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briant
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Reducing fees on small transactions

Post by briant »

Very basic question here on starting out with discount brokerages and keeping costs low.

I'd like to start a non registered portfolio with a discount brokerage. Say the transaction cost is $30. Say I would like to purchase BMO stocks. In order to keep my costs below 1%, I would need to make my first purchase of BMO $3000. What did you guys do, when you started picking individual stocks, but didn't have enough cash in hand to easily keep these costs low? Did you save till you had enough cash before making the purchase (doesn't become cost effective untill you save a few thousand)?

I must be missing something here, because I've seen other peoples portfolios totaling ~50K, and they hold positions of < $500 worth in a single company.
BRIAN5000
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Post by BRIAN5000 »

DRIP...if you can get your hands on 1 share of BMO registered in your name you can send the transfer agent money every month. You get to put in little bits of money, over a long period of time and its free.
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Post by Shakespeare »

I've seen other peoples portfolios totaling ~50K, and they hold positions of < $500 worth in a single company.
Maybe they were $3K once.... :wink:
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queerasmoi
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Post by queerasmoi »

For many popular companies, try Canadian ShareOwner... you can get $9 trades on amounts as small as you wish; and if you place an order for a whole bunch of different stocks at once, the total fee is capped at $36.
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Post by bitey »

My strategy when I had smaller amounts was to wait until I had about $5000, then I used the money to buy an ETF (XIU). This provided the diversification I needed until I could start buying larger amounts of individual stocks.
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Post by Jaunty »

queerasmoi wrote:
For many popular companies, try Canadian ShareOwner

I had a few stocks through TD Greenline when it first started, but moved to Canadian Shareowner from its inception. I Dripped away all those years and closed the account last year only because I am not in the acquisition mode any longer and because at that point my BMO InvestorLine holdings (with things you can't invest in through ShareOwner) were larger and I wished to consolidate most of my holdings.
It is an excellent choice IMHO.
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Post by Operabob »

DRIP until you can afford $3,000 (or $1,000):

http://www.dripinvesting.org/Articles/C ... 07/22a.htm

OB
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Post by queerasmoi »

Just a thought: You can add shares through the company's DRIP/SPP once you own a single share, right?

So why not do a batch co-op buy through Canadian Shareowner of at least one share of every stock you want to DRIP, and pay a total $36 commission for it? Then you can make future contributions through the company SPP instead of through CS.

Does this make sense or am I missing something?
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Post by MC Hammer »

You need to get a share certificate registered in your name before you can purchase directly from the transfer agent. I believe Canadian Shareowners charges $40 per certificate. If you want to be registered in 10 different SPP's, that would be $400.
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Post by BRIAN5000 »

MC Hammer wrote:You need to get a share certificate registered in your name before you can purchase directly from the transfer agent. I believe Canadian Shareowners charges $40 per certificate. If you want to be registered in 10 different SPP's, that would be $400.
Granted this only happened once, that I can remember, and it was with my wife's account. I was in the Drip and they enrolled her with out having a share in her name.

Some US companies will let you make your first purchase directly with them and sign you up for the DRIP. Usually the first purchase may be $250 - $1000 then DRIP after that from $25 a month on up.

If you have a group of people and you share costs its a long process but doable. I think if you ask nicely the editor of the Canadian Money Saver used to sell you one share. They did have share clubs going on in Canada not sure if they still exist or not.
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Post by Operabob »

Use our Share Exchange:

http://www.dripinvesting.org/Boards/BoardMsgs.asp?BID=8

Here are the Guidelines:

http://www.dripinvesting.org/Articles/O ... elines.htm

OB ( Contributing Editor, Canadian MoneySaver Magazine)
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Post by queerasmoi »

Interesting, I had been under the impression that some people holding brokerage accounts could go to the Computershare web site and access the DRIP/SPP there directly. Guess not.
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Post by Alpha Dog »

TDW has a pretty complete DRIP program, which is a lot simpler than dealing with a transfer agent. For some shares, (usually trusts) they deal directly with company's plans (advantage: slight discount in price, disadvantage: takes a while to process), or sometimes they just make the buy amongst all of their shareholders and split out the shares (market price, but a little quicker to hit the account). I've been pleasantly surprised at the names (including US companies) that they'll DRIP.
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Post by Operabob »

The problem with a TDW (or any other broker) account is they have no SPP unless you pay the commission which is what Briant would like to avoid.

BMO $0
BNS $100
CIBC $100
NA $500

All the above have SPPs allowing you to make optional commission free investments once a month with the minimum cheque amount shown.

In other words you could send a cheque for $0.01 to BMO and they'll buy you $0.01's worth of a share calculated to 7 decimal places.

TD & RY have DRIPs but no SPP.

OB
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Post by Operabob »

The following is a list of Canadian DRIPs. It also has a column indicating if it also has an SPP. The list is maintained by one person relying on others to keep him up to date so always check before buying:

http://cdndrips.blogspot.com/

OB
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Post by Bylo Selhi »

Alpha Dog wrote:For some shares, (usually trusts) they deal directly with company's plans (advantage: slight discount in price, disadvantage: takes a while to process), or sometimes they just make the buy amongst all of their shareholders and split out the shares (market price, but a little quicker to hit the account).
One caveat: If you intend to transfer some or all of a TDW (and I presume other discount brokerage) account where some of the securities are DRIPed, the delays in crediting your account, especially with monthly-pay trusts like REITs, almost guarantees that after the securities have moved your broker will credit you with a dividend payment and use it to buy a few shares. Now you can either keep the stragglers and deal with the additional bookkeeping or pay $10 a pop to sell them. (If you're TDW PA and ask nicely they may sell your orphans for free.)

Bottom line: Before you do a transfer, turn off DRIPing from the affected securities.

(One of the lessons learned in succumbing to RBCDI's 1% transfer bribe.)
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