08-20-2013, 02:04 PM
Hey Scott- I agree with what the others have said about making a buy with less than $2,000 ready. Personally I try to make my buys with at least $1,000 available. I use Scottrade and pay $7 commissions so this gives me 0.7% expense fee on the buy side and another 0.7% on the sell side (hopefully I never have to sell). I think over the long term as long as you try and keep trading costs below 1% you should be fine. Obviously the lower the better but if you really have a buy you want to currently make and you have enough capital to keep trading costs below 1% then I wouldn't hesitate to pull the trigger. Like others have said you'll recoup those trading costs pretty quickly and hopefully you are buying for the very long term.
The more capital you have the easier it is to keep trading costs low. It's definately good to always keep them in mind. I use to make $500 buys before I realized I was having to make up 2.8% before breaking even on a trade. I've since switched to making buys of at least $1,000. Unfortunately this means I don't get to make a buy every single month. Sometimes I have to save a month or two's savings up before I am ready for a purchase. As my income grows I'd also like to increase my purchase size to lower my transaction costs even more.
The more capital you have the easier it is to keep trading costs low. It's definately good to always keep them in mind. I use to make $500 buys before I realized I was having to make up 2.8% before breaking even on a trade. I've since switched to making buys of at least $1,000. Unfortunately this means I don't get to make a buy every single month. Sometimes I have to save a month or two's savings up before I am ready for a purchase. As my income grows I'd also like to increase my purchase size to lower my transaction costs even more.