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moneysense.ca, 24/11/05
E*Trade’s New Year Gift
In an earlier post, I complained that while discount brokerage commissions have fallen sharply in the United States, Canadian discount brokers continue to charge fat commissions. E*Trade is promising to provide some welcome competition by sharply cutting commissions for both Canadian and U.S. equity transactions. Effective January 10, 2006, E*Trade will charge a minimum of $19.99 per transaction (compared to $26.99 now). Competing brokerage charges range from $25.00 to $29.95.
I hold my accounts with RBC Action Direct. If they are unwilling to cut their commissions, I would be seriously considering moving my business to E*Trade.
FD: E*Trade (ET) is one of my top 5 holdings.
Note: Don’t forget to put in your entry for the One Year Anniversary Giveaway. You have nothing to lose!
moneysense.ca, 24/11/05
A caveat on the other E*Trade fees which may negate whatever cost savings one may have on the trading fees; e.g.
(i) cheque withdrawal fee of $10 at E*Trade, whereas it’s no cost at my current discount broker
(ii) A 1% fee (minimum $38.88) will be charged on the sale or switch of all mutual funds held for less than 90 days (Except for Fundplus Program Funds). Mutual fund charges imposed by the Fund companies are in addition to the above fees. The minimum purchase amount for all money market funds is $5,000. All other funds are subject to minimum purchase and redemption amounts as outlined in the prospectus or $1,000, whichever is greater. Switch orders are only permitted within the same load type & family of funds. Add $35.00 for broker-assisted trades.
Whereas, with my current discount broker, I can buy their in-house money market fund for a minimum of $1000 (non-plan account) or $100 (plan account). No minimum holding period and no fees.
What was/is your rationale for holding E-Trade stock? They have been doing very recently, although I dislike them from personal experience.
Jordon: Good point. E*Trade may not be for everyone.
Jonathan: I bought ET when it was trading at $10 and was earning close to $1. I thought a PE of 10 is a bargain. I am holding ET because it is a big player in the rapidly consolidating online brokerage sector. The company is growing revenues and earnings in a fairly good clip. I also think that ET is a takeover candidate. I am not sure I’d buy the stock now though. It has a PE of 20 and is forecast to grow earnings by 23% over the next 3-5 years (ValueLine estimates). That’s decent but not a bargain.