Fidelity Slashes Fees — Here’s What It Means for Investors

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The brokerage's latest cost reductions reflect a growing trend that can help add hundreds of thousands of dollars -- or more -- to your nest egg.

Fidelity Investments just slashed fees for retail investors — again.

The brokerage announced Tuesday that it has reduced its commissions for certain trades, along with other costs.

This follows Fidelity’s June announcement that it would lower expenses on select index mutual funds and index exchange-traded funds, or ETFs.

The latest reductions include:

  • Online U.S. stock and ETF trades: $4.95 (down from $7.95)
  • Online options pricing per contract: $0.65 (down from $0.75)
  • Lowest margin rate: 4 percent (The base margin rate remains 6.825 percent.)

Fidelity notes that its new U.S. equity trading commission makes it “the lowest-priced provider among major retail competitors, including TD Ameritrade, Schwab and E*Trade.”

Its new options pricing and margin rates also give Fidelity the lowest such costs among its major retailer competitors.

Ram Subramaniam, president of Fidelity’s retail brokerage business, explains in the company announcement:

“Our active trader clients who make hundreds of trades each year will particularly benefit from our dramatic price reductions, and all clients who trade will be able to keep more money in their pockets. We encourage investors to evaluate their firm on the overall value they receive.”

Fidelity’s recent reductions reflect a trend of lower fees that has slowly penetrated the investment industry in recent years. The price-cutting is taking place as consumers become more educated about the true cost of investing fees.

As we report in “Of All the Fees You Pay, This One Is the Worst,” over the course of your working lifetime, even a small fee can easily reduce your nest egg by six figures — if not more.

In “Ask Stacy: Do I Need a Financial Adviser, or Can I Manage My Money Myself?” Money Talks News founder Stacy Johnson notes that he typically recommends another Fidelity competitor, the Vanguard Group, due to its low costs. He also suggests that many investors can save money by taking a DIY approach to their portfolio:

Money management isn’t rocket science. In fact, I’d consider it more basic than income taxes. Providing you’re willing to do a little reading, you can easily do it yourself.

Stacy considers index mutual funds — a specialty of Vanguard — the best way to reduce investing costs. To learn more, check out “9 Tips Beginning Investors Must Know.”

Are you taking advantage of this trend? Let us know below or on Facebook.

Stacy Johnson

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