I recently received a few questions about Zecco so I wanted to post an update. Zecco is an online broker started on July 4, 2006 that offers free stock trades and low cost option trading. Zecco says it will make money from interest income and margin spreads, as well as by charging a low fee for options trades. Zecco also hopes to attract advertisers to its financial portal site. I have been using Zecco Trading for six months and here is a review of my experience with Zecco.com.
Cost I have made 46 stock trades since I have opened my account with Zecco and I have paid zero in commission. I have made 45 buys and 1 sell. I did pay $.04 in fees associated with the sell order. Comparing the Zecco account with my Scottrade account, I have saved $322! There are no account fees for regular accounts but there is an annual charge of $30 for IRA accounts. You get 40 free trades a month and after that you are charged $3.50 per trade. You are allowed 10 free trades in one day. There is no minimum amount required to set up a cash account and $2,000 is required to set up a margin account. Online options trades cost $3.50 plus $.60 per contract with no minimums and online mutual fund trades are $10. Here is a link to all Zecco fees.
Flexibility I love the ability to make small purchases to help create a well diversified portfolio with a limited amount of assets. I can use dividends from a couple of my large stocks to make purchases into new holdings, again allowing me to diversify my portfolio at no cost.
Ease of use You can now open an account online through a very streamlined process compared to the paper process I went through. Once you are logged into the Trading Center there is a simple to use Stock Order Entry. You enter the stock symbol, buy or sell and the number of shares. It also allows limit orders on this same entry form. Trades are processed very quickly and I have not noticed any difference in execution versus Scottrade.
Trading Tools There are limited trading tools to help with additional financial analysis of stocks. Zecco does offer Motley Fools stock rating “CAPS”.
Customer Service The customer service I have received has been very good. You can contact customer service via email or phone. I had a question on my account when I first opened the account which I submitted via email that was answered the next day. I also transferred stocks from Scottrade via ACAT and the process was very smooth and took about two weeks. I also enjoy the ability to process online ACH bank transfers to and from my Zecco account. Scottrade does not offer ACH transfers out of your account. I recently had a problem with my cash balance not updating but I called Zecco and it was updated the next day.
Community Zecco offers a program called Share which is in beta testing. Zecco Share is a secure area where Zecco account holders can share trade history, make blog posts and write comments to other users. If you are a Zecco member, you can follow my trades under my user name ZEEMAN.
Overall I have to say I have been very pleased with my Zecco account and would recommend Zecco to anyone who wants to save money on stock trades. If you are skeptical, open an account and purchase as little as one share to see how it works. Give Zecco a try if you're a novice investor or a seasoned investor. You can't beat free stock trades!
The Div Guy has not been compensated for this post.
Free Stock Trades: Zecco Review
Posted by Div Guy | Tuesday, September 11, 2007 | investing, stock, Zecco | 8 comments »
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Great information! Thanks for making it so easy and clear. You mentioned that you buy stocks that give dividends and that you plan on using the dividends to retire on , how do you choose which stock to buy to give you the best dividend for the best price of the stock? Also I read an article in Business Week that someone suggested that to invest 95% in TIPS bond and 5% in an out-of-the market call option on a merket index. What do you think of his strategy ,and do you do any call or put trading that you can share your strategy?
I have a couple questions. I currently use sharebuilder and I'm happy with them.
First off at sharebuilder you can have your dividends automatically reinvested into the stock that pays them. Is that possible at zecco? I know that with zecco you can receive the dividends and reinvest them into any stock free of charge, but once the dividend is paid to you then don't you have to pay income tax since it is a dividend received as opposed to not paying income taxes when the dividend is auto-reinvested? Or am I wrong...does an investor pay taxes on dividend reinvested?
My second question is: Does zecco have a money market fund that your money goes into until you are ready invest the cash you have in your account? At sharebuilder I transfer money every paycheck into my account. The money that I don't have invested sits in a money market fund earning 4.95% until the trade is executed to use that money. I use that money market account as my emergency fund also because of the decent savings rate. Does zecco have anything like that?
Those are my 2 main questions.
En, I will write a post about my stock selection but the bottom line is each person has to know how much risk they can take and come up with an allocation strategy. ie what percent in stocks, bonds and cash.
Stealthy,
I have read that you can have your dividend automatically reinvested when you set up the Zecco account. You are responsible for the taxes whether you get the cash or reinvest. Zecco does offer a money market fund that earns over 4% currently. You can sign up for that when you open an account. I just move money from my bank via ACH to Zecco. It is a two day process and does not cost anything.
lol thanks for the info. I have just one more question about the dividend reinvestment. Have you ever had your dividends reinvested through zecco? My real question is can you get some of the companies you hold to reinvest your dividends and at the same time receive your dividends from a different company? Can you change back and forth from receiving to reinvestment in zecco?
This is my one problem with sharebuilder. You either have to reinvest your dividends with all of the companies you hold or receive your dividend from them all. Good thing is that you can turn it on and off whenever you want.
Thanks for all of your attention to this topic. If you can't find the answer don't worry yourself over it. I'm going to try zecco when I get my bonus in a couple months. Is there a referral program? I'll sign up under you if you get a lil bonus.
Stealthy, I have not had my dividends reinvested at Zecco. If you send me your email address I can send you an invite and Zecco will make a $50 contribution to the Autism Society of America.
I do understand that choosing a stock is based on risk but even after assuming the risk how does one compute a return on investment for a particular stock in terms of dividends. If I want a 8% return in dividends how do I find which are the lowest risk stock?
EN,
I would suggust you take a look at a book by Lowell Miller called "The Single Best Investment" to get started with dividend investing.
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