Firstrade Introduces A Transaction Fee For No Load Mutual Funds

[This post is written and copyrighted by FIRE Finance (http://firefinance.blogspot.com).]

If you need a referral to earn 5 commission free trades at firstrade, you may send an email with your FIRST and LAST NAME plus email id to firegetters@gmail.com [firegetters at gmail dot com]. We'll send you a referral.

A couple of days ago we wrote how cool Firstrade's no transaction fee, no load mutual fund inventory was. But the honey is no more! It is all about money now. Firstrade has introduced a transaction fee of $9.95 for their no load mutual funds! We called Firstrade to make sure that this change was indeed true and not a scam. Their customer service affirmed that the change in fee structure was true and there would be no exceptions to the rule.

Starting on April 2, 2007, please be advised of the following changes to Firstrade's mutual fund policy:

• A $9.95 commission will now apply to No-Load mutual fund trades. This allows us to maintain the lowest mutual fund rate in the online brokerage industry.
• No Transaction Fee (NTF) and Load funds will remain commission free. For an updated mutual fund list, please click here.
• The early redemption period has been decreased from 180 calendar days to 90 calendar days. An early redemption fee of $19.95 will apply to all mutual funds held less than 90 calendar days.
• Accounts opened prior to February 15, 2007 can still enjoy free mutual fund investing until March 30, 2007. For accounts opened on or after February 15, 2007, the new mutual fund commission rates will apply.
  

The introduction of a transaction fees will coerce us to change our investing strategy. Perhaps we shall now consider shifting our investments to the less expensive ETFs instead of continuing with index funds. Moreover Firstrade's transaction fees for ETFs is $6.95 which is considerably less than the new fees of $9.95 for No Load Mutual Funds.

If you are planning to open a brokerage account at Firstrade please keep the above fee change in mind while planning your portfolio. Transaction fees eat up quite a bit from the returns that our portfolio earns. However Firstrade is still offering a flat rate of $6.95 on stocks and ETFs. The newly introduced transaction fee of $9.95 for No Load Mutual Funds is still one of the lowest among all brokerages. If you are new to Firstrade and want to open a brokerage account with them they are offering five free trades through referral.

We hope this early heads up on the change in fee structure will give our audience enough time to plan ahead for the changes, if any, they need to incorporate in their portfolios this year.

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