FRONTLINE FRUGALITY - 2
penny saved is not a lot... According to E-Trade.
inventor, printer, and philosopher, Ben Franklin, said "A penny saved is a penny
earned." These days, "A penny saved is not alot." according to online
discount broker, e-Trade, whose billboard slogan overlooks Silicon Valley travelers on
Northern California's hectic highway 101. For traveling tightwads, this billboard
seems to be a slap in the face to those who look at pennies as the first step in the
mathematics of serious savings.
Hi-tech Trader Turns Traitor!
"Saving a few pennies was my goal, when I defected over to Charles Schwab's
innovative discount brokerage service in the early 1980's" says Jonathan Ortmann, a
savvy high tech quality control guru, who has worked at many of the valleys top hi-tech
firms. According to Ortmann, the futures were bright with Schwab's innovative
telephonic trading until e-Trade, the Palo Alto based upstart, lowered the cost of trading
and put it on a personal computer. "I Schwab'ed the deck and dropped Charlie,
when e-Trade went on-line and wiped-out the discount competition, a few years ago."
Although Charles Schwab was soon online, e-Trade initially made a huge impact with
services and information that had previously been held in expensive ivory investment
towers. "e-Trade offered lower trading fees, faster online information, and nearly
instant trading that was hassle free," explained Ortmann. "When e-Trade
put discount trading on the computer screen, I was a really happy camper." In
the virtual world, however, time does not stand still. The last few years, the stock
market volume has smashed through the glass ceiling and a virtual swarm of online brokers
and discount trading companies have begun to chip, crack, and gouge the huge customer base
gathered by e-Trade. "Money magazine, e-Trade and climbing mountains, have really
taught me alot about the ups and downs of the free market." "...(e-Trade)
taught me to buy low and sell high, but the truth is, today you can buy even lower with
low cost trades from SureTrade, AmeriTrade, Datek and a few others, but e-Trade is still
stuck at the high end."
Defections Save Dollars Not Pennies
With one of the largest budgets for an online discount brokerage, e-Trade has been
actively pursuing clients with an advertising budget that stretches from local billboards
to the million dollar Super Bowl commercials. Recent M-TV generation-X slackers have even
been pursued by e-Trade on shows like "The Real World" by giving away thousands
in trading dollars. All of this e-Trade hype has left many people wondering if lower
trading fees wouldn't be better than bigger ads. And now true tightwads are looking
to a skyline of billboards, and asking if e-Trade is now in the business of ridiculing
Deals to be Made for Low Cost Trades
If savings were the keystone of e-Trade, then savings can be
found in the recent myriad of online discount brokers now offering low cost trading with
low minimum balance accounts. Some of the more popular include: FirstTrade at
$6.95/trade, SureTrade at $7.95/trade, AmeriTrade at $8.00/trade, and Datek at
$9.99/trade. Price can be deceptive and is not always the best factor when
considering brokers, say the experts. Many of the price comparisons don't
include extra fees and charges or the availability of online research. To search
effectively, many tightwad traders are using the service of "the e-commerce
authority," Gomez.com. Gomez evaluates the best sites using criteria the you
select. Overall Cost, Ease of Use, Customer Confidence, One Site Resources, and
other criteria can be sorted for your evaluation. On top of that, Gomez offers cash
rewards and deals to folks that sign-up directly through Gomez.com. For example, Gomez
offers $20. worth of free trades per month for six months with new sign-ups for
FirstTrade. For new Datek customers, Gomez will pay $75.00 when your Datek account
is funded. In addition, Gomez offers $150. for new account holders who sign with
E-trade. Check Gomez deals at http://www.gomez.com/deals/index.cfm?topcat_id=0
Pennies Are Not Peanuts
When examining online discount brokers, the bottom line should
not be based on a company's advertising strength, but how much cash you can save and make.
Bottom line savings brought e-trade it's success. And yes, just a few hundred
pennies do add up, just like a few hundred dollars add up to make a fortune. In the world
of online brokers, pennies add up one trade at a time. The word here is to do your
homework and start building savings habits. Because, as Franklin said, "A penny
saved, is a penny earned!"...even if those pennies are earned one trade at a time.
Commentary by Richard James, Copyright Imagex Associates 2000
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