Everyday Freethought

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Looking For A New Broker

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Posted by Everyday-Freethought on 2014-04-26 at 00:35:08

Lately I have been thinking about going with a different broker.

One reason is security. So far there have been no problems, but you can never be too careful. There have been a lot of articles about security after the discovery of the Heartbleed bug. I read a article/comment/post from someone who said the passwords for one of his financial providers was case-insensitive. Some do not allow non-alphanumeric characters for passwords. Some have low character limits.

I also found out that Scottrade has what they call FRIP, Flexible Reinvestment Program. It is sort of like a DRIP. With a DRIP, dividends from a stock are re-invested in that stock. With a FRIP, you can re-invest dividends commission-free in upto five stocks. It does not have to be the same stock that paid the dividend.

When I was looking at brokers, I did not go with Scottrade because they did not allow you to buy fractional shares. If they had the FRIP back then, I probably would have gone with Scottrade.

I am currently reinvesting all the dividends from the stocks I own back into themselves. I think with a FRIP, I could reach my goal of getting some of my stocks up to 100 shares a bit more quickly; have all the stocks feed into one, then when it gets to 100 shares, pick another. I might be buying high if the market keeps rising, but if I keep doing what I am doing I will be buying high anyway. Plus now that I am looking at the FRIP, the idea of fractional shares seems unnecessarily complicated.

The downside is that I would pay a lot in commissions to sell at my current broker, and buy at Scottrade. Another broker offered 50 free trades for new accounts, but I did not see that at Scottrade. I have read comments on other dividend sites that they might offer it if you ask. Plus I would be giving up some dividend income for a couple of weeks. We shall see.

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