How to pay lowest possible commission on regular investments

Author: Peter Smith
Occupation: Content Writer at CompareBroker.com
Date: 9/21/2009

Just take a closer look at the markets and you would realize a specialist discount broker is among the safest options. At discount brokers firms you can buy funds with lowest charges in the market. Discount brokers are specialist Ôexecution onlyÕ firms that simply sell you whatever fund you request. Like index funds advisors, they receive commission from the fund managers but as they simply execute the transaction and donÕt give advice, their costs are much lower. These firms allow you to pick and choose investments from a wide range with ease; you can transfer between funds online, with small charges of only around 0.25% of the amount invested.

The Amount of Commission Varies with the Discount Brokers

The amount of the commission varies from investment to investment. For instance, an unlisted property trust, with no entry fee, will provide a 3% commission, and in turn some discount brokers provide a 2% cash rebate.

For those looking to invest regularly, some of the best available alternative options are:

• Buying no-load mutual funds
• Keeping good records
• Consolidating investments
• Increasing retirement plan contributions

You can also Utilize the Power of Compounding

One should understand the power of compound interest. When you invest money you earn interest. Then you start earning interest on the money you earned from interest. Over many years this continues to compound and eventually leads to a very large sum of money. The same concept applies to time. If you invest time by working hard when youÕre young, you put yourself in a position to succeed that will continue compounding for the rest of your life. If you waste time when youÕre young, you canÕt make up for it later because youÕve lost the opportunity to utilize the power compounding.

Benefits of Regular Investment

Since nobody knows the exact direction where the market would be moving in the short term, the best thing you can do is to ignore these advices. Most of the experts, however, agree that the market is going (only) up in the long term. There will never be a time when you can get into the market at very bottom and exit at the exact peak, thatÕs where regular investments come in. Regular investment also means you are saving regularly which is a good habit. YouÕll have to do your home work diligently though since you are investing through the discount broker.