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Originally Posted by NovaJ
First time I have posted in this thread, but have been trying to follow it and have certainly learned a lot.
I have decided that it is time to start doing more than just my company 401k stuff and am therefore looking at the online brokerages available. I think I have basically narrowed it down to Scottrade and Schwab. I like Scottrade because they have the option of an actual office fairly close to me, while Schwab's office that is also in the same area is listed that it is "Open by appointment only" which seems potentially inconvenient.
The one thing keeping me from pulling the trigger and going with Scottrade is I am not so sure about the FRIP (Flexible Reinvestment Program) that Scottrade uses. For those who might not be familiar, the FRIP pools your dividends into one sum and then buys stocks based on how you have set the pool to be allocated to investments which does not necessarily have to be buying the stock that generated the dividend. It does seem nice to have the option to use your dividends on things other than what paid you the dividend, however, the fact that you can only buy whole shares with the FRIP seems like it might be restrictive, especially in the beginning since I will be working with a relatively small account (hopefully not for too long though, right).
Any thoughts on this type of system? Or even other reasons why you chose the firm you're using vs. the others?
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I'm with Sharebuilder. They let you buy "fractions" of shares, if using the auto-investment tool (which buys the stock on "tuesdays"). If your a Costco member, you usually get some free $$ by signing up, plus discounts on all trades (standard trades or the auto-investment). No fees (at least not for my ROTH IRA or my Personal account). I've never needed a reason to go "into" an office at this point. That sort of banking is slowly going away.
They dont offer a "frip" system, but you CAN choose NOT to re-invest the dividends. You can also setup the Auto-Investment feature to auto buy "X" when you have "$Y" in your account. So essentially, it is the same as the FRIP, but it would also include any other deposits you made into the account.
Personally, I reinvest dividends for now. We'll see if that ever changes. Not sure yet, I've considered mixing it up. But I don't feel i earn enough div anyway to make much of a difference to start hoarding it on the side to buy another stock.
Anyway, just my 2 cents.
(I also set up a schwab account, with the minimum amount in it, just to utilize their Research tools. Which are really good).
I doubt you can go too wrong with whatever you choose. Just look at the costs involved to make purchases and such. My Auto-Investments are $2, and standard on the fly purchases are $6.