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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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The cost of investing

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: I have a money market account with TD Waterhouse with $20,000 but have been fearful for many years as I do not know how to invest because of the high cost of investing. Would you please make some suggestions.

A: The belief that investing is expensive may be a misconception in today's high-tech market. A cost-conscious investor can keep the price of a diverse market portfolio to roughly the same price as a money market account. Smart investors today can easily avoid paying commissions, surrender charges and high fees by taking advantage of the superior investment products and services that became popular in recent years. The emergence of non-commissioned Registered Investment Advisers (including OnlineAdviser service) now gives investors with modest account balances the ability to get experienced professional help for a small fraction of the cost of the service that was previously available. For example, the total typical charge in the investment accounts I most commonly use at TD Waterhouse (the name was changed to "TD Ameritrade" earlier this month after the two companies merged) for a $20,000 account is only $40 per year. This compares with money market internal charges that would average perhaps $25 to $35 per year, depending on which money market fund you use. By the way, the brokerage firm you chose - TD Ameritrade - is generally targeting larger accounts than yours so you might find a better match at another firm that handles middle income investors. An experienced independent Registered Investment Adviser (who is not affiliated with or paid by the investment firm) who handles middle income clients can help develop a personal risk profile and investment strategy, set-up a portfolio without any commissions, set up automated account monitoring and rebalancing, periodically review the account with the independent adviser all for this incredibly low fee!


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