Don't trade commissions eat away at returns when dollar cost averaging if you're buying ETF's or stocks?

Answer 1

yes, they do ...

that said, most dollar cost averaging blokes are long term investors rather than traders and thus believe that the long run growth will cover the added commissions.

Still, it can pay to look for firms that have dividend reinvestment plans. Many of them allow you to buy more shares each month or quarter without commission [or with very low commission].

Of course, mutual funds have percentage of investment commissions and thus avoid this issue, which applies only to flat rate commissions.

Answer 2

If you set up a DCA plan thru a systematic purchase, some brokerage firms charge a significantly reduced fee. Certainly, averaging into a mutual fund might be more cost effective and a wiser investment choice due to the diversification and professional mgmt. If you don't have a portfolio of at least $100k in core mutual funds, you really should not be buying stocks or ETFs. Don't go for home runs when you don't have a foundation established.

Answer 3

When you buy low and sell high, who cares about commissions? I made $8,000 on NOK stock last year and you think I worry about the $11.00 fee??

Erik

Answer 4

depends on your capital