Frugaling

Save more, live well, give generously

  • Home
  • Start Here
  • Popular
    • Archives
  • Recommended
  • Contact
  • Save Money
    • Lifestyle Downgrade
    • Save Money with Mindfulness
    • Save at Starbucks
    • Psychological Trick To Reduce Your Online Shopping
    • Best Freebies
  • Minimalism
    • 8 TED Talks To Become A Minimalist
    • We Rent This Life
    • Everything Must Go
    • Lifestyle Downgrade
    • The Purchase Paradox: Wanting, Until You Own It
    • Nothing In My Pockets
  • Social Justice
    • Destroy The 40-Hour Workweek
    • Too Poor To Protest: Income Inequality
    • The New Rich: How $250k A Year Became Middle Class
    • Hunter Gatherers vs. 21st Century Desk-sitters
  • Make Money
    • Make $10k in 10 Months
    • Monetize Your Blog
    • Side Hustle for Serious Cash
  • Loans
    • 5 Rules To Follow Before Accepting Student Loans
    • Would You Marry Me?
    • Should I Have a Credit Card If I’m In Debt?
    • $50k in Scholarships in 70 Minutes

Finally, You Can Trade Stocks For Free!

By Frugaling 3 Comments

Share This:

Wall Street Free Stock Trading
Get ready world! Wall Street is about to get a lot more friendly.
Photo: Michael Daddino/Flickr

Back then, free stock trades weren’t possible

Free stock trading isn’t exactly new. In fact, plenty of companies have tried and failed in the process. Any number of problems have beset these pioneering companies. From beginning to charge commissions and fees to questionable management to poor corporate reputations, they haven’t stood the test of time.

When I first started investing and researching individual stocks, I was a wee middle schooler. As I tried to understand the markets, my burgeoning interest was dampened by trading fees. With only a couple hundred dollars to my name, stock trading fees of about $50 made it financially oppressive. I couldn’t invest in Apple (ticker: AAPL) right after the iPod was released, but I wanted to.

Fees destroy profits and wreak long-term havoc on investment returns — especially for those getting started. Thankfully, fees have been on a precipitous decline in recent years. From that abominable $50-fee time to now, you can see great change. Most online brokerage companies are around $10 or less per trade.

Unfortunately, if you’re an average investor — or even a day trader — you’ll spend money every year rebalancing your portfolio to better diversify. Whether you choose individual stocks (more risky) or exchange traded index funds (more diversified), you’ll be spending about $20 per stock to get in and out. And that should be frightening to anyone. Heck, that’s 10% of my monthly food budget!

The hope for fee-free stock trades

The lingering question: Is there actually a non-scammy, reputable way to trade for free? Until very recently the answer was still no. Unless you had gobs of wealth ready to trade, investment and brokerage companies had no interest in providing for the little guy or gal. Free didn’t really exist; the handful that tried, failed.

Today, there’s good news for everyone — at every income level — because data and tech companies have solved this wretched problem. Today, I’m making a rather lofty prediction: nobody in the United States will pay to trade at average investor levels within 7-10 years. Today, there’s hope on the horizon for a more affordable, accessible investing world.

The cost of everything tech-related has fallen. We can store more and get data faster than ever before. It makes all of our consumer products less expensive to purchase, and has the added benefit of making cloud applications cheaper, too.

We are just beginning to benefit from these reduced costs, as many cloud-based providers have opted to slash costs for services. For instance, Google Drive offers 15GB free and for $2.00 per month, you can receive 100GB. Think about it, only a few years ago we were working with floppy disks that stored about 1.5MB!

As technology prices decline, the consumer has benefited appreciably. And it’s leaving room for innovators to save us even more when trading stocks. If a company can utilize the latest technology, reduce brick and mortar costs by only having an online presence, make money off of user data, and turn cash-on-hand into interest for them, then you could have a success story.

Robinhood saves money for everyone

The other day I was reading up on a new tech startup that’s aiming to do everything I mentioned. They have an office — not hundreds or thousands of offices. They have a staff of coders, developers, graphic designers, and technical support to make something for the 21st century.

The company’s called Robinhood. I don’t know if they could come up with a better name than that! They aim to “democratize” stock trades by removing the “$10 [fees] for every trade.” Now, the wealthy and the hopefully-soon-to-be wealthy can participate in the market without being eaten alive by trading fees.

Instead of porting over old ways about investing, Robinhood revolutionizes everything about trading. All you need is a smartphone (iOS only, Android coming soon). With a few taps, anyone can invest for free.

Here’s where I want you to ask, What’s the catch, Sam? Nothing in life is free, right?

True. Nothing in life is completely free. There’s always some trade off. The fees that used to be captured by older brokerage houses are eliminated; instead, the company profits off of unused cash balances in portfolios. For instance, say you deposit $1,000 in a Robinhood account. Until you formally invest in a stock, that money is borrowed by the company and put in an interest-bearing bank account for them. As you research and decide on a stock to buy, they scoop up a little interest in the process.

Additionally, Robinhood uses advanced technical features that will likely be able to track user data far better than stodgy companies. I’m always cautious about data-based companies, but the potential gain is worth the information loss.

Robinhood Investors Google Ventures

Robinhood is backed by some of the biggest names in Silicon Valley, including Andreessen Horowitz and Google Ventures. That has provided them with some much needed funding to get off the ground and running. With Google behind them, I trust their platform and user-focused future. This isn’t a company that will crash and burn like Zecco did.

First impressions on this new app and trading platform

Robinhood iOS App

I deposited my first funds into Robinhood’s iOS app a few days ago. Trading stocks and ETFs were easy. As if conditioned to wince over the costs like before, I clicked and beared for some strange $7-10 trading fee. It never came.

Robinhood is an honest platform with some exciting energy. When I reached out for support via their FAQ forums and Twitter account, responses were delivered within 24 hours — usually in a couple hours. That’s impressive for a small staff with plenty of new accounts. The company seems to understand that if it’s to appeal to younger, more tech savvy generations, they’ll need to meet them where they are — Twitter included.

Reducing these trading is a wonderful first step towards a more accessible, affordable stock market for all. The dangers of stock market manipulation are still ever present, but being able to enter the market without these fees is amazing. And having a terrific platform on top of it is a wonderful thing!

Want to try it out? Unfortunately, it’s invite-only at this stage, but I have 3 invite codes up for grabs! Comment below and share this article on Twitter. I’ll email the codes to 3 people within 7 days of this article.

Filed Under: Save Money Tagged With: Free, invest, investing, market, money, review, risk, Robin Hood, Robinhood, stock, trades, trading, Wall Street

How Media Makes More Money Publishing About Fake Self-Made Millionaires, Whiz Kids

By Frugaling 7 Comments

Share This:

Whiz Kid Story in New York Magazine
New York Magazine Article on a “Whiz Kid”

At the spry young age of 15 and 16, I began trading stocks. I read Jim Cramer’s autobiography and was inspired by his love of markets. Memorizing the two, three, and four-letter tickers for major companies provided a unique joy; frankly, I’m not sure why. I loved watching CNBC and seeing the symbols dance up and down like a permanent Christmas tree of green and red.

Every now and then, a story would catch my eye. It was someone like me; passionate about the markets, but they were making boatloads of cash. They made me jealous, and I wondered how I could emulate their success.

That was until I realized most were fake, underreported, and often, downright lies. These were hardly the role models I should’ve been following. Today, I wanted to point out a few recent stories that highlighted frauds — willingly and with seriously piss-poor reporting.

The already-rich, “self-made” millionaire

Anton Ivanov was a serial entrepreneur and personal finance blogger for years. I had multiple conversations with him after starting Frugaling. To avoid anything slanderous, I’ll just say that I planned on never working with him. Something just didn’t make sense about his riches and efforts in the personal finance world.

Then, shortly before his 27th birthday a slew of stories were written about Ivanov. He even wrote an article for the occasion in one of my favorite personal finance sites, Budgets are Sexy. Yahoo Finance interviewed him to discover how he had succeeded to save, invest, and make wealth in record time.

Being a 27-year-old, self-made millionaire is a unique club that’s generally reserved for entrepreneurs and young tech whiz kids. The Internet has enabled a new generation — Millennials — to see millions and billions in record time with the sale of apps and sites.

Ivanov reported that he did it with old-fashioned hard work and dedication. Remarkable! His advice centered on a few steps: set clear and actionable goals, track net worth, save more income, avoid consumer debt, have an emergency fund, save for large expenses, and invest.

Yahoo Finance reported that Ivanov had successfully entered the workforce at a young age, started hustling at a young age, and then got into the real estate game. The article is filled with blasé quips like,

“He hopes to own at least 10 properties by the time he hits his 40s, but he’s in no rush.”

See, it’s not that his advice was fraudulent and questionable. The heart of the problem was that he wasn’t actually a “self-made” millionaire (as if anyone magically prints money themselves). Here’s what Yahoo Finance then wrote,

“Since the publication of this story on Nov. 4, new details have come to light which have made Anton Ivanov’s claims of becoming a self-made millionaire highly suspect. On Monday, Ivanov admitted to Yahoo Finance that 75-80% of his wealth consists of an inheritance that was left to him by his parents, who died several years ago.”

This kid made $72 million… From his parents

Ivanov isn’t the only fake “success story.” New York Magazine found a “whiz kid” that supposedly made millions trading stocks on his “lunch hour.” It was the ultimate viral article. With a catchy title that spoke to ridiculous riches — $72 million made from trading — and a young man looking to become a hedge fund manager.

Mo Islam was a 17-year-old kid who had already been profiled by Business Insider, as a “20 under 20.” He was going somewhere in life because of his vast wealth creation. Islam supposedly started buying penny stocks — over the counter and paper-based companies that don’t necessarily trade on the major exchanges. These stocks vary greatly and are dangerous for 99.99% of investors to even think about.

The penny stocks didn’t pan out, so Islam swiftly switched to oil and gold. That’s when New York Magazine says he struck bank account success. He quickly amassed about 8-figures of wealth.

If the story is unbelievable and astonishing, it might just be unreal and manufactured. Only a couple days later, every major media outlet was discrediting the kid and New York Magazine’s story. It was all made up, and while the “whiz kid” did have a large bank account, it is because very wealthy parents.

The media is rewarded for good, fake stories

Over and over again, false stories are reported in the media. They used to make me envious for their success. I thought, “Wow! If they can do it, why can’t I?” Well, there was an essential distinction between them and me — lots and lots of money to start. Both Ivanov and Islam started with wealth that was either inherited or given to them. The trading, saving, and investing that came afterwards didn’t essentially make them rich — it just added to their earnings.

These weren’t the mythical “self-made millionaire” and “whiz kids.” No, they were privileged with familial riches. Today I’m writing this story, not to further discredit these two people, but to highlight the severe media mismanagement and horrific reporting that was associated with both stories (and many others I don’t have time to cover).

With each story, the media outlet claimed that the individual told them that he had made boatloads of money. With each story, they reported that claim without properly vetting the source. And with each story, the media outlets made vast advertising dollars in spite of their errs. In fact, they made even more than they would’ve if they honestly vetted and reported the stories!

Ordinarily, these people are singular stories — one-hit wonders. They’re popular for a little while and then the media company moves to the next story. They make money from that one story, but here’s the genius: if they get it wrong, there’s at least two stories to come!

Here’s how you make more money as a news company by reporting fraudulent stories:

  1. Publish a poorly vetted story
  2. Make money from visitors to the “incredible” story
  3. Receive harsh critique and censure from observers of the story, which sends a surge to the original article
  4. Make more money from visitors to the “incredible,” fraudulent story
  5. Publish a story highlighting the “truth” regarding the “self-made millionaire”
  6. Make even more money from visitors to the “incredible truth” about the fraudulent story

All the while, media outlets work diligently to discredit the source, while excusing the journalist’s poor reporting. And meanwhile the mythical narrative of the “self-made millionaire” continues, stubbornly. The narrative doesn’t change, despite the blow to accuracy. Everybody wins when the narrative stays the same, right?

What do you think, can people actually be “self-made” millionaires? What’s the best way to make and build wealth? Is there actually one-size-fits-all advice that works for everyone?

Filed Under: Make Money, Social Justice Tagged With: cash, market, Millionaire, millions, money, New York Magazine, self-made, stocks, trading, whiz kid, Yahoo Finance

Follow

  • Facebook
  • Google+
  • Pinterest
  • RSS
  • Twitter

Subscribe

Best Of

  • Was Albert Einstein A Minimalist?
    Was Albert Einstein A Minimalist?
  • 5 Tricks To Save Money At Starbucks (Updated)
    5 Tricks To Save Money At Starbucks (Updated)
  • I have $37,718.68 in debt. Would you marry me?
    I have $37,718.68 in debt. Would you marry me?
  • The New Rich: How $250k A Year Became Middle Class
    The New Rich: How $250k A Year Became Middle Class
  • Do I Regret Deleting My Facebook?
    Do I Regret Deleting My Facebook?
  • My Low-Income Lifestyle
    My Low-Income Lifestyle

Recent Posts

  • How to Eat Healthy on a Budget
  • How To Live Stream Your Art
  • 5 Fun Summer Activities on a Budget
  • How to Pay Off Medical Debt
  • 5 Ways to Save Money Before a New Baby

Search

Archives

  • June 2023 (1)
  • May 2023 (2)
  • January 2023 (1)
  • March 2022 (3)
  • February 2022 (2)
  • November 2021 (1)
  • October 2021 (2)
  • August 2021 (4)
  • July 2021 (5)
  • June 2021 (3)
  • May 2021 (2)
  • January 2021 (2)
  • December 2020 (2)
  • October 2020 (2)
  • September 2020 (1)
  • August 2020 (3)
  • June 2020 (1)
  • May 2020 (2)
  • April 2020 (1)
  • February 2020 (2)
  • January 2020 (1)
  • December 2019 (1)
  • November 2019 (5)
  • September 2019 (4)
  • August 2019 (1)
  • June 2019 (1)
  • May 2019 (1)
  • April 2019 (1)
  • March 2019 (3)
  • February 2019 (1)
  • January 2019 (3)
  • December 2018 (1)
  • September 2018 (2)
  • July 2018 (1)
  • June 2018 (2)
  • May 2018 (1)
  • April 2018 (5)
  • March 2018 (6)
  • February 2018 (4)
  • January 2018 (1)
  • December 2017 (10)
  • November 2017 (3)
  • July 2017 (2)
  • June 2017 (5)
  • May 2017 (2)
  • April 2017 (8)
  • March 2017 (4)
  • February 2017 (3)
  • January 2017 (2)
  • December 2016 (2)
  • November 2016 (4)
  • October 2016 (2)
  • September 2016 (1)
  • August 2016 (4)
  • July 2016 (1)
  • June 2016 (3)
  • May 2016 (3)
  • April 2016 (4)
  • March 2016 (5)
  • February 2016 (2)
  • January 2016 (2)
  • December 2015 (3)
  • November 2015 (5)
  • October 2015 (5)
  • September 2015 (4)
  • August 2015 (6)
  • July 2015 (8)
  • June 2015 (6)
  • May 2015 (14)
  • April 2015 (14)
  • March 2015 (13)
  • February 2015 (12)
  • January 2015 (15)
  • December 2014 (10)
  • November 2014 (5)
  • October 2014 (6)
  • September 2014 (7)
  • August 2014 (12)
  • July 2014 (11)
  • June 2014 (12)
  • May 2014 (16)
  • April 2014 (13)
  • March 2014 (13)
  • February 2014 (9)
  • January 2014 (20)
  • December 2013 (9)
  • November 2013 (18)
  • October 2013 (15)
  • September 2013 (11)
  • August 2013 (11)
  • July 2013 (27)
  • June 2013 (18)
  • May 2013 (16)

Best Of

  • Was Albert Einstein A Minimalist?
  • 5 Tricks To Save Money At Starbucks (Updated)
  • I have $37,718.68 in debt. Would you marry me?

Recent Posts

  • How to Eat Healthy on a Budget
  • How To Live Stream Your Art
  • 5 Fun Summer Activities on a Budget

Follow

  • Facebook
  • Google+
  • RSS
  • Twitter

Copyright © 2025 · Modern Studio Pro Theme on Genesis Framework · WordPress · Log in