It’s hard to believe that the ball has dropped on yet another year. Now that the hustle and bustle of the holidays has passed, we are left with at least trying to stick to our New Year’s resolutions for more than a few weeks. For many, that may include getting your financial houses in order, saving more, spending less, or reducing your credit card debt after all the holiday shopping.
Personal finance programs can help you get a leg up in these pursuits. These general-purpose applications offer a variety of tools for budgeting, tracking income and expenses, and managing and researching your investment portfolio. They are also designed to help with long-term financial planning—such as for retirement, buying a house, or paying for college. The two dominant programs in this category on the market today are Quicken from Intuit and Microsoft Money. The article that begins on page 20 outlines the features offered by the latest versions of these applications and offers my recommendation as to which one wins the head-to-head competition.
Discount Broker Comparison
This year’s comparison of on-line discount brokers lists 47 firms. Last year’s merger of TD Waterhouse and Ameritrade may initiate a new wave of mergers and acquisitions in the industry. While companies typically point to mergers as a way to cut costs, the impact on investors may not be quite so pleasant. There is always the potential for trading Web sites to change along with different fee structures and lower quality of customer service than customers have come to expect.
Security issues also came to the forefront in the brokerage industry this past year, as several firms were the target of hack attacks. Many attacks originated with spyware loaded on a computer that captures vital account information that thieves then use to open victim accounts. For this reason, it is important to safeguard yourself against these kinds of attacks, as well as closely safeguard your financial data. The SEC offers guidelines for those with on-line brokerage accounts at http://www.sec.gov/investor/pubs/onlinebrokerage.htm.
As the On-Line Discount Broker Comparison shows, there are brokers catering to a variety of trading styles, holdings periods, and investor knowledge level. If you trade frequently, then you will probably want to focus your search on the deep discount brokers, or even consider a broker that has a monthly fee, but very low commission schedule.
You should not, however, focus strictly on commissions when selecting a broker. Quality of trade execution is just as important—factors such as the price at which an order was filled, whether the broker was able to shop around for a trade within the quoted bid/ask spread (known as price improvement), the speed at which the order was filled, and even the likelihood that an order will be filled when it is entered. All of these factors are intertwined and involve some level of compromise. But attempting order improvement may result in a slight delay of execution.
The On-Line Discount Broker Comparison, which begins in this issue on page 9, should offer a number of on-line brokers that match up with your needs.