A Huge Tax Cut for Every Investor

Andrew Snyder
by Andrew Snyder, Editor-in-Chief, The Oxford Club
tax cut investment expenses

Nearly every investor in the country just got a guaranteed boost to their portfolio. Think of it as tax break.

In some cases, “taxes” were slashed by 40% or more.

The best part is this cut has nothing to do with Uncle Sam and - an idea that’s bound to be even more popular - the rich won’t feel it nearly as much as the poor.

Here’s the deal... The Oxford Club (the unique group behind Investment U) follows a strict set of principles called the Four Pillars of Wealth.

The fourth Pillar mandates we cut our investment expenses.

It starts with...

Unless you run or sit on the board of the companies you invest in, there’s nothing you can do to affect your stocks’ performances once you own them. But there are critical moves you can make to ensure you get the absolute most out of your portfolio.

Cut your expenses... and stiff-arm the taxman.

Investors that follow that sage advice just got a huge gift. A price war broke out in February and now the biggest and most popular online brokerages have slashed their trading fees.

From what we gather, the first shot started when Charles Schwab lowered its cost of making a single trade to $6.95.

But then, four weeks later, Fidelity sent an email to its customers with a big announcement. It told its customers that it cut the cost of a trade from $7.95 to $4.95.

Within four hours, Schwab countered and matched the $4.95 price.

Shortly after, TD Ameritrade announced a $6.95 price.

And then E-Trade followed in kind... $6.95

Meanwhile, Robinhood, the commission-free brokerage, stood back and laughed, poking fun at the entire idea of a “trading” tax.

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Of course, with our strict mandate to slash expenses, we think Robinhood’s got the right idea. We predict that, within a decade, online commissions will be a thing of the past. For now, though, they’re something traders must deal with.

Sadly, many investors won’t notice the price war. After all, this price battle isn’t so much for existing customers - most folks don’t tend to pick up their money and leave over a few bucks per trade. Instead, brokerages are fighting for new accounts.

They know that once they have a customer, he’s likely too lazy to move.

But we argue you should be willing to move your money - especially if you make several trades each month. Saving a few bucks on both sides of the trade adds up quickly.

Again, it’s like eliminating a tax on every trade.

It benefits the small guy the most. The lower the amount you invest, the harder a flat-fee commission hurts.

Remember, brokerages bank on the sticky nature of their business. Once you open an account and plunk some money into it, they expect you to stick around. The hassle of moving your money into a new account is too great.

We hope you see the flaw in that logic. We hope you’re willing to devote, at most, a half-hour to sending your money where it’s treated best.

It’s not hard.

I did it recently - abandoning a higher-priced provider - and the process was painless. It’s almost entirely automated. You merely need to fill out a Transfer Initiation Form and send it to your new broker. It will then do all the work for you.

If your old broker charges you a fee to transfer the funds, no worries; your new broker is likely to reimburse you.

Finally, if you happen to be shopping for a broker, you may be looking to make your first trade as well.

The Oxford Club’s research team recently put together a short video tutorial that outlines exactly how to do it.

 

We urge you to watch the video even if you are an experienced investor. You may learn a trick or two.

But, more important, we urge all readers to review their fees - and do what’s necessary to cut them.

We all beg for tax breaks. We just got one... a sizeable one.

Take advantage of it.

Good investing,

Andrew

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Lecture Notes