Investing costs fall again: Fidelity, Schwab cut commissions

NEW YORK (AP) — It keeps getting cheaper to invest.

Fidelity on Tuesday became the latest company to cut its fees in an ongoing industry battle that’s helped mom-and-pop investors keep more of their own dollars. Rival Charles Schwab matched the price cut in a matter of hours.

Fidelity said it will cut its commission for retail brokerage investors trading U.S. stocks and exchange-traded funds online by more than a third to $4.95 from $7.95, among other fee cuts. Fidelity is the country’s largest online brokerage firm with 17.9 million accounts and $1.7 trillion in client assets.

It was only earlier this month that Schwab cut its base commission for online stock and ETF trades to $6.95 from $8.95, a move that many investors anticipated would lead to a pricing war. Just hours after Fidelity made its announcement, Schwab said on Tuesday it will drop the commission to $4.95, which matches Fidelity’s cost.

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“We feel that this is going to put more money in the pockets of retail investors,” said Ram Subramaniam, president of Fidelity’s retail brokerage business.

He pointed to younger investors, who typically have less to invest. That means trading costs can be a bigger burden on them, proportional to their investment. “They’re in their first job, second job, and for them every penny counts,” Subramaniam said.

Active traders, who make 120 trades a year or more, make up less than 10 percent of Fidelity’s total customer base, but they account for a significant chunk of trading.

Besides trading commissions, the financial industry has also been cutting the fees they charge for investments in mutual funds and exchange-traded funds. Last Friday, for example, Vanguard cut expense ratios for 68 mutual fund and ETF shares, which it says should save clients more than $105 million overall.

Schwab is cutting the expenses for its index fund that tracks the…

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