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What are commission-free ETF?


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Hi Earnest,

If you are a prospective ETF investor or have been in this field for quite some time, you may be familiar with commission-free ETF. Investing in commission-free ETF is attractive since you are thinking of a deal where you will not pay any commissions. However, lovely as it may sound; investing in these ETF is not a guarantee that you will not incur any costs. Nonetheless, it means that the prices you will pay are slightly less than when you would have paid a commission fee.
Any ETF you choose to invest will come with commission fees as well as some fund expenses. Therefore, in commission-free ETF, you can be sure of incurring these funds costs and any other costs associated with ETF other than the commission.
Commission-free ETF are funds that are not accompanied by any trading costs. Exchange-traded funds are traded on an exchange market similar to where stocks sell though they have the same elements as mutual funds. When you trade any instrument on an exchange, you have to suffer commission costs, also known as the transaction fees.
In exchange-traded funds, the commissions you pay will be between $10 to $20, depending on the brokerage firm you are dealing with. Any time you want to trade your shares, you will pay the commission. The amount you spend on the commission may vary depending on your frequency of trading. The commissions are costly if you frequently trade your shares. On the other hand, buying commission-free ETF will significantly save your money more, so if you trade your ETF shares monthly. 
A good number of brokerage firms will offer you the commission-free ETF. The firm may have several propriety funds set aside, which they offer without commission.  The firm will, however, charge a commission for funds that are not part of these funds. An excellent example, in this case, is Vanguard. The Vanguard ETF do not incur any commission; however, its opponent Fidelity is usually charged the transaction fee. Before you invest in ETF, it would help if you checked the elements you want from a brokerage firm.
Investing in commission-free ETF is not always the best option. Since ETF are very similar to commodities, all the funds aim at one goal. ETF whose costs are low is the best to invest in.
 It would be best if you avoided brokerage firms that claim to have commission-free ETF, yet they go ahead and charge you commissions. The exclusion to this is when you have an account with the brokerage firm that charges commissions on ETF, and you rarely place any trade. You should also circumvent from buying ETF where the broker charges you huge transaction costs than what you would have suffered if you decided to buy and hold an ETF

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