It appears that Zecco brokerage has now removed their minimum opening requirements, on top of their 40 free trades a month. I’m guessing this means you can start trading with any amount of money, which is nice because you can try them out with minimal commitment. You still need $2,000 to open a margin account, though. See my Zecco review for more information, and how to maximize the interest on your idle cash.
This got me to thinking – someone could now build the world’s tiniest diversified stock portfolio which tracks the entire world by buying:
- Vanguard FTSE All-World ex-US ETF (VEU) at ~$56 per share. This ETF essentially tracks the entire world’s publicly traded companies, minus that of the US, and holds over 1,500 representative stocks from 47 countries.
- Vanguard Total Stock Market ETF (VTI) at ~$151 per share. This ETF tracks the total US market via the Wilshire 5000 index and includes over 3,600 stocks.
To got the respective ratios approximately correct, you’d have to buy 3 shares of VEU and 1 share of VTI, for a total of only $319. This gives you 53% International/47% US, which is very close to how the market capitalization of the world is currently split up, which if I recall correctly is about 55%/45%.
I find it very cool that you can now track the world via over 5,000 stocks for about $300. With the free trades, the total cost to maintain this $319 portfolio would be just the slim expense ratios, which add up to… 53 cents a year!
…or you could just trade a bunch of stocks and do your best Warren Buffett imitation like everyone else is thinking. 😀
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Fun post. I wonder if there is some mutual fund transfer agent who would let a 10 year old kid plop down $25 to buy the world in that same capitalization proportion (split between fractional shares of the open-ended fund equivalents of Vanguard All-World and Total Stock Market)? Sometimes financial institutions waive fees and minimums for the littlest guys, trying to build the lifelong business relationships early.
Regarding Warren Buffett imitators, there is psychological attribute (can’t recall the official name of it) which causes *more than* half of the people to believe that they are in the top half, in whatever measurement.
It certainly seems like it would be hard to pick a much simpler portfolio! It would also keep you from chasing “hot” sectors. Pretty neat.
@Austin
Didn’t you know? 75% of people say they are above average drivers!
Their customer service is terrible. When you call it goes to their voicemail and they take their own time to return the call. This is so even for emails. I am yet to hear from then for an email that I sent two weeks ago. If you try to use your account to short the stocks, the order gets immediately rejected if the price is not equal to market price.
I requested options trading when I opened the account and it has been several months and they have not enabled it so far.I have sent several mails and no response so far.So I transferred all funds to my other account with TradeKing.com. Their fee is small, customer service is very good and they have very good facilities for options trading.
I’m sure that’s what Zecco is trying to do – get people to try them out at least, maybe when they have only a little money, and then hopefully make them long-term customers.
I’m just trying to throw out a low-cost diversified option for those people with lower balances 🙂
You could probably do the fractional shares with with Sharebuilder or FolioFN, but it’s cost at least $4 a trade or $12 a month I think.
I’m waiting for a World Market ETF – there are already All-World indexes, but I don’t know if there is enough interest for someone to form it.
What is a margin account and why would you want one? – Newbie Investor.
I wonder how rebalancing this portfolio would work.
Ted – That’s the beauty of it! If you really want to track the whole world in a market-cap weighted fashion, you shouldn’t have to do anything 🙂 The ratios should take care of themselves. Kind of like if you only wanted to track the US market, you’d just keep holding VTI, no need to worry about rebalancing between large-caps or small-caps.
Ryan – Margin accounts allow you to buy stocks essentially on credit. Accordingly, they will charge you interest, and you will need to maintain certain equity levels otherwise they will perform what is called a margin call and sell your stocks to pay them back. However, it can also increase your flexibility in trading – Please see my review for more information.
How does Zecco make money?
Praveen -> Zecco approved options trading for me in about a week. I’d give them another e-mail.
Jon-> Do yo think you could update your “About Me” w/ your current situation!
Thanks!
But you may have to adjust your weighting between US and foreign stocks eventually – if one outperforms the other, your ratio of VTI to VEU may have to change – maybe you’d have to go with a 2:3, or a 1:4, or whatever.
yea i just bought veu with zecco today, it got pretty cheap : )
i agree about the customer service, worse ever.
but i havnt needed it tooo much yet
Once the 40 free trades are gone, that small amount of cash is going to eaten up very quickly with commissions.
Zecco has changed their base requirements a couple times now (took away fee on IRA and then added it back). I wonder what this means?
Will they one day changed from free trades to paid trades only? Add monthly maintenance fees back after low balance people have joined? Or are they having issues turning a profit and trying to attract more business?
Kinda of scary when half the people say they have bad customer service.
What happens to your investments if they go belly up??
Zecco customer service sucks. They take days to respond and the paperwork you have to do is much more than other online brokers. If you want free trades, be prepared to face a slow crawling customer service that can barely listen to you.
Excellent Site. My father in law recently passed away at the age of 52 from a Brain Tumor (hope you never have to deal with one of those in your life!) and my mother in law is pretty uneducated in finances. I’ve been helping her roll over his 401k into an IRA and appreciate your posts on various companies.
I’m making some $ through online surveys these days after a few hours on the computer and am planning on taking those earnings and place them into an IRA as well, thanks to your advice!
I am a Canadian, will it be hard for me to sign up an account with Zecco? From their FAQ it states “Non U.S. Citizenship with International mailing address and no U.S. social security number: Requires a signed application, copy of Passport, and W-8, completed and signed by all parties.” I didn’t think non US citizens could sign-up for a US brokerage account. Are there other firms that allow this? Any comments for this Canuck would be greatly appreciated.
Tan,
I am non US citizen from India and I have used firstrade.com for about two years and have been very satisfied with them except $7 commission :).
They have excellent cust service.
I have sent my application to zecco to open an international acct. As everyone here says, cust service does not seem to be good…but I have been lucky to get response within 48 hrs.
Also, I think there are some things are different for Canadian citizens so make sure you get all the info.
Bob–> My account has been approved for options trading. But when I go to their options trading screen, it says “your account is not authorized”. The organization of website and the navigation is poor unlike tradeking.
Tan–> You can open A/C with InteractiveBrokers.com. They are discount brokers who charge samll fee and they offer many instruments like stocks, futures etc.
Nikhil,
How did you get your application from Zecco? I tried to setup an account online but could not get pass the Personal Profile, the system allowed me to enter Canada as my country but under state there were no provinces. I have sent their customer service and email. But just curious as how you got around this issue. Any suggestions out there would be helpful. Thanks!
Tan,
From zecco website:
Can Canadian residents open a Trading Account?
Canadian citizens residing in the U.S. are able to open an account at Zecco Trading; however residents in Canada are currently unable to establish an account due to current Canadian security regulations.
So it seems you may not be able to acct there.
For India, as soon as I select country India, the state box becomes invisible.
Nikhil, thanks I checked the Zecco website you are correct. It seems like Canadians are not allowed due to regulation :)…So sad, I am inquiring about this particular legislation and if it will be change. Greg Sorbara is the MPP appointed as Minister of Finance in my Province(Ontario) that over sees the Ontario Securities Commission. Fellow Canadians out there that want to challenge this please start with is MPP.
What is a reasonable amount of time I should allow for my account to be activated? I filled out the application on 6/4 and I still don’t have a trading key
🙁
I have noticed on the Customer Info page and via Zecco’s IVR it talks about Debit Card and Check Writing. While I was on the phone with Zecco about my account I asked and they said they do offer those services and sent me this email.
“Thank you for contacting Zecco Trading. Yes we do offer check writing and debit cards. Please fill out the attached form to apply for these services. Our check writing service is free. Your first set of checks is free. After that, there is a $5.00 fee for the next set. This is all explained on the application. The debit card carries a $30 annual maintenance fee and requires a $10,000 minimum account size.”
The form is the PenFlex Account Application.pdf. The email also states to mail and not to fax. But I’ll ask customer service next time I’m on the phone to be sure.
The $5 reorder fee is for 100 checks. “Check reorder fee: $5 for 100 checks”
The form also has a section labeled “Money Fund Choice” with these check box options.
– Money Market
– Government & Agency
– Tax-Exempt
– Treasury
– Tax-Exempt California
– Tax-Exempt New York
– Tax-Exempt Pennsylvania
– Tax-Exempt Florida
– Tax-Exempt New Jersey
– Tax-Exempt Michigan
– Tax-Exempt Ohio
– Tax-Exempt Massachusetts
– Tax-Exempt Virginia
– Tax-Exempt Connecticut
It turns out that you make your Trading key using the first three digits of your social, then the last four of your account number. I’ve been able to get in all along. Doh.
Next question. If you have transferred shares in from another broker, do you have to pay fees to both, or how does that work?
Zecco have a very poor customer service.
They have lost my paperwork and it was impossible to solve the problem until sending again all the papers. The customer team is not able to follow a simple problem and to solve it. Very very poor service. Hope that nobody will have problems, because it takes days to solve them.