There is a new discount brokerage on the block – SogoInvest.com. Mentioned yesterday in the Wall Street Journal, this broker is interesting on a couple of levels.
Automatic Investing Broker King?
It’s obvious that this broker has buy-and-hold automatic brokers like ShareBuilder as one of its targets. It offers the same no minimums and easy dollar-cost-averaging via fractional shares and automatic weekly investing. But it’s cheaper. At the most basic plan, it offers $3 automatic trades vs. $4 at ShareBuilder. And whereas ShareBuilder charges $14.95 for real-time market trades, SogoInvest charges the same low $3. Nice.
If you want a lot of auto trades, you can get 15 free for $15/month, plus only $1 more for each additional one. Real-time trades are then only $1.50. However, if you truly want to “build your own mutual fund” with more than 20 stocks, FolioFN still offers 200 automatic trades per month, for $20/month or $200 a year.
Overall Discount Broker King?
Looked at another way, SogoInvest is just another really cheap discount broker. $3 a for market/limit orders is pretty solid. As an introductory offer, new signups at Sogo get $1 trades (both real-time and automatic) for 90 days. Note that IRAs are currently not available. A good question would be what kind of features they offer and how they compare with other brokers with trades in the $5-$7 range.
Still, I wouldn’t say they are the hands-down cheapest. MB Trading which still offers trades starting at only $1 (100 shares or less). Depending on your trading behavior, MB Trading or the similar Interactive Brokers might be cheaper.
Grant at TheCornerOfficeBlog has his own opinions on SogoInvest as well, and makes some good points.
I think that Sogo offers a good alternative to ShareBuilder (although SB has given me a decent amount of free money). But as a discount broker I’d weigh all the options first. Price is big, but not everything.
For me personally, I’m going to stick with Scottrade for my main account, and continue to tinker with my MB Trading account whenever I have enough time to do so. Of course, if they offer a juicy sign-up bonus…
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I am not very pleased with Tradeking.com
I have real time quotes and I feel I am not getting the best price when buying or selling shares thru them. It is ALWAYS higher/lower than what the real time quotes and it has never sold or bought anything to my advantage….
Does anyone know if we should look into this as well? U could end up losing $5 to $10 each time you buy/sell stocks….so in the end, the $4.95 trade might not be as cheap as we think…..
Do you think we need to look into execution time or if the broker has a mechanism to get the BEST price in the market when you are buying or selling…..(if i am not wrong, Ameritrade has this system). When I used Ameritrade, I ALWAYS got the best price….
I have been using Tradeking for 2 months now, And it has been doing that for every SINGLE purchase or sale.
I buy/sell stocks 3-4 times a week, so this is very important to me.
I think I found what Im looking for my previous post. This is from the website of MbTrading.com
http://mbtrading.com/mbtx.asp
MB Trading believes in always putting the interest of our clients first. Our order routing decisions are made on an order-by-order basis in an unbiased fashion. MB Trading receives no payment for order flow from any Market Makers and has no vested interest in any ECNs.
MBTX has saved our clients over $17,096,624!
MBTX scans the market to find the best available price and venue to execute your equity orders. Since 2002, MBTX has saved our clients over $17,096,624! These savings are computed as the difference between the fill price and the best bid (on a sale), and the fill price and the best offer (on a buy).
Both MB Trading and Interactive Brokers offer you the choice to direct where your order gets filled. They also both have a default “smart” routing setting that tries to get your best fill.
I usually use limit trades, so I haven’t really seen any difference between brokers.
Only limit orders can guarantee the executed price.
With market orders, you expect somebody will profit from you down the line. It can be the market maker or whoever sees your order, such as your broker!
For instance, you make a market order to SELL a stock when you see it at $10. Your broker can simply buy that stock at $10 and give that stock to you at $10.10, LOL!
I agree with you that price isn’t everything, which is why I’d consider using BOTH Ameritrade for one trading strategy and SogoInvest for another.
As I mentioned in my post, I like the tools and utilities of TD Ameritrade, but you can’t beat the commission on SogoInvest.
I think SogoInvest is a great opportunity for investors who want to invest on an automatic schedule, but don’t want to monitor their portfolio on a daily basis.
Another aspect I’ll ask William Yeh about is the trade execution times…
As your commenters have been saying, commission is one thing, but you also have to get the trade through on your terms in a timely manner.
-Grant
AA: With market orders, you expect somebody will profit from you down the line.
Same can happen with limit orders. Let’s say you put in a Buy Limit order for $10. Broker could buy the stock from the market at $9.90 and sell it to you for $10.
For instance, you make a market order to SELL a stock when you see it at $10. Your broker can simply buy that stock at $10 and give that stock to you at $10.10, LOL!
LOL, you’ve got it backwards.
The same can happen with Market orders, but at least with limit orders, you know what price you’re going to get.
Does it offer dividend reinvestment? Looking through the site, do not see this mentioned.
Thanks
WW
my bad, but you got the idea
A couple things to note from their FAQ:
“In order to guard against identity theft, SogoInvest requires that you fax or mail us a copy of a valid driver?s license and signature prior to any fund transfers. We do not require this documentation to open the account, but only to transfer funds out of the account.”
“SogoInvest requires that you contact us over the phone if you wish to transfer funds out of your account.”
Seems like a lot of work to get your money back.
Thanks for the post on SogoInvest, some interesting points brought up about price vs. execution. I’m also interested to see how Sogo does with Customer Service. I setup an account after first reading your blog post, and so far, I called in twice, and they’ve been very responsive (no automated hold for 5+ minutes like I got at etrade and my bank all the time).
Two key points to make here:
1) The guy who commented about execution and losing money by not getting best price – absolutely agree, and think it’s CRITICAL, so I’ll be watching it with Sogo. Since they’re a division of Genesis Securities, that clears over 1 billion shares/mo with institutional clients, their speed and execution should be sharp (we’ll see).
2) Comparing broker pricing is CONFUSING, b/c everyone prices differently, then advertises in tricky ways. For example, “$4 Trade” from Sharebuilder doesn’t tell the full story, as you pointed out in the post “$14.95 for real-time” BUY OR SELL. I find this key when trying to get out of a position with Sharebuilder, you get hit! Note, now that Sogo is around, none of the competitors will list them in their comparison charts; so keep this one handy – http://www.sogoinvest.com/sogo/home/compareus.aspx
I’ll check back when I have more experience trading through Sogo.
You said you closed your MB TRADING account (due to a monthly fee you didn’t expect:
https://www.mymoneyblog.com/archives/2006/02/goodbye_mbtradi.html
Have you re-opened it?
Yes, I did close it, and then reopened it in anticipation of starting a Fun Money account. The trades were just too cheap, and so I thought my initial opinion was perhaps too harsh and gave them a second chance. Also, they now have online transfers between linked bank accounts. I still have never placed a trade with them, though.
Figures.. I just signed up at Sharebuilder a couple weeks ago. Though I did manage to get two bonuses (50 and 40), so I shouldn’t complain. I think if they ever do a new account bonus I will probably signup and atleast give it a try.
If you have your $ idle in Sogo, what interest rate do they pay you (sweep account?)?
Thanks
Credit Interest Rates
FREE CREDIT BALANCE INTEREST RATE
$0.01 – 9999.99 2.00%
$10,000.00 – 49,999.99 2.50%
$50,000.00 – 99,999.99 3.00%
$100,000.00 – 249,999.99 3.25%
$250,000.00 – 499,999.99 3.50%
$500,000.00 – $999,999.99 3.75%
$1,000,000.00 and Greater 4.00%
I advise readers to think before leaping to Sogoinvest. The per trade fees at Sogoinvest may be low but I found that Sogoinvest is using other methods to nickel and dime investors. The following is the information I gather from emails with customer service when I opened an account:
1) If you bought a security on margin, margin interest starts accruing on day T+1. This is very unfair to investors. All other brokerages that I know of starts charging margin interest only on day T+3 (which is the settlement date). At Sogoinvest, amazingly, you start paying interest even before Sogoinvest pays for the security! In the worst case scenario of a trade on Thursday, you will start paying interest on Friday instead of Tuesday, i.e. 4 more days of interest compared to other brokerages.
By the way, the current margin interest is 9.5% so for a $10k balance, you will be charged $2.60 a day. Four additional days is $10.4 in interest, easily wiping out any per trade commission you might save.
2) When you submit a ACH into Sogoinvest on day T, your money gets deducted on day T+1 from your bank BUT the money will take another three days before it posts to your Sogoinvest account, i.e. on day T+4. I had specifically asked whether the money held hostage will earn interest and the answer is no. So, Sogoinvest dings you of three days? interest whenever you perform an ACH in. It does not look like the money held hostage can be used to offset your margin balance either.
3) There might be another way to nickel and dime investors who are on automatic investment plans. I haven’t tried this but I suspect you will most likely get the highest price of the day for any automatic investments, with Sogoinvest pocketing the difference.
The above amounts might be small in some cases but in principle, I dislike dealing companies that think customers are fools and can tolerate unfair practices. It also reflects badly on the company management’s mentality.
The only saving grace now is that Sogoinvest is still currently offering free ACAT out (maybe to attract investors?). I am considering an ACAT of my holdings to Izone. At Izone, it is $5 per trade (unlimited shares) versus the $3 per trade (up to 5000 shares) at Sogoinvest after the promotion. The per trade fee might be $2 more but at least I have been treated fairly so far and the method of calculating margin interest and ACH credit are per industry norms and not stacked against the investor.
Some additional comments are documented HERE.
Does it offer automatic dividend reinvestment?
Hi,
I’m a Mom on a very tight budget who has always had a desire to invest a few dollars here & there in companies that seem to do well; standard, well-known companies who provide things that people use daily such as Johnson&Johnson, Procter&Gamble, etc. only I am at a loss as to where & how to begin. I have just started trying to learn online, first site I visited was one you have been discussing – Sogoinvest. Not knowing ANYTHING about the business I am confused as to which direction to go or which company to go with. As I said, my budget is very tight & I can’t afford to waste money on extra fees or interest charges but really do want to give this a try. I would appreciate any advice from you more experienced traders!
There is $500 for account minimum now.
I use sogoinvest. They have good points and bad as listed above. However, I can say that they are quicker than Scottrade in getting transferred funds to your brokerage account. It takes about two business days. Also, the real time bid and ask price are what I get. My main problem with sogo is that there sometimes can be a hang in the trade going through in market and limit trades. Sometimes it has worked in my favor and sometimes not.
I also use scottrade. They’re more expensive but their trading platform through their real time streaming quotes software is fantastic. Quick. I have not done a limit trade but I wouldn’t expect much difference. Scottrade seems to be noticeably more on the ball.
I have used sogoinvest and they really deserve a pat on their back. The process is simpler and fast.
What indexfundfan says above, i totally disagree with his views.
I’d stay away. Their site has been down for over 48 hours and unable to access/place a trade for a full market day.
Terrible customer service.
VJ Says: Does it offer automatic dividend reinvestment?
Yes, Sogoinvest does have automatic dividend reinvistment. It is called DRIP. I have been with them for 7 months and am thinking about moving to Scottrade because of the poor customer service at Sogoinvest.
However, I am not a big time investor when it comes to self-directed investing….I am too chicken to risk too much. So, Sogoinvest may be just perfect for others like me.
I’ve been with Sogo for over a year now and have had no problems. I was a first time stock investor- tired of mutual funds going no where- and I think Sogo was very easy to understand and user friendly. They are working on getting streaming quotes, but I’ve never had a problem buying or selling for the price I want.
sogo works for me…I have had many accounts….. brown, scott , and many others…For the price of trading, they are great.. You must be careful..