

Q: How do investors starting out only buying a few shares of stock avoid paying big commissions?

A: Commissions on trading have fallen, thanks to online investing. But smaller investors can still get chewed up by fees.

It's fairly typical for even the top-notch online brokers to charge $10 or so for trades. For investors buying $3,000 or more in stock per trade, that's not a big deal to worry about. But if investors are buying just one share of a $50-a-share stock, even a $10 a trade commission is a 20% fee.

That's why investors, who want to buy stocks and not mutual funds, need to be more mindful of the fees they're paying.

There are some brokers, such as ShareBuilder and BuyandHold, which cater to the investor who wants to make smaller investments. ShareBuilder charges $4 a trade, while BuyandHold charges a $7 monthly fee, which includes two trades.

Another option would be deeply discounted brokerages. Just2Trade and TradeKing are low-cost leaders, charging $2.50 and $5, respectively, for trades.

Investors can also consider buying directly from the company issuing stock or direct stock-purchase program offered by some larger companies, such as Disney. These can be compelling offerings, but make it more difficult to build a diversified portfolio of all sorts of companies.

Last, investors just starting out might consider the programs that allow $0 commissions on exchange traded funds. Top brokers such as TD Ameritrade and Charles Schwab offer these programs, which allow investors to quickly build a diversified portfolio and pay no commissions.

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