5 Deciding Factors on an Investment Account for our LLC

It’s been essentially a whopping 24 months since we have monetized portions of our brand and website.  On top of that, our blog has been growing and we have started to earn revenue via Google Adsense and media.net advertisements.  We have built a small nest egg of cash and what would we, the Dividend Diplomats, do with a nest egg?  Invest in dividend paying stocks, of course!  We have a solid cash position and determined it to be the right time to research, investigate and decide on the factors for the right investment account for our Limited Liability Company (LLC).

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5 investment account factors for the llc

The Top deciding factors for the investment account for our LLC will be listed below, with reasons why and an overall grid as it relates to the providers of such an account.  This way we can compare and help make a decision, similar to our famous Dividend Diplomat Stock Screener.  Let’s check out the factors!

firms-review

1.) Cost Per Trade – No brainer here, and is similar to one of our (Lanny’s goal) goals for 2016 to keep trading costs low.  We would like to trade for under $10 per trade.  Why is this important?  Heck, we aren’t making that much money here, so our capital position isn’t enormous enough that we can swing multiple times.  Cost for the trade, therefore, is critical, as if we are at $1,500 – we may be comfortable with making 2 trades at under $10 each, but if it were any higher, we would stick with 1 trade.  As you can see from the chart above – there is a tight range of up to $10 per trade, which is fairly common.  Therefore, all firms listed above fit the bill.

2.) Partial Shares – This is not a pure deal breaker, but I love using the Capital One Investing “automatic” trades, where the trade fee is not only $3.95, BUT they allow the partial share on an investment purchase.  That’s one factor.  The other piece, to this, is reinvestment, a critical deciding factor to be honest, into partial shares.  With such a lower dollar amount for us to invest, we may not have enough capital to own enough shares that produces a dividend for a whole share.  For instance, as you can see in the chart, Scottrade does not allow partial shares on dividend reinvestment – the heck Scottrade?!  See the conversation below.  With that – E-Trade, Fidelity and TDAmeritrade are the runners here.

scottrade

3.) No monthly maintenance fee – “Duh” right here.  No chance in hell we are going to pay a monthly fee to have an account open.  My (Lanny) Health Savings Account has a plethora of these, which is fine because I have a huge kick-in from the employer – but if it was my own money, “Later” to that.  Our account wouldn’t be large enough at this time to sustain a monthly.  Plus, with technology in this day and age, a monthly fee should be a clean-free cut from most firms.  As you can see above – all clean here.

4.) Free DRIP – Here we go dividend investors!  Not only do we want to reinvestment our dividends through a “Dividend Reinvestment Plan (DRIP)”, BUT we also want to do this without paying any fees.  This is critical, similar to other reasons, we both currently don’t pay anything to DRIP, we believe in the power of DRIP, and want to keep the costs of owning an investment as low as possible.  Another pure no brainer, but the answers we have begun to find out from these factors are quite different and staggering.  Scottrade, losing out here, again!  No FREE DRIP?  No thanks..

5.) Minimum Deposit – This is clutch right now – as some are all over the place, such as – just need enough to buy one share, $500 or even as high as $2,500.  So this plays into a very good factor for us to make a decision, as we wanted to get this started earlier, than later.  The reason why this is critical, as well, is not just the opening of the account, but also it would prohibit our ability in making a trade.  Heck, our cash is sitting on the sidelines right now earning 0.00%, time to make it work, now.  Charles Schwabb came back with $250K… uhm… what??  See our conversation below, we also were shockingly surprised he never heard of The Dividend Diplomats?!

schwabb

other thoughts on the investment account

After our investigation and research of the firms, we are definitely widdling it down.  Big Chuck Schwabb, however, didn’t even come close to making the cut, as you can see above.  This has been a fun process, as Bert and I have been talking about opening the account up for quite some time, but I kept wanting to hold off to build more capital.  But, Bert was right and we should have had this opened up, so we could make a move on something when needed.  As you can see above, we also asked the question if Citizens & Northern (CZNC) could be purchased, as we are potentially looking at smaller cap bank stocks for the portfolio of ours.  The answers were all a “yes”, so that’s solid to know we can do this.  Additionally, as you can see, there is also one name off the list, Capital One.  Sad to say – they are not offering any investment accounts for LLC’s, and it’s a damn shame.  We hope at some point that get this started, as soon as possible.

Lastly, we did not just research firms online, but we also cold called them THIS MORNING, on a Saturday, to see who we could contact and work with.  This was a fun process and hilarious hearing Bert cold calling a few reputable firms to put them through the ringer.  This was important, as we wanted to see how available customer service was in case we had questions or problems.  We also wanted to ask if there were any freebies and bonuses from talking with someone to open an investment account.  It doesn’t hurt to ask, something one should ALWAYS do in their life, such as negotiating on a house, a car or cable/internet.  Always ask if there are discounts/bonuses, as the answers may be well in your favor.  And if not, well, at least you know.  Curious on the final verdict of where we are leaning?

Investment account for the LLC Verdict

The firm we had the best interaction with was, needless to say, Fidelity!  They were amazing on the phone and were extremely easy to work with, had some nice sign-up perks that the guy could directly work with us through on getting and it appeared to be a very easy process to open.  From looking at the chart above – they had a lower cost for a trade at $7.95, offered free dividend reinvestment, as well as reinvestment into partial shares, which is key for us.  In addition – there are no account minimums nor monthly maintenance/inactivity fees.  The customer service was awesome, ready to talk on a Saturday morning even, and was interested in hearing about who we are and what we do.  Something tells me, this could be a great investment account relationship us Dividend Diplomats will have.

What are your thoughts above?  For those of you have have LLC’s or potentially LLC’s even for your blog, do you hold investments in there?  Do you have an investment account specifically for the LLC?  Any other experiences or interaction with firms that you’d like to share?  Please let us know!  We appreciate the stop-by, as always, and are excited on what feedback that the community has in this decision.  We are excited to get the ball rolling to make our first investment purchased under the Dividend Diplomats name!  Talk soon everyone, have a great weekend and GO TRIBE!

-Lanny & Bert

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20 thoughts on “5 Deciding Factors on an Investment Account for our LLC

  1. No I don’t have an LLC or thinking of one. But if small cap banks are the game many do stock dividends (I have a few of these). Schwab paid cash-in-lieu rather than shares for HWBK even with dividend reinvestment. You may want to check this angle as well. (I moved the shares to AST).

    • Charlie –

      Yes, yes we’ll have to check that angle. Fidelity, on the otherhand, was great and hit on all the right criteria, not the lowest cost per trade, but definitely not the highest. Free DRIP and partial shares on the DRIP was huge for us!

      -Lanny

  2. Congratulations on earning enough with the blog to invest! You might want to also check if they allow investing into NWFL. I used to have an account that allowed investing in CZNC normally online, but said I would have to call to invest in NWFL (which no doubt would have resulted in a higher commission). I was pretty surprised by that since it’s a regular NASDAQ stock, not an OTC stock.

    • Brian –

      Thank you! I do love NWFL and typically now you can – but you are right, when we talk to them again tomorrow, we will verify that. NWFL, I know, was more of a market trade and not a limit order trade kind of stock, it’s quite funny. I was able to purchase NWFL a few times with capital one and thought – if they can, Fidelity should haha. Hope you’re having a nice weekend.

      -Lanny

  3. Congrats on your choice with Fidelity guys! Sounds like you made the right choice. Charles Schwabb must have lost of potential business by having such a large number like that. Oh well, their loss.

    Will you do an update showing how your investments in the LLC are doing?

    We don’t have an LLC 🙂

    Tristan

    • T –

      Thanks again for the comment. They were awesome as heck to talk to and hooked us up with a few spiffs to open there as well. Really excited to get this moving. But yes… with big Chuck – not sure what/why that is the case with them?

      We will definitely keep everyone posted with an article or something similar on the DD Portfolio!

      Thought about an LLC at all? We created ours a few years ago.

      -Lanny

  4. Really liked that you made the saturday calls. Sounds like you’ve made a good choice going with Fidelity. And awesome achievement that you guys can now invest all the returns from the blog.

    The equivalent of an LLC for us is a Dutch General Partnership (or VOF), which we currently don’t have.
    When did you guys start with the LLC, was this from the start of your blog, or this happened later on?

    • Divnomics –

      Thank you – yep the calls were hilarious, hearing Bert just start rambling questions off was hysterical. It’ll be fun to make the first purchase.

      The VOF eh? We started the LLC a little over two years ago – happened slightly after we started, and then we were committed to make this legit! Are you thinking of doing it? It’s more for liability and security purposes, as well.

      -Lanny

      • Really curious on the first purchases you’ll making.

        A few years back I did some projects while self-employed, and needed something like a LLC. Later I got a ‘real’ job and did not needed it anymore, so I ended it.
        For now it will take some time before I will set up a LLC. In the Netherlands it’s not very customary to do so until you earn some money from your business. Will do some early investigation though, just to check out what’s possible.

  5. I have been wanting to diversify where I invest, but it’s so hard for me to pick another brokerage because I like Fidelity so much. I have a little while before I really need to make the decision, I want to at around $200k, but it’s something I haven’t figured out yet. Great choice on Fidelity, amazing brokerage and I love their monthly statements.

    • Stacker –

      Thanks for the feedback and glad to hear that you like Fidelity, makes choosing them feel better! Also – any reason why around $200K to move/change/diversify? Curious and would love to see what you are thinking, to see if we should be considering those as well. Appreciate the comment stacker.

      -Lanny

  6. This is great! I’ll bet the guys at Schwab don’t get many calls like that on a Saturday morning. I’m glad you didn’t pick one of the affiliate programs to be honest – Fidelity seems like the clear leader, affiliate program or no.

    Great to hear as well that you are reinvesting the proceeds from your blog! Well done. Keep pushing that snowball.

    • ADI –

      Great acronym for the Australian dividend investor in you, digging it! And yes – hands down feel like we are in good hands. Now all we have to do is officially fill out the form and I have a location very close by, so that I can even bring it in to them. That’s the funniest benefit, is that there is an actual place close to the house at the moment, random, but funny.

      Yep, you got it – making those assets go to work to churn more income. Ah… another stream, let’s keep this going!!

      -Lanny

  7. Curious as to why BofA/MerrillEdge was not included as an option? Free trades if you have bank and/or investments (brokerage or retirement) accounts totaling > $50K with your name on the account? I recently transferred and consolidated some accounts from Charles Schwab and others to BofA/Merrill Edge and haven’t looked backed. I received a small bonus for transferring the assets and had to wait for my 3 month average balance to exceed the minimum threshold and bam, free trades! In the meantime, I was able to execute a few trades at a still relatively cheap $6.95 trade expense. With or without your LLC account, it looks like both of you would have sufficient balances to qualify for the free trades.

  8. Hey guys,

    In a few months, I’ll be living in a paid off house and totally debt free. I’m looking at throwing that newly freed up capital somewhere safe from family and lawsuits and an investment LLC for dividend growth stocks has been on my mind for awhile now. I’m glad to see there are other like minded cool dudes out there.

    My big concern is taxes. If I buy the stocks in my personal brokerage account, the dividends will be taxed at the capital gains rate 20%.
    If I buy the stocks in the LLC, I have to call the dividends personal income, whether or not I take them out of the business or reinvest, which is a tax rate of 25%.

    Am I understanding this correctly? How do the two of you address this?
    Looking forward to your replies.

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