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I'm largely a buy and hold DIY investor (as we all are these days ;)). All my holdings are at a self-directed discount brokerage.

As part of my maximizing gains strategy, I minimize fees - and try to keep them below 0.5% of the transaction. With a $9.95 transaction fee, this means I only buy in chunks of $1990 or more.

But when I think about it, if I'm holding on to something for 5 years, is it acceptable to buy $398 at a time, since over the holding period, my annual fees would only be 0.5% (better than most ETFs)

Am I being too strict with the minimize transaction fees strategy?
 

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Hi Sampson. I am not nearly as strict. I keep mine less than 2% but I hope to move toward getting it well under 1% as the years pass. I currently just like the convenience of my bank/broker where I have all accounts tied into. Sounds to me that you are being a touch too strict. Just think what you would pay in fees for MFs.
 

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I'm very strict about controlling expenses. There are a couple of reasons: (1) Expenses and emotions are under our control; market behaviour isn't. (2) Too high an expense might indicate high turnover, which hurts returns. Instead of looking at commissions/expenses of each transaction, I look at commissions / total portfolio. Typically for me that ratio is around 20 basis points. Blended MER of the portfolio is around 25 basis points for a total cost of approx. 40 basis points.

I explained the blended MER of the portfolio in this post but my personal portfolio has some minor differences.

Costs of the Sleepy Portfolio
 

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I do think about these costs - that's why I use the cheapest brokerage in Canada.

You don't want to go overboard on saving money though. The 1% rule is a good one to follow.
 

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I generally pay 4.95 a trade. In my leveraged account I'm paying about 0.5% mostly because I'm buying in lots of $1k.

In my RRSP account costs range in between 2.5% to 0.8%. This is only for the time being while I dollar cost average. Once I start re-balancing the costs will drop below 0.5%
 
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