Brokers

Most major brokers now offer zero commissions on stock trades. However, it's important to note that brokers still earn a minor profit from these trades through the bid-ask spread, which is the difference between the prices at which you can buy and sell. Additionally, they receive profits in the form of kickbacks from the destinations to which they route your trades. For major stocks (though not for options), this is typically a fractional amount that you can generally disregard unless you're a frequent trader. In that case, these sums might accumulate, potentially equating to or even exceeding the cost of a traditional $10 commission. However, for smaller traders, this is unlikely.

That said, larger investors should prioritize finding the best execution price, although this can be difficult to determine. 

In today's market, brokers primarily generate revenue from the residual cash in clients' house sweep accounts. Most brokers offer minimal yield on these accounts and do not permit the use of money market funds that offer significant returns (above 1%). In effect, you're 'paying' potentially 5% on your idle cash, negating the benefits of saving $10 on commissions for a stock trade. A more financially sound approach might be to willingly pay the $10 commission on a trade while earning 5% on your cash reserves.

A savvy strategy to counteract low cash yields is to proactively invest in Treasury bills or funds that hold Treasury bills with minimal fees (note that there are no zero-fee options), or consider a no-fee bond ETF. When evaluating brokers, one with the highest cash yield often emerges as the preferable choice. Vanguard leads the pack in this regard, closely followed by Fidelity. Surprisingly, Robinhood, known for its casino-like gamification, also ranks among the options for higher yield choices.

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