Month: May 2010


FINANCIAL BENEFITS OF COMPETITION


In my life, I have found competition to be healthy – on the racquetball court, at work … it motivates me to be better. I've also found it to be of great benefit in my financial life. Competition motivates companies to offer lower interest rates and fees, lower insurance premiums, lower commissions, better products, or suffer the consequences (lost business opportunities). That should be a pretty strong motivator!

Value of Competition.
Earlier in the week (05/04/10), Vanguard announced a dramatic reduction in their commissions charged on stock trades as well as commission-free trades on Vanguard ETF (exchange traded fund) transactions. Viewed in isolation, this would be big news. In reality, this is just one more domino to fall in the name of competition … Vanguard was merely following the lead of Fidelity and Schwab, a couple of its primary rivals.

Fidelity Headline (February 3, 2010). “Trade 25 ETFs — Commission Free” …

Schwab Headline (November 2, 2009). “Schwab rolls out free-trade ETFs” …

Healthy competition tends to bring out the best in individuals and companies. When companies compete, consumers win …




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