Reducing Trading Costs in Large Accounts

For investors with larger portfolios, trading costs can quietly add up and have a real impact on long-term results. Even small fees and commissions can eat into returns, especially if you’re trading frequently or moving big amounts. Knowing the true costs of buying and selling investments is a key part of managing wealth wisely.

You can lower these costs by shopping around for low-fee brokerage platforms, watching out for bid-ask spreads, and being smart about how often you buy and sell. An experienced advisor can help you build a strategy that controls costs while staying true to your goals. By staying proactive and informed, you can keep more of your portfolio’s growth working for you over time.

Why Trading Costs Matter

With bigger accounts, every trade can have a ripple effect. Just a 0.2% trading cost on a $5 million account means $10,000 each time you trade. If you trade too often or at the wrong time, those costs snowball and drag down performance. Vanguard’s 2023 research found that minimizing trading costs can add 0.5% to 0.75% to annual returns—especially in portfolios that see a lot of trading.

Source: Vanguard – Trading Cost Efficiency

Case Study: Cutting Costs in a Large Portfolio

An investor with a $12 million, diversified portfolio noticed that frequent and unnecessary trades were racking up significant annual expenses. By shifting to a more disciplined and strategic trading approach, they dramatically cut costs—while still keeping the portfolio balanced. The result was real annual savings and more of the portfolio’s growth preserved for the long term.

Key Strategies to Reduce Trading Costs

• Use Cost-Effective Platforms: Pick brokers that offer competitive commissions and reliable execution—especially for larger accounts.
• Batch and Plan Trades: Combine trades when you can and avoid unnecessary small transactions. Trading during high-volume periods can also help lower your costs.
• Limit Unnecessary Turnover: Stick to long-term strategies and avoid frequent changes unless they’re really needed to meet your goals.

These habits can help you keep trading costs down and allow more of your gains to stay invested for growth.

Actionable Tips for Investors

• Consider using highly liquid, low-cost investment vehicles like ETFs to help reduce trading expenses.
• When trading, use limit orders to control your execution price—especially on larger trades.
• Think about the tax consequences of each trade. Where possible, make trades in tax-advantaged accounts to limit your taxable gains.

Ron McCoy’s Expert Perspective

With decades of experience, Ron McCoy is a strong believer in disciplined trading and using the right tools to manage costs. His approach focuses on efficient execution and minimizing unnecessary fees, so clients keep more capital invested and working toward their financial goals.