Comparison of Popular Online Stock Brokers

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The following is a post by MPFJ staff writer, Kevin Mercadante, who is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

There is no shortage of online brokerage firms these days, and you can be blinded by all the options they offer. Most have low fees, and there are slight differences between each that make all the difference in the world (funny how that works sometimes, right?!), depending on what type of trader you are, and how larger your portfolio will be.

Before you move your money into any of these accounts, it is important to check out the specials that they are offering – and they all seem to be offering them an ongoing basis. Most will at least reimburse you for exit fees paid to your current broker, but some firms also offer free- or lower cost-trades, either for a certain amount of time or a limited number of transactions.

Special offers aside, here are the basics on some of the more popular online stock brokers.

Scottrade

Scottrade offers basic stock trading at $7, and reasonable transaction costs for most other trades. In addition to stocks, you can also trade options, mutual funds, exchange traded funds (ETF‘s), certificates of deposit, and foreign securities.

You can also open a range of IRAs, including traditional, rollover, Roth, and SEP accounts. Scottrade is also offering banking services, including checking, savings, and money market accounts.

The service offers real-time stock quotes, free research, and phone apps. The minimum to open and account is $500.

Sharebuilder

One of the advantages of Sharebuilder is that it has no minimum balance requirement, and that opens the service to the smallest of investors. Basic stock and ETF trades are $6.95, and mutual funds trades are $19.95. You can trade options at $6.95 plus 75 cents per contract.

You can have both individual and joint investment accounts, and also education savings accounts (ESA’s), traditional and Roth IRAs, and rollover- and small business-401(k)’s.

E*trade

Probably the best known online brokerage service – due to its aggressive advertising campaigns – E*Trade offers two commission structures on stock and option trades. The standard fee is $9.99 per trade, but if you’re an active trader – meaning that you execute more than 150 trades per quarter – the transaction fee drops to $7.99 per trade.

The company offers stocks, bonds, options, mutual funds, and ETF’s. You can hold an IRA with no fees and no minimum deposit requirements. The company also offers full service banking. There is a minimum deposit requirement of $500 to open a taxable account.

E*Trade offers trading in more than 7,600 mutual funds, which includes 1,100 no-load/no transaction fee funds.

The company’s Power E*Trade Account is available if you make at least ten trades per month, or 30 trades per quarter. This service provides advanced tools including advanced charts, and screening- and analytical-tools.

TradeKing (Which Now Includes Zecco.com After the Merger)

TradeKing offers one of the lowest transaction fees available for online brokers (the only one lower than this I know of is SogoTrade.com, which offers $3 trades). The basic fee of $4.95 applies to stocks, mutual funds, and options (plus $.65 per contract). There is no minimum amount to open up an account.

The company also offers trades in stocks, ETF’s and more than 8,000 mutual funds. There is no annual maintenance fee, however, if you do not execute any trades within a 12 month period, and the balance in your account is less than $2,500, you will be charged a $50 inactivity fee.

SmartMoney gave TradeKing it’s highest customer service rating in 2012, and when you combine that with some of the lowest transaction fees in the industry, it’s a tough combination to beat.

TradeMONSTER

TradeMONSTER offers transaction trading fees that are (at $7.50 per trade) about middle-of-the-road as far as online brokers go. The company offers both individual and joint investment accounts, as well as no-fee IRAs. You can also trade stocks, options, mutual funds, and ETF’s. There are no FOREX offerings, and futures can only be traded through a separate account.

The company reportedly has excellent customer service, including research tools, portfolio analysis and reporting tools. On the negative side, they do require a minimum of $2,000 to open an account, and there are no extended trading hours, nor do they offer access to international exchanges.

Bringing it all together

The various account terms and fee structures can be confusing, so here’s a chart with a side-by-side comparison of each of the five brokers from above. Just be sure to do some deeper research into each company before making a decision. Some companies may offer even lower prices if you are a more active trader.

online brokers, brokerage reviews, discount brokerages, stockbrokers, ETrade, Scottrade, Sharebuilder, individual stocks, IRA

How about you all? Have you used any of these brokers, and if so, how has your experience with them been?

Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/perspective/186512551/sizes/s/in/photostream/

    Comments

    1. FrugalRules says:

      Great comparison! We use Scottrade & Options House. I would probably have everything at Scottrade but they limit what you can do in regards to options trading within an IRA. OH allows quite a bit more plus their trades are only $3.95 which is pretty nice.
      My recent post Confessions of a Former Fast Food Employee

      • Thanks so much for sharing FR! I tried Scottrade when I first started investing 8 years ago or so.

        Are you pretty satisfied with the stock trading interface at Scottrade?

        The thing that keeps me away from going back to them is that their costs are a little higher than the one I use (Sogotrade.com, which offers $3 trades).

        Thanks again for your comment! 🙂
        My recent post Comparison of Popular Online Stock Brokers

    2. myfijourney says:

      Thanks for posting this. One of my goals for the next year is finding a second brokerage to diversify into.

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