Best Online/Discount Broker:
I recently opened a second investment account (my first in the United States) to start begin building another portfolio. I researched all the known online brokers, as well as a dozen others that are not as popular or known, for about two weeks, hoping to make the best decision. Overall, I had a very hard time picking a firm, but in the end chose TD Ameritrade for several reasons.
Today, I found this great post on Steven‘s Blog:
Rankings are based on: 1. amount of research offered; 2. trade cost; and 3. minimum amount to open.
Pros: No account fees
Cons: $29.95 for a trade; $2,000 to open; $29.95 for a trade; limited research; $29.95 for a trade
Bottom Line: Did I mention $29.95 for a trade? That alone stops me. Throw in the $2,000 minimum to open, limited research, and the lackluster website and I am no way Jose on this one.
Pros: $7.00 trades; many local office locations; no account fees
Cons: $500.00 to open and limited research
Bottom Line: If you want/need to be able to walk in and talk to your broker than Scotttrade is for you, as it has many physical branches nationwide. $7.00 trades are a plus but limited research holds me back.
Pros: $6.95 stock trades, no minimum to open; no account fee
Cons: Only offers S&P reports
Bottom Line: Good pricing on stock trades at $6.95 and no minimum to open get it tied with Scottrade, but very limited research makes it a no go in my book.
No. 4-5 is E*Trade. Etrade offers $12.99 stock trades. The available research includes Reuters Research, S&P Reports, Rochdale Research, Sabrient Systems, Wall Street On Demand, Thomson Financial, and Bank of New York’s Jaywalk Research Reports. For those with large accounts ($100,000+) Credit Suisse Research is also available. You can find the whole list here.
Pros: Wide offering of research providers; no fee IRA accounts
Cons: $12.95 stock trades; $1,000 minimum to open; non-IRA accounts must make at least one trade per quarter or are assessed $40 account charge
Bottom Line: At first glance looks inviting based on the amount of research available, but the $40 account charge on non-IRA accounts and $1,000 minimum to open puts me off. $12.95 for trades is also a negative. Objectively it could be higher, but hey it is my list and I just get the feeling that it is more of a bank with a lot of little fees here and there.
Pros: Morningstar research; good tools for option traders; no minimum to open, no fees on any account
Cons: Stock trades are $14.95; only offers Morningstar stock research
Bottom Line: No hidden fees at all is a big plus as is no minimum to open, but $14.95 for stock trades is a negative (if the trade cost was under $10 I would have put them at No. 3). While it is limited in research to Morningstar Stock Reports it is the only broker to offer access to Morningstar so that gives it a slight edge to E*Trade in my book. Note: For those interested in Health Savings Accounts (HSA) Optionsxpress is one of the very few ways you can actually set up an HAS account and trade normally.
No. 3 is Muriel Seibert. Trades are $14.95. No minimum to open and no account fee except on IRA’s less than $10,000 ($30 per year). Seibert offers the following research: Standard & Poor’s Reports, Zacks Research, Reuter’s Multex, ProphetFinance, Validea, MarketEdge®, VectorVest®, Growth Stock Analytics, Lehman Brothers, and Thomson Baseline.
Pros: No minimum to open, wide variety of research
Cons: $14.95 to trade, $30 a year on IRAs less than $10,000
Bottom Line: Good selection of research. $14.95 to trade is a negative as is the $30 per year charge on a IRA. But it offers a wide variety of research with a couple of unique products not offered elsewhere. If there is some specific research provided which is something you are looking for than this may be the choice for you. It gets the nod over E*Trade based on no minimum to open and over Optionsxpress based on the amount of research. If Seibert cut its trade cost and got rid of the $30 IRA account fee it could challenge for the top two spots.
No. 2 is Fidelity. Fidelity has stock trades for $19.95. There is a $2,500 minimum to open but no account fees. Research is extensive: Argus Research, Ativo Research, LLC, Channel Trend, Columbine Capital Services, Decision Economics, Ford Equity Research, Lehman Brothers, Market Edge, Ned Davis Research , Prudential Equity Group, Standard & Poor’s Reports and Outlook, Thomas White International, Thomson Financial, and Zacks Research .
Pros: Lots of Research, No account fees, local branches
Cons: Trades are $19.95, $2,500 minimum to open
Bottom Line: While the trade price is high at $19.95, the amount of available research makes Fidelity one to consider. Also, many investors might have a 401(k) here and that may make it easier to keep everything in one spot. The trade cost and large minimum to open kept it out of first place.
The No 1 pick is TDAmeritrade. Stock trades are $9.99. Minimum to open is $1,000 for IRA accounts and $2,000 non-IRA. Research includes : S&P Reports and Outlook, Vickers Stock Research, Thomson’s First Call, The Street.com Ratings, Ford Equity Research, and Thomson’s Market Edge.
Pros: $9.99 stock trades, lots of research, no account fees
Cons: $1,000/$2,000 minimum to open
Bottom Line: TDAmeritrade offers good selection of research and a low trade price. While the minimum to open is a drawback, overall I would say TDAmeritrade deserves consideration and gets a slight nod over Fidelity based on the trade cost.(Thank you Steven)