As featured in The Wall Street Journal, Money Magazine, and more!
     

SmartMoney’s Top 10 Discount Brokers

This article was written by in Investing. 8 comments.


Discount brokers are everywhere. Not long ago, only a few companies offered the ability to trade stocks with low commissions. If you wanted to trade with a full-service brokerage, it might have cost $30 for each transaction. For this fee, you would talk with a broker assigned to your account, who would help you make trading decisions. Of course, the transaction fee and the promise of earning money encouraged these full-service brokers to suggest trading as much as possible.

Companies soon realized that they could offer a self-service model of stock investing, reducing overhead costs by eliminating the human broker, and passing that savings onto investors through reduced trading fees. In order to keep the volume of trades high, some discount brokers offer incentives to encourage more buying and selling.

SmartMoney recently looked into a number of discount brokers in detail in order to determine the best among a variety of categories:

For our 18th annual ranking of brokers — itself top-ranked by the Web site ConsumerSearch — we scrutinized a wide range of factors, from trading commissions and account fees to the cost of certain banking services and margin rates. In addition to parsing survey responses from the brokerages, we consulted with research firms and put brokers through our usual litany of customer-service tests.

Here is SmartMoney’s top ten discount brokers:

Broker Commission Comments
1. Fidelity $7.95 I use Fidelity for their Charitable Gift Fund.
2. E-Trade $9.99 My company stock purchase plan is held at E-Trade.
3. TD Ameritrade $9.99 SmartMoney is impressed with this company’s customer service.
4. Charles Schwab $8.95 Schwab’s low-cost index mutual funds are cheaper than Vanguard’s.
5. TradeKing $4.95 TradeKing claimed the top spot in this list in 2006 and 2007.
6. Scottrade $7.00 A few years ago, I moved some investments from Wachovia’s discount brokerage to Scottrade and I’ve been happy.
7. WallStreet-E $7.99 I’ve never heard of this company.
8. Firsttrade $6.95 Firsttrade received average marks from SmartMoney and still made 8th place.
9. Just2Trade $2.50 With this commission, Just2Trade is a discount discount broker.
10. Muriel Siebert $14.95 This is the most expensive broker in the top ten, but offers good customer service.

Others just missing the top ten include OptionsXpress, Zecco, and my current preferred discount broker, ShareBuilder. Who is your favorite discount broker?

See more details at SmartMoney.

Updated March 24, 2011 and originally published July 16, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
avatar
Points: ♦127,435
Rank: Platinum
About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 4 comments… read them below or add one }

avatar Khanh Nguyen

My mortgage had paid in full 6 years ago, I work until I turn 55 then I can draw my early retirement. I don’t own nobody money, (no c.c. debts) and I do not need someone to advice how to manage my own money. Am I doing the right thing?

Reply to this comment

avatar Luke Landes ♦127,435 (Platinum)

You can’t go wrong when you have no credit card debt, and if you’re planning to take an early retirement, you must be doing something right.

Reply to this comment

avatar InvestingNewbie

How come ShareBuilder didn’t make the cut?

Reply to this comment

avatar Barbara Friedberg

Hi Flexo, Nice succinct treatment of discount brokers. I’m adding the link to the appendix in my upcoming eBook on investing. Regards, Barb (fellow Yakezie :))

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: