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E*TRADE set the bar as one of the first online discount brokers. But is it the broker you should be using? We help you answer that question in our E*TRADE review.

ETrade Review

It’s curious that the editorial team here at Consumerism Commentary has never reviewed E*TRADE before today. I say that because we have written about how to close an E*TRADE account. E*TRADE is also one of the largest and most innovative investment brokerage firms available, making this review long overdue.

About E*TRADE

Founded in 1982, it was one of the first companies to offer online trading. It’s one of the very best investing platforms for active traders, but it also offers managed investment options for investors who don’t want to manage their own portfolios.

E*TRADE has more than 3.5 million individual brokerage accounts, and more than $49 billion under management. In August 2017, E*TRADE acquired OptionsHouse, which is one of the top options investment platforms available. This makes the E*TRADE platform even more beneficial for active traders.

E*TRADE Review Summary

After reviewing dozens of investment platforms over the years, E*TRADE comes up as one of the better ones. What I like about E*TRADE is that many brokerage firms specialize in self-directed investing, others in managed portfolios and robo-advisors. E*TRADE offers both.

And the My Virtual Advisor tool can provide you with a portfolio allocation for your self-directed investing, using the same methodology as robo-advisors.

Where I find that E*TRADE falls a little short is that it has a definite orientation toward the high-volume trader. For example, E*TRADE Pro is one of the most intuitive trading software programs around, and would be particularly beneficial for new and small investors. But it’s only available for active traders.

The same is true of their reduced pricing, at $4.95 per trade. It’s also available only to very active traders. By contrast, Ally Invest also offers discounted commissions for high-frequency traders, but $4.95 per trade is standard for all investors.

Compare: See how E*TRADE stacks up to other online brokers

E*TRADE Features and Benefits

Available Accounts. E*TRADE offers individual and joint taxable brokerage accounts, trusts, estates, conservatorships, custodial accounts and Coverdell education savings accounts. They also offer a futures trading account, as well as a Forex trading account. Accounts can also be opened under business corporate LLC accounts.

Retirement accounts include traditional, Roth and rollover IRAs, beneficiary IRAs, IRAs for minors, and SEP and SIMPLE IRAs. They also offer small business retirement accounts and 401(k) rollover accounts

Investments Offered

E*TRADE is available to invest in stocks, bonds, mutual funds, exchange traded funds (ETFs), target date funds, options and futures, and fixed income securities. The firm offers more than 9,000 mutual funds, including 4,400 no-load funds with no transaction fees.

Minimum Initial Investment

You need a minimum initial deposit of $500 to open up a trading account. However, there are no minimums required for either retirement accounts or custodial accounts.

Calculators and Tools

E*TRADE has one of the most extensive trading platforms in the industry. Some of what they offer includes:

  • E*TRADE 360–This is the firm’s do everything platform for traders and investors. It offers streaming real-time quotes, customizable planning tools, and access to free independent research. That includes research from TipRanks, Credit Suisse, Thompson Reuters, and more.
  • E*TRADE Pro–This is E*TRADE’s main platform for active traders. It includes enhanced speed, insight and performance, including its Enhanced Options Analyzer to evaluate positions and strategies. Use a point-and-click order entry system, which enables you to trade more quickly and easily. You can use it to trade stocks and ETF’s, in addition to options.
  • Stock and Fund Screeners–Use this tool to cull thousands of funds and stocks to find the investments that you’re looking for. There are individual screeners for stocks, mutual funds, ETF’s bonds, and bond funds.
  • My Virtual Advisor–This is a tool that will recommend an asset allocation for you. It will evaluate your risk tolerance, financial goals and investment time horizon, and then make recommendations in a matter of minutes.

E*TRADE also offers the E*TRADE Community, which is a social media outlet where you can swap investment strategies, and discuss specific investments. It includes discussion boards for personal exchanges, and even gives you the ability to monitor community sentiment.

OptionsHouse Platform Access

This past summer E*TRADE and OptionsHouse began enabling investors to access their OptionsHouse trading platform from their E*TRADE accounts. This is a significant upgrade, since OptionsHouse offers one of the most advanced options trading platforms in the industry. The OptionsHouse platform provides Integrated Trading, Advanced Charting, Trading Ladders and Options Chains.

Mobile App

The E*TRADE mobile app provides the same information and tools that are available on the web app. That includes accessing the personalized retirement center. The app is available on iPhone, Android, tablets and Apple Watch, and can be downloaded at Google App and the App Store.

Local Branches

The company has 30 branch offices available in and around major cities.

Customer Service

Available 24 hours a day, seven days per week, by phone, email and online live chat. E*TRADE has investment advisors available at all times to help you with your investment decisions.

Account Protection

E*TRADE provides SIPC insurance on all accounts, with coverage up to $500,000, including up to $250,000 in cash. There is additional coverage through a London insurer for up to $150 million. Both types of coverage protect against broker failure, and not against losses due to market factors.

E*TRADE Managed Accounts and E*TRADE Adaptive Portfolios

If you’re not comfortable with self-directed investing, E*TRADE offers several options to have your account managed for you.

First is the Unified Managed Account. This is an actively managed portfolio, that invests in stocks, mutual funds and ETF’s. It’s for larger investors, requiring a minimum investment of $150,000. The annual fee for the service is not more than 1.25% of the value of your portfolio.

E*TRADE also offers E*TRADE Capital Management, to actively manage your portfolio. This is similar to investment management services provided by other traditional investment managers. For that reason, and because your account will be actively managed, the fees for the service range between 0.65% and 0.90%, depending on size of your portfolio. The minimum investment for the service is $25,000.

Finally there’s E*TRADE Adaptive Portfolios. This is E*TRADE’s robo-advisor service. It provides a fully automated investment account for the person who wants hands-off investment management. The account is managed through E*TRADE Capital Management, who both creates and manages your portfolio, including periodic rebalancing.

Adaptive Portfolios actually involves two distinct portfolios. The first is comprised entirely of ETF’s. This makes it a completely passive portfolio, since the funds represent markets and market segments. The second is a hybrid portfolio, that includes both ETFs and mutual funds. The mutual funds add an actively managed component to the portfolio, in an attempt to provide higher returns than index funds alone.

E*TRADE Adaptive Portfolios requires a minimum initial investment of $5,000, and an annual management fee of 0.30%. It’s available for taxable individual and joint brokerage accounts, all types of IRAs, custodial accounts, and even traditional and Roth 401(k)’s.

E*TRADE Bank

E*TRADE’s bank was created specifically for its investment customers. It offers free checking with no minimum balance requirement, although there is an initial deposit requirement of $100.

The bank also offers an interest-bearing checking account, but requires a minimum monthly balance average of at least $5,000, otherwise there is a $15 per month service charge.

With either account, you also get a free Visa debit card, as well as unlimited checking. Your account can be accessed online or by mobile app. Transfers between accounts, including your brokerage account, are free. In addition, E*TRADE Bank offers unlimited ATM fee reimbursements.

The bank also offers mortgages. In addition, all accounts are protected by FDIC insurance, for up to $250,000 per depositor.

E*TRADE Pricing

E*TRADE offers the following pricing:

  • Stocks, options and ETF’s–$6.95 per trade; $4.95 per trade with 30 or more trades per quarter. E*TRADE also offers a number of commission-free ETF’s
  • Options–$0.75 per contract; $0.50 per contract with 30 or more trades per quarter
  • Futures–$1.50 per contract
  • Bonds–$1 per bond, subject to a $10 minimum and a $250 maximum
  • US Treasury securities–no fee
  • Mutual funds–$19.99 per trade, but more than 4,400 no-load, no transaction fee funds
  • Broker -assisted trades–$25 per trade

There are no annual or monthly account fees for regular brokerage accounts.

E*TRADE Current promotions

E*TRADE is currently offering a cash credit starting at $200, and going as high as $2,500. The promotion works on a sliding scale, so the largest credits will go to the largest deposits or transfers. The scale looks like this:

You can get up to 500 free trade commissions for each stock or option trade completed within the first 60 days of the deposited funds being made available for investment in your new account. You will pay the trading fees as normally required, but the account will be credited within one week. Also, the transferred or deposited funds must come from a third-party source (bank, brokerage etc.), and not from another E*TRADE account.

SPECIAL OFFER–E*TRADE is currently offering a $600 bonus if you open up a new trading account with at least $10,000. This is specifically for non-retirement accounts, and the account must be opened no later than December 31, 2017.

How to Open an Account with E*TRADE

The entire sign-up process with E*TRADE takes place online. The application asks for general information, such as your name, address, occupation and income. You must have a valid Social Security number. You will also be requested to provide financial information, including liquid assets available, your net worth, and how much you expect to contribute to your account.

Once all of the general information has been entered, you will be asked to select the type of account that you want to open. That will also bring up a series of investment-related questions. E*TRADE tries to determine your level of experience, particularly in regard to more sophisticated trading, such as options and futures.

You will be asked specific questions, such as what types of investments you have previously held, and how much experience you have in managing them.

Once you have completed the application, you will create an account ID, and fund your account.

E*TRADE Pros

  • Excellent fee structure for active traders–$4.95 per trade is at the lower end of the industry fee structure.
  • 24/7 customer service, plus 30 local branches. Most investment brokerage firms only offer regular business hours, or extended trading hours. And few have any brick-and-mortar branches at all.
  • Top-of-the-line investment platform, that offers the kinds of tools needed by both novices and experienced investors.
  • 4,400 no-load, no transaction fee mutual funds.
  • The ability to maintain both a self-directed account for trading purposes, as well as managed options for those who lack the ability or desire to manage their own accounts.
  • The sign-up bonus ranging from $200 to $2,500–plus up to 500 free trades–is one of the most generous promotions in the industry.

E*TRADE Cons

  • The management fee of 0.30% on E*TRADE Adaptive Portfolios is at the middle range for robo-advisors, but higher than the 0.25% charged by popular robo-advisors like Betterment and Wealthfront.
  • Trading fees are only at the middle of the investment brokerage range if you are not an active trader.

Should You Sign Up With E*TRADE?

Due to the reduced trading commissions, E*TRADE will work best for very active traders (30 or more trades per quarter). The availability of investment options and platform tools is one of the very best in the industry. The E*TRADE Community also gives investors an opportunity to interact directly with other investors. This is a major benefit for both new investors and highly experienced ones.

But one of the biggest advantages with E*TRADE is the fact that it offers both a robust self-directed investment platform, as well as managed investment programs. This gives the user the ability to allocate his or her portfolio between self-directed and managed portions. An investor can decide to have some of their portfolio professionally managed, while keeping a portion for do-it-yourself investing.

Whatever type or level of investor you are, E*TRADE is an excellent choice. If you’re a new investor, you can start out using a managed option. But as your experience and your portfolio grow, you can seamlessly transition over to self-directed investing.

If you’d like more information, or if you’d like to sign up with the service, visit the E*TRADE website.

How to Manage Your E*TRADE Investments

Track and Analyze your Investments for Free: The easiest way to track and analyze all your investments, regardless of where they are located, is with Personal Capital’s free financial dashboard. By far the best financial tool we’ve ever used, Personal Capital enables you to connect all of your 401(k), 403(b), IRAs, and other investment accounts in one place. Once connected, you can see the performance of all of your investments and evaluate your asset allocation.

retirement fee analyzer

You can also see the fees you are paying through Personal Capital’s Retirement Fee Analyzer. I was stunned to learn that the fees in just my 401(k) could cost me over $200,000, requiring me to put off retirement for three years! They also offer a free Retirement Planner. This robust tool will help you plan for retirement and show you if you are on track to retire on your terms.

retirement planner

Try Personal Capital
[P_REVIEW post_id=75933 visual=’full’]

 

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Is Betterment a smart way to invest your money? Our detailed Betterment review gives you everything you need to make a sound investing decision.

Betterment Review

Betterment is a different type of brokerage. Most discount brokerages want to get customers to trade as frequently as possible. But Betterment is looking to be your asset manager.

Currently, the brokerage is offering an incentive for new customers. But the way they do business is a bit different than most brokerages you may be familiar with. This uniqueness is evident as early as the account sign-up process.

When you apply for an account with a typical discount brokerage, the application asks about income, net worth, and investment experience. Betterment asks about the goals and purposes of your investments. The service encourages each new account holder to designate a main account goal, like retirement, a major purchase, or a vacation. Betterment will also ask how many years you expect to take to reach that target or the age at which you’d like to achieve a goal.

What is Betterment All About?

The core philosophy for investing with Betterment is the asset allocation. This is the type of simplicity that I’ve seen with 401(k) accounts. These retirement investments often try to take an important concept of investing–asset allocation–and make it simple. This way, busy employees can simply submit a risk profile, and the investment will use this information to determine their ideal mix of stocks and bonds. Betterment takes this concept further, making the process incredibly simple.

Fees

Because of this simplicity, Betterment’s fees can be lower than other forms of investing. Although you could have a free account with a discount brokerage and never pay a transaction fee, you may still be subject to fees built into the investments, like expense ratios or front-end load fees. Betterment’s approach is to charge a percentage of your account’s value–or assets under management. This is the custom among professional asset managers who generally work with high-net worth clients.

This fee might depend on how much you invest with Betterment. For those looking to have a hands off approach, the annual fee is 0.25% (digital plan).  For those looking to take advantage of the premium service ($100,000 account minimum) the fee is 0.40%.  The premium service includes everything in the digital package plus in-depth advice on investments outside of Betterment and access to their CFP professionals.

And now for a limited time, Betterment is offering a promotion of up to 1 year managed for FREE.  Six different levels and timelines are available for the bonus; outlined below.

  • $5,000 – $24,999 – 1 month free
  • $25,000 – $49,999 – 2 months free
  • $50,000 – $99,999 – 3 months free
  • $100,000 – $249,999 – 6 months free
  • $250,000 – $499,999 – 9 months free
  • $500,000+ – 1 year free

Investment Management

With Vanguard investing, you’re mostly on your own. You alone decide your asset allocation, and many investors do not consider asset allocation at all. Betterment can be more expensive, but they are also providing a service that, depending on your needs and interests, may be worth the extra cost. At the same time, it’s less expensive than having a dedicated asset manager while offering many of the same features.

You’d have to be a hands-off individual to like the type of service offered by Betterment. You don’t choose your own investments like you would with a typical full-service or discount brokerage. Betterment chooses the investments for you, and their selections are based on a mix of index exchange-traded funds (ETFs). Betterment reinforces the idea that individual investors should not try to beat the market. For the most part, investors fail when they try. And their investments would have fared better had they remained diversified across a broad selection of investments and refrained from changing their risk profile.

Betterment Investments

Betterment‘s investments include baskets. Each basket represents exposure to a type of assets. To help an investment portfolio match a risk profile, the portfolio could include a combination including a stock market basket and a treasury bond basket. Betterment will rearrange the balance between the different stock index ETFs as it sees fit, but investors control the relationship between stocks and treasury bonds through the risk profile.

The treasury bond basket is split evenly between two investments, TIP: iShares Barclays TIPS Bond Fund and SHY: iShares Barclays 1-3 Year Treasury Bond Fund. The stock market basket includes these investments:

  • (VTI) Vanguard Total Stock Market
  • (VTV) Vanguard US Large-Cap Value Index ETF
  • (VOE) Vanguard US Mid-Cap Value Index ETF
  • (VBR) Vanguard US Small-Cap Value Index ETF
  • (VEA) Vanguard FTSE Developed Market Index ETF
  • (VWO) Vanguard FTSE Emerging Index ETF

Betterment IRAs

Previously Betterment’s investing plans were limited to the form of a standard brokerage account. But the service now offers IRAs. You can now use the government-designated accounts for saving for retirement through Betterment’s service. Some of the benefits of owning a Betterment IRA are:

  • IRA fees are a fraction of a standard 401(k) provider
  • You choose your personal risk strategy
  • Betterment regularly rebalances your portfolio

Opening a Betterment Account

Opening my account at Betterment was easy, and they approved my account right away. Like any new financial account accepting electronic deposits from other banks, I needed to confirm my ownership of the linked account through the familiar process of verifying test deposits. I’m waiting for my external checking account to receive the test deposits so I can begin investing with Betterment.

Betterment is a fairly new player in the word of finance. This is an industry where the major companies have been around for a century or more. But Betterment protects your assets just like any other major investment firm. Betterment is a Registered Investment Advisor with the Securities and Exchange Commission and is regulated by FINRA and the SEC. Accounts are insured by SIPC up to $500,000 per owner.

This doesn’t protect investors from having their investments lose value, but it does protect the value if the brokerage were to fail. If Betterment were to go bankrupt or to go into receivership, the insurance coverage would allow you to access your account.

Why Use Betterment?

For the micro-manager, Betterment might not be the perfect way to invest. It’s also not the appropriate service for someone who wants to trade their investments frequently or delve into investing in individual companies. Betterment’s services may be right for investors with the opportunity to save for their future outside of retirement accounts who want the simplicity of diversified investments, risk-based asset allocation, and a buy-and-hold-and-rebalance investing philosophy.

Their published returns are nothing to scoff at, and their fee structure works especially well for smaller investors who are looking to avoid day to day interaction.

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The IRS just released IRA contribution limits for 2018. Unfortunately, the limits didn’t change from 2017. The ROTH IRA income limits, however, did change. Here are the details.

You have more time than you might think to contribute to your traditional and Roth IRAs. Rather than an end-of-year deadline, you have until you file your taxes to make that contribution. Federal taxes for 2017 will be due on April 17, 2018, so this is the deadline for establishing and contributing to your 2017 IRA. If you file for an extension, however, your IRA deadline will not be extended; don’t miss the April contribution deadline.

IRA Contribution Limits for 2018

If you’re under age 50 and contributing to your 2017 IRA, the maximum you can contribute to your Traditional and Roth IRAs combined is $5,500. Taxpayers 50 or older can make an additional contribution of $1,000 for 2017 between both types of IRAs for a total of $6,500.

Year Under Age 50 50 and Older Standard Deadline
2018 $5,500 $6,500 April 15, 2019
2017 $5,500 $6,500 April 17, 2018
2016 $5,500 $6,500 April 17, 2017
2015 $5,500 $6,500 April 18, 2016
2014 $5,500 $6,500 April 15, 2015
2013 $5,500 $6,500 April 15, 2014
2012 $5,000 $6,000 April 15, 2013
2011 $5,000 $6,000 April 17, 2012
2010 $5,000 $6,000 April 18, 2011
2009 $5,000 $6,000 April 15, 2010

These contribution maximums are further limited by taxable compensation. If your modified adjusted gross income was only in a given year, that is your IRA contribution limit in that year.

Open an IRA

  • Betterment: Low fees and very easy to get started
  • Ally Invest: $4.95 equity trades
  • Wealthfront: No management fees on the first $5,000

Traditional IRA rules

Contributions to a traditional IRA are tax deductible, but depending on your income and employment situation, the amount that can be deducted from your income varies. Any taxpayer with a filing status of single not covered by a retirement plan from their employer can deduct their traditional IRA contributions in full. For those who are covered by a retirement plan at work, when modified adjusted gross income reaches a certain level, the allowed deduction for traditional IRAs begins to decrease to zero. If you’re in this situation, you can still contribute to a traditional IRA, but you won’t benefit from the tax deduction as much or at all.

2017

Here are the rules for 2017:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $62,000 to $72,000, up from $61,000 to $71,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $99,000 to $119,000, up from $98,000 to $118,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000 and $196,000, up from $184,000 and $194,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

(Source: IRS)

2018

And here are the changes for 2018:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $63,000 to $73,000, up from $62,000 to $72,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $101,000 to $121,000, up from $99,000 to $119,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $189,000 and $199,000, up from $186,000 and $196,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

(Source: IRS)

Roth IRA rules

Your income limits your ability to contribute to a Roth IRA up to the maximum. This is different than the traditional IRA, where income affects tax deductions. Here, income limits contributions. You could be penalized by the IRS if you contribute to your Roth IRA beyond your allowable limit.

2017

Here are the 2017 limits (sources same as above):

The income phase-out range for taxpayers making contributions to a Roth IRA is $118,000 to $133,000 for singles and heads of household, up from $117,000 to $132,000.  For married couples filing jointly, the income phase-out range is $186,000 to $196,000, up from $184,000 to $194,000.  The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

2018

And here are the 2018 limits:

The income phase-out range for taxpayers making contributions to a Roth IRA is $120,000 to $135,000 for singles and heads of household, up from $118,000 to $133,000. For married couples filing jointly, the income phase-out range is $189,000 to $199,000, up from $186,000 to $196,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

Plan for 2017

An IRA is an important piece of a retirement plan, and it should be high on most people’s priority lists, right below investing in a 401(k) up to the employer’s matching maximum.

If you have a good idea of what your income and tax situation will be in 2017, you can determine how much you can and will contribute to your 2017 IRA throughout the year. A convenient way to contribute is through automatic investments, so you can set it by December 31 and forget about it for the entire year. If you plan to invest in the stock market and don’t want to invest in the IRA with your full year’s contribution at once, you can take advantage of dollar-cost averaging to reduce your exposure to swings in the market.

Set up an automatic transfer from your checking account to your IRA custodian of choice. I use Vanguard for my retirement funds, for example. Because there is no cost to transfer, I would create a plan that places my investment each week. With 52 weeks in a year and a $5,500 maximum contribution, that’s about $105.76 a week or $458.33 a month.

Take Control of Your IRA

Track and Analyze your Investments for Free: The easiest way to track and analyze all your investments, regardless of where they are located, is with Personal Capital’s free financial dashboard. By far the best financial tool we’ve ever used, Personal Capital enables you to connect all of your 401(k), 403(b), IRAs, and other investment accounts in one place. Once connected, you can see the performance of all of your investments and evaluate your asset allocation.

retirement fee analyzer

You can also see the fees you are paying through Personal Capital’s Retirement Fee Analyzer. I was stunned to learn that the fees in just my 401(k) could cost me over $200,000, requiring me to put off retirement for 3 years! They also offer a free Retirement Planner. This robust tool will help you plan for retirement and show you if you are on track to retire on your terms.

retirement planner

Try Personal Capital

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Let’s get this out of the way. There is no one best online discount broker for everybody. What will be the best choice for you will depend on many factors. And what works for you may not be the ideal option for somebody else.

best online brokers

We’ve used a number of brokers, including Scottrade, Ally Invest, OptionsHouse, Motif, Vanguard, and several robo advisors. We’ve compiled this list of the best online brokers based on personal experience.

Best Discount Brokers

Let’s start with our top picks by category. Then we’ll look at each option in more detail.

Discount Broker
Stock Trading Cost
Sign-Up Link

0.25%

Betterment Review

$4.95

Ally Invest Review

$4.95

E*Trade Review

$4.95

Fidelity Review

$5.00

TradeStation Review

$6.95

TD Ameritrade Review

$6.95

Cap One Investing Review

Betterment – Betterment is not your typical discount broker.  They’re a robo advisor that advertises a simple free structure to your investments.  The fee to invest with Betterment is 0.25% annually.  If you want to take advantage of their CFP’s, they have a Premium plan that requires a minimum of $100,000 invested and a fee of 0.40%

However, there are no trading fees or other fees associated with your account.  Experts choose the investments and Betterment is confident in average annual returns much greater than the fees they charge.  As a bonus, Betterment is offering new account holders some time without fees. The length of time depends on the dollar amounts invested

  • one month free for $5,000 deposited
  • two months free for $25,000 deposited
  • three months free for $50,000 deposited
  • six months free for $100,000 deposited
  • nine months free for $250,000 deposited
  • One full year free for $500,000 deposited

Ally Invest – Ally recognized that TradeKing was one of the greatest online discount brokers and decided to gobble them up.  Not only can you trade with Ally, but you can also open up an online savings, check and CD accounts with the big bank.  Stock trades cost a very low $4.95 per trade and contracts will run you $0.65.  Ally Invest also offers a robo-advisor service for those who aren’t looking to invest themselves.

Unfortunately, Ally Invest does not currently offer any sign-up incentives.  They also do not offer a fee free ETF’s. So while this is a terrific option for low cost trades and robo investing, it lacks a few of the finer details you can find elsewhere on this list.

E*Trade – One of the few online discount brokers that offer volume based pricing, E*Trade was the very first online broker I used back in 2005.  If you’re a high volume trader, trading 30 or more times per quarter, a stock trade is $4.95.  Low volume traders will pay the rate of $6.95 per trade. Options contracts also offer volume pricing, with contracts costing $0.75 a piece at the low volume threshold and $0.50 a piece at the high volume threshold (again, 30 trades per quarter).

There is a $500 minimum to open your E*Trade online discount brokerage account and for a limited time, new accounts can trade commission free for 60 days on a deposit of $10,000 or more.  For those wondering why OptionsHouse didn’t make our list; that platform was sold to E*Trade last year.  The conversion is now complete, so anyone who owned an OptionsHouse account is now a proud member of E*Trade.

Fidelity Investments – If you can make at least 36 trades per rolling 12 month period, Fidelity Investments offers my favorite trading platform -Active Trader Pro.  It has the most advanced trading features for both mobile and desktop users.  You’ll also have access to dedicated trading specialists.  The minimum to open a Fidelity Investments account is $2,500 which is a bit high compared to the $500 minimum most others require.  Their costs are simple: $4.95 per stock trade and $0.65 per option contract.

Fidelity Investments kicks off new account holders with the promise of free trades.

  • Deposit $50,000 and earn 300 free trades for the first TWO years
  • Deposit $100,000 and earn 500 free trades for the first TWO years

Fidelity also offers a wide variety of other accounts, including deposits, credit cards and bill pay.

TradeStation – Straight forward, discount pricing is what you can expect with TradeStation.  All stock trades are $5 and all options contracts cost $0.50.  There are no software fees, no additional trading fees to speak of.  TradeStation includes a top notch trading platform, mobile app and Radar Scanner.  With Radar Scanner, you’ll have the ability to look through a thousand ticker symbols at once, real-time to find patterns and trading opportunities.

One feature that stands out is that for customers who open an account with $500,000 or more, TradeStation will pay a 0.40% APY on the balance of your account.  Most every other discount brokers offers little to no APY on your deposited funds (I could find none greater than 0.01%).  This interest-sharing program is set to expire on December 31st, 2017.

Beyond this feature, there is currently no up-front incentive to open a TradeStation account.

TD Ameritrade – TD Ameritrade offers it’s clientele stock trades for $6.95 a piece.  Options trades will cost $0.75 and if you’re in need of a broker, assisted trades run the rate of $44.99.  Perhaps the greatest feature of owning a TD Ameritrade account is use of their Trade Architect technology.  You’ll have access to streaming news, trading specialists and level two quotes using this platform.

TD Ameritrade offers a great up front bonus for new account holders.  Depending on the amount of your initial deposit, you’ll be rewarded with:

  • Free trades for 60 days on a deposit of $3,000
  • $100 + free trades for 60 days on a deposit of $25,000
  • $200 + free trades for 60 days on a deposit of $100,000
  • $300 + free trades for 60 days on a deposit of $250,000

Capital One Investing – What used to be known as ShareBuilder is now Capital One Investing.  After their purchase of ING, Cap One has launched itself into the online discount broker space with a terrific sign-up bonus. Depending on how much you’re willing to open your account with, you stand to earn between a $50 and $600 cash bonus.  The breakdown of the bonuses (with promo code GET600M17) earned are as follows:

  • $5,000 deposit earns a $50 bonus
  • $15,000 deposit earns a $100 bonus
  • $50,000 deposit earns a $200 bonus
  • $100,000 deposit earns a $300 bonus
  • $200,000 deposit earns a $600 bonus

If however you cannot meet any of those initial deposit amounts, fear not.  Capital One is also offering a free $50 for new account holders after they make their first trade.  When signing up, use promo code M50FT17.

There is no minimum to open a Capital One Investing account and the cost per trade is a play $6.95.  Options contracts will run you $0.75 per contract plus the base commission and if you dare, they’ll offer you a margin rate of 7.75%.  Capital One Investing trading account has no account fees or annual fees.

How to Pick A Discount Broker

Here are the seven key factors to consider:

  1. Cost: The cost of trades is crucial for active traders. Here you want to find the lowest cost broker for the types of trades you make. For those who trade infrequently, like me, the cost is less important.
  2. Trading Frequency: This relates to cost, but it also relates to ease of use. Frequent traders spend a lot of time on their broker’s website. It should be easy to use.
  3. Tools: For technical traders, tools are critical. This is where it’s important to understand the type of investor you are. So you can be sure to get the tools that are most useful to you.
  4. Simplicity: This is the most important feature in my view. You want an online broker that’s easy to use.
  5. Types of Investments: Here it’s important to understand the types of investments you’ll be making. Do you want to invest in mutual funds and ETFs? Or will you be doing a lot of options trading? The answer to questions like these will often dictate which broker is best for you.
  6. Control: Simplicity and control are often mutually exclusive. A robo advisor gives you limited control, but wonderful simplicity. Interactive Brokers, in contrast, gives you wonderful control but far more complexity. There is no “right” answer here. It again depends on the type of trader you are.
  7. Account Type: Most brokers offer all of the basic account types, including various retirement accounts. If you are a small business, be sure to make sure they offer the account type you need. Examples include SEP IRAs and Solo 401ks.

Since I am not an active trader, I don’t actively seek out new discount brokerages. If you have experiences you’d like to share, please leave comments below.

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