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Online Stock Broker Comparisons and Reviews

April 28th, 2008 by Wealth Builder


Online Stock TradingAre you looking to open an online stock broker account and overwhelmed with the number of choices out there? Well, thank your lucky stars! Below is a summary of online stock brokers that I put together to help our Financial Resource community.

Most likely many of you already have an online stock brokerage account, but if you are like me, you may have started an account a while back and continued using the same company and account all these years even though we know there are a lot more options and possibly better ones now. For example, I started an Ameritrade account a little over 10 years ago (the company is now called TD Ameritrade after a merger) and I still have the same account. At that time, my priority was to get the lowest stock trade fee (or lowest commissions). I didn’t care too much for stock analysis and company research, as I used other sites like Yahoo Finance to do most of my research. However, over the last 10 years many things have changed and there are a lot more options out there. Maybe I have been missing out on a lot of new features that could save time and money!

The first point I need to make is that there are many online brokers out there. No one solution fits all, and each of us may have a different need, so I will not be recommending a particular broker to work with. My goal is to summarize my research with the most relevant information to share with our Financial Resource community. This summary can serve as a base to work from or help you to decipher which online broker offers what you need. From there, I highly advise you to research their website, their product and offering, and contact and speak with them, if needed, to get a better feel for what you will get when you open a stock trading account.

The online brokers that I looked at are Fidelity, TD Ameritrade, ShareBuilder, and Charles Schwab. The following is a summary of the key factors that may help you with your decision.

Fidelity Investments

Account Minimum to open: $2,500

Equity Trade commissions: $19.95 for asset balance less than $50,000, $10.95 for asset balances between $50,000 and $1,000,000, and $8.00 for asset balance over $1,000,000.

Mutual Fund Trade Commissions: No transaction fee for Fidelity mutual funds. $75 fee for most other funds. Over 1,400 industry leading funds with no transaction fee.

Investment Choices: Stocks, mutual funds, options, bonds, and ETFs (exchange traded fund).

Research tools: Research includes reports from over 10 firms covering over 4,500 stocks. Fidelity offers the broadest range of free independent equity research available from a major brokerage firm, based on a survey of competitors´ online offerings performed in June, 2007.

Other services offered: Retirement guidance, college planning, 401(K) rollovers, annuities, IRAs, and trusts and estate planning.

TD Ameritrade

Account Minimum to open: $1,000 equity is required to open an IRA account, and $2,000 equity is required to open any non-IRA account.

Equity Trade commissions: $9.99 for all internet orders, $34.99 for telephone orders, $44.99 for broker assisted orders.

Mutual Fund Trade Commissions: NTF (no transaction fee) funds available, $49.99 no-load funds

Investment Choices: Stocks, mutual funds, options, bonds and CDs (certificate of deposits), and ETFs (exchange traded fund).

Research tools: I noticed a great difference here based on my initial years with Ameritrade. Since the merger of TD Waterhouse and Ameritrade and especially the research tools of TD Waterhouse, the available research tools and reports have significantly improved.

Other services offered: Nationwide branches offering investment consultants and support, retirement planning, College savings plans, IRA, 401(k) rollover, and unlimited check writing from your account (however the account is not FDIC-insured or bank guaranteed)

ShareBuilder

Account Minimum to open: No minimum.

Equity Trade commissions: Pricing depends on the account type selected - Basic, Standard or Advantage. Automatic stock trades cost $4.00 in the basic plan, but can be cheaper in the Standard and Advantage plans (however these two other plans also carry a monthly fee of $12 and $20 each respectively). Real time trades start at $9.95

Mutual Fund Trade Commissions: No load mutual funds available. Different funds have minimum amount requirement.

Investment Choices: Stocks, mutual funds, ETFs (exchange traded fund), and options.

Research tools: The research tools are geared for a novice investor with simple clear illustrations and reports.

Other services offered: Emphasis on financial education with articles, tools, and tutorials are provided from basic investing to retirement planning.

Charles Schwab

Account Minimum to open: $1,000

Equity Trade commissions: Online trades can vary from $8.95 to $12.95 depending on account balance and number of trades/year, add $5.00 fee to telephone trades and $25 fee to broker assisted trades.

Mutual Fund Trade Commissions: NTF (no transaction fee) for Charles Schwab and selected mutual funds. Other mutual funds cost a $49.95 fee. Add $25 for broker assisted trade.

Investment Choices: Stocks and options, mutual funds, options, CDs and money market, bonds and fixed income, ETFs (exchange traded fund), annuities, and margin loans,

Research tools: One of the best research tools available from Morningstar and Goldman Sachs. Plenty of information and reports.

Other services offered: Retirement planning, college savings plans, banking and lending, and credit cards.

Hopefully this was a useful and concise summary. Are any of you using other online brokers not mentioned in this article? I would like to hear from you and what your impressions are so that our Financial Resource community can learn from your experience.

Happy trading!

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This entry was posted on Monday, April 28th, 2008 at 10:50 pm and is filed under 401(k), Bonds, Investing, Stocks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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