I hunted for reputable stock brokers with great pricing and the lowest fees. Here are some of the more popular brokerages I’ve looked into.
I’ve always been quite interested in adding to my investment holdings and have been on the lookout for good online brokers. If you’re someone who’s been keeping the faith about the long term prospects of the stock market (typically 10 years or more), then this could very well be a good time to add to your equity positions.
To go cheap, I house my investments in a mix of both no load mutual fund companies and discount brokers. As a stock investor, you could go the mutual fund route with great names like Vanguard, Fidelity, Charles Schwab, and T. Rowe Price, but to add some flexibility to your portfolio at really affordable transaction rates, you may also be interested in signing up with an online discount broker. I did some research and compiled this list of low cost brokerages:
Best Online Stock Brokerages With The Lowest Fees & Commissions
1. TradeKing offers $4.95 per stock trade regardless of the size of your account balance. They have some helpful tools and calculators to help customers out with determining their target prices for trades. In addition, they’ve got good support for options trading such as seminars and tools, for those among you who dabble in options. TradeKing is also tops in customer service, with a live representative at the ready via phone, email or IM through their web site! They’re quite easy to reach. Some other extras they offer: a refund of your transfer charges up to $150 if you switch your account to them, and $50 for each friend or referral you send their way.
Also, TradeKing has won some great accolades from the personal finance community, having received the following awards and honors: Smart Money ranks TK as #1 in customer service in 2008, the best discount broker in its annual Broker Survey of US Brokers (twice in a row!) and the highest ranking of 4 stars in Barron’s 12th Annual Survey of Best Browser-Based Online Brokers. For those interested in opening an account, Here’s where to sign up.
2. OptionsHouse has very affordable commissions, only $3.95 per stock trade. Mutual fund trades are $9.95 (same as Zecco and Firstrade), they’re easy to reach over the phone, and they offer Live Chat via their site. They’ve also got a broker comparison table, which all online brokers like to show to put themselves in the best possible light. Their table shows that their trading commissions are better than many brokers’ (for regular trades) but they’re missing that nice community feature that’s available on sites like Zecco or TradeKing. But open an account with them and you could get your transfer fees reimbursed up to $100. They also have an ongoing promotion right now that’s good for a limited time: 100 free stock trades for new accounts. Here’s where to sign up.
3. Zecco is one of those online brokerages which used to offer free trades for those who open an account with a balance minimum or who would trade fairly actively. However, they’ve since changed their rates and pricing structure, and these days, their trades have been set at $4.95 per transaction. For commissions on mutual funds that are not on the no-load list, Zecco charges $10 per trade.
Also, Zecco has since revamped their site and services, and while they provide extra services (such as getting the information you need for tax purposes) for a charge, they’ve also beefed up their suite of free trader tools and applications. They’ve also raised their site’s user-friendliness quotient. It’s great to see them make ongoing improvements to address their weak points. For more active traders who are looking for an investment platform with rich features, they may be worth a look. Here’s where to sign up.
4. Scottrade charges $7 per stock trade online, but will charge more for phone and broker assisted trades. These are great prices, but I actually appreciate their mutual fund fees even more! For mutual funds with an NTF designation (no load and no transaction fee), your transactions are completely free. However, no load funds that aren’t in the NTF program have a fee of $17 for each trade, whether you buy, sell or exchange. Similar charges are applied to loaded funds and broker assisted transactions with mutual funds, so you’ll get the best deal by sticking to managing your portfolio online. From the feedback I’ve heard about Scottrade, they’re a well-established, highly popular broker that’s a great fit for the retail investor. You’ll also be eligible for free trades if you refer your friends and family to Scottrade. Here’s where to sign up.
5. Firstrade commission rates run $6.95 a trade for stocks and $6.95 plus $0.75 per contract for options. Being a fan of mutual funds, I like that Firstrade.com has a large product roster of mutual fund offerings and will charge you nothing for load funds beyond the load fees. No loads will run you a relatively lower $9.95 a trade. Broker assisted trades do run a bit higher, at $26.95 though. I also like the fact that you can also buy fixed income securities here, including treasury bills, notes, bonds, various other bond instruments and CDs. They’ve got some special deals going with free trades, transfer rebates and cash back bonuses for new accounts as well as wire transfer reimbursements and a cool $50 referral fee offer for each friend you refer to them. Here’s where to sign up.
6. E*Trade isn’t the cheapest broker, relative to the others we’ve listed here, with rates ranging from $7.99 to $9.99 per trade (depending on your trading frequency), but they’re still pretty affordable. Some things to watch out for: if you need broker assistance, they’ll hit you with $45 a trade and an online commission. There are also a few account activity fees and special request fees that you should take note of (e.g. returned check fee, stop payment requests, outgoing wire transfers, etc).
The positives? They offer some support for those who need financial advice potentially rivaling what you’d expect from full-service brokerages, and they’ve got a wide range of investment selections in their product roster. They also rate well for solid tools and seminars for those folks who are interested in options trading. In fact, they may have the most diverse set of tools available of any online broker (check out their ETrade Pro platform). Their customer has also been beefed up with the introduction of a Live Chat option and faster phone response. I’d put them at par with Charles Schwab.
As far as honors go, Smart Money chose them as the #1 online broker for 2007 and 2008. Recently, they’ve received 5 stars for their trading tools in Smart Money’s 2011 survey. They also earned 5 stars for customer service (from Kiplinger’s) and 4.5 stars for excellent research amenities (from Barron’s) in 2011. So clearly, they’re doing a lot of things right! Here’s where to sign up.
7. tradeMonster has entered the trading market as one of the newer online brokerages in this list, with roots in the options world. They offer a simple pricing structure for stocks — a flat $7.50 per trade. Mutual funds and bonds are $15.00 per trade (only upon purchase) with no fees upon sale. For options, the commissions are tiered, but appear to be relatively cheaper than the fees of other brokers, especially when more contracts are involved. Overall, they’re a much cheaper options broker than TradeKing or OptionsXpress if you intend to be a high volume options trader. Plus, they’ve already been honored by Barron’s with a 4 star rating despite being the new kid on the block. Here’s where to sign up.
Overall, these brokers are a good list to work with. I’ve done business with a few of them and have experienced good customer service with great commission rates.
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