Online discount brokers are a cheaper alternative to using a full service broker. With an online discount broker the fees are considerably less and you are responsible for maintaining your account, doing all the research and executing the trade. When looking for an online discount broker you’ll want to take a few things into consideration before choosing. The first thing you’ll want to compare is how reasonably priced they are with their competitors. You’ll find prices that will vary, and like any smart investor with their eye on the bottom line you’ll want to pay the least amount of money in fees and commission as long as the quality of service is available. Customer service should not be overlooked when it comes to online brokers. You’ll want to choose someone that is committed to their customers and is accessible. Some other things to take into account include access to research on investments, easy site navigation and the flexibility of their trading platform.
Personally, I don’t invest a lot outside of my 401k right now, but after looking at several personal finance blogs around the web, here are a few named as the best discount brokers available. Keep in mind, this list is here to get you started. Makes sure you do your own research before deciding on the best discount brokerage for you.
Betterment - Betterment is a new player to the game forming in 2008 but they have built a site known for its simplicity and function for investors. Betterment charges no commissions or transaction costs, instead only charging a reasonable annual asset management fee that is determined on the balance of your current portfolio. The management fee ranges from 0.15% to 0.35%of your average balance. Betterment does the research for you providing you a blend of stock and bond ETF’s to choose from for your portfolio. The also provide a community to see how others are investing so that you can learn from them. Finally, Betterment is integrated with Mint personal finance software.
Sharebuilder – Sharebuilder offers no account minimums along with an easy to navigate web site and overall good customer service as an ING product. They offer a wide range of investment options, excellent research and top training tools. Sharebuilder offers a wide variety of investment options and $4 scheduled trades (once per week) or $9.95 ”trade now” trades. You can also trade on the go with a mobile app.
Scottrade - Scottrade costs more in commissions at $7 per trade but offers excellent customer service and are among the best for online discount brokers. They offer a variety of online trading tools and research as well as provide mobile trading features. You’ll need a minimum balance of $500 to get started.
Optionshouse - Don’t let their name fool you – Optionshouse isn’t only for you options traders. This broker also offers strong trading services and a low rate of $3.95 on stock commissions and $9.95 on mutual funds. Optionshouse doesn’t require a minimum account balance and they offer good customer service, a wide range of tools and an easy to navigate web site.
TradeMONSTER - TradeMONSTER offers a great set of browser-based investing tools, geared especially towards options traders. TradeMONSTER offers $7.50 stock commissions and no inactivity fees, hidden fees or maintenance fees. They also offer above average customer service and good research material including webinars for beginner investors.
OptionsXpress - As the name might suggest, OptionsXpress primarily caters to people who are options geeks but they are a good choice if you’re also interested in trading stocks. They offer reasonable commissions along with low fees. They currently offer $9.95 stock commissions. Their site is a breeze to navigate and they provide several tools and learning resources.
Zecco - Zecco is a great choice for investors looking for free trades along with not having to pay fees on every equity transaction. They are dedicated to providing the most responsive customer service via phone, email, chat or fax. Zecco also provides an extensive suite of tools to conduct your research. Zecco is currently offering $4.50 stock commissions.
E*Trade - E*Trade is probably the most well-known online broker listed and has received awards from both SmartMoney and Kiplingers magazines. They provide easy to navigate web site and learning tracks for those new to investing as well as for experienced traders. E*Trade is also consistently among the best rated online discount brokers in terms of customer service and satisfaction. They are currently offering $9.99 stock commissions and there is a minimum of $1000 to get started.
Fidelity - Fidelity is one of the largest brokers out there and it uses its large scale and deep range of resources to allow customers to benefit from their terrific research and top of the line investing tools. All-around this is a great choice. They currently offer $7.95 stock commissions, great customer service and a site that is easy to navigate.
SogoTrade - SogoTrade offers very low $3 stock commissions and no inactivity or maintenance fees on accounts with over $100. The provide real-time streaming to track ideas, positions and results. They provide themselves in customer service and security.
ChoiceTrade - ChoiceTrade has a powerful platform for trading and offers no minimum account balances, inactivity fees or maintenance fees. ChoiceTrade also offers low $5 stock commissions and good customer service. Most people on this site are experienced investors. Market data is available for free for the first 4 months and then the cheapest plan is $14.95 per month.
Thinkorswim (Ameritrade) - Ranked among the top of their field for the last few years, Ameritrade offers an industry leading variety of no fee exchange traded funds, along with excellent research, and a wide array of helpful investing tools. Currently they offer $9.99 stock commissions, a strong customer service department and a site that is simple and easy to navigate. Trade free for 60 days when you open an account with $2000.
TradeKing – TradeKing offers highly competitive pricing along with excellent resources for any investors who is interested in getting into options. They’ve won awards from SmartMoney and Barrons. They offer extended hour customer service and will reimburse you to transfer your account for transfer fees up to $150. TradeKing currently offers $4.95 stock commissions.
Have you used any of these discount online brokers? If so, please share your experience in the comments.