For the savvy investor who knows how to do his or her own trades, it’s no wonder that
online brokerages, also known as “discount brokerages,” are becoming a popular option. An online brokerage account is easy and quick to open, has low fees per trade, and responds to your buy and sell orders almost instantaneously. No longer do you need to wait for your broker to pick up the phone: you can do everything yourself, online, for a fraction of the cost of a traditional brokerage.
If you are not sure where to start, take a look at some of the best online brokerage services and compare features. Different online brokerages will have different advantages. Some brokerages have proprietary research tools available, others excel at customer service, and some may have the lowest fees per trade for online trading. The top 10 online brokerages are always jockeying with one another for position, depending on market conditions and what new products or services they may be offering. However, according to a recent February 2009 Consumer Search report, here are the results of the online brokerage firm comparisons:
1. Charles Schwab - With high marks in customer service and a range of research products available, Charles Schwab was well-rated by trusted sources such as SmartMoney magazine, Baron’s and Kiplinger’s. With a $1000 minimum to open an account and rates of $12.95 per trade (reduced from $19.95), it’s not for everybody. 2. Trade King - Trade King has some of the lowest fees available ($4.95 per trade) and no minimum. Attractive transfer bonuses have also helped Trade King emerge as a favorite. 3. Interactive Brokers - Access to over 70 foreign markets and proprietary investment tools make Interactive Brokers a standout, but not everyone will appreciate its fee structure: this online brokerage charges a monthly fee instead of fees per trade. 4. E*Trade – This company has built a solid online-only business since it went public in 1996 and is leading the way in online security. Its pros consists of having updated trading tools, access to foreign markets, and professional banking services. However, this company is involved in the sub-prime mortgage crises, has higher fees, and doesn’t have the best customer service. 5. ShareBuilder – Great for beginning investors since there is no minimum balance required. This company is well known for its automatic investing program. Packages include tutorials, automatic investment plan that costs just $4. Yet, market orders costs are $10, trading tools are very basic, and investment products are limited. 6. Scott Trade – Customer ratings are high and consistent, transactions fees are only $7, consist of many branch offices (300), and low opening balance of only $500. However, you have to do your own research if you want to trade – there is not much help from them in that area, the online tools are fairly basics, and trading selections are narrow. 7. TD Ameritrade – There are no minimum balance to start off with TD Ameritrade, they are well known for their research and analysis tools – which has been praised numerous times on their website, as well as their customer service. However, trading selections are narrow. 8. Fidelity – If you’re a big time investor – Fidelity has its perks – where if you invest $1 million plus you get your own account executive to watch over your investments. This company offers great research tools, it has many branch offices throughout the nation, and have a wide range of investment products to select from. However, the minimum to open is $2,500 and commission rates are also high as well. 9. TradeStation – This company is known for its excellent research tools, direct access trading, and customized trading platforms for individual investors. However, it is software based only so there is a learning curve, and it is quite expensive. 10. Zecco – There are some perks with Zecco. Customers with about $25,000 in their accounts or make about 25 executive stock trades a month are allow to make 10 free trades a month. There is no minimum deposit required or maintenance fees, and commission trade is only $4.50. However, they rank low for customer service, have basic research tools, and they have a narrow selection of products to trade from.
The best online brokerage account is the one that suits you best, so despite how you might feel after reading comparisons go with what makes you the most money.
Photo credit: KatrinaTuliao