If there is one crucial lesson to learn about investing, it’s that compound interest is downright magical, but fees are its mortal enemy. Over the course of 20 years, just an additional 0.25 percent in fees on an investment of $100,000 — that’s just $250 in the first year — will cost you a whopping $10,000, even assuming a very modest 4 percent return.
That’s why one of the most important factors to consider when you compare online brokers is its fees. No matter how well you invest, if you’re using a brokerage account with the wrong fee structure for your trading patterns, your returns might lag behind what you want and expect.
So, here’s a brokerage fee comparison for when you decide it’s time to open a brokerage account.
What Is a Brokerage Fee?
Brokerage fees are how your brokers are paid for the services they provide in buying and selling stocks on your behalf. It’s next to impossible to buy and sell stock without the services of a broker, so you should expect to pay at least some brokerage fees in the process of building your nest egg.
Although fees come in all sizes and types, the advent of online brokerages has meant that a simple, flat per-transaction fee has become the norm for most brokers.
Here’s a look at what some top online brokerage firms are charging for their services:
|Brokerage Fees Comparison|
|Broker||Stock Trade Fee||Options Trade Fee||Cost per Options Contract||Bonds Trade Fee||Mutual Funds Fee (Load)||Mutual Funds Fee (No-Load)|
|E-Trade||$0||$0||$0.75||$1||Varies by fund||$19.99|
|Firstrade||$0||$0||$0.50||On a net yield basis||$0||$9.95|
|Merrill Edge||$2.95||$2.95||$0.75||$1||Varies by fund||$19.95|
|T. Rowe Price||$19.95||$19.95||$1||$5||$0||$35|
|TD Ameritrade||$0||$0||$0.75||On a net yield basis||$0||$49.99|
|Vanguard||$7||$7||$1||$2||Varies by fund||Varies by fund|
|Accurate as of June 19, 2018|
Online Brokerage Comparison
With so many options to choose from, it’s wise to select your brokerage firm carefully. Depending on how you invest, different cost structures will ultimately result in higher or lower fees, so be careful to compare not just fees but where they’re assessed and what that might mean to you.
Ally Invest touts the charting tools and calculators available through its platform, promising an intuitive trading experience that is designed to benefit investors of all experience and education levels.
Its fees are among the lowest across the board, including a $4.95 stock trade fee and a $9.95 fee on no-load mutual funds that compares well with its competitors. Additionally, there’s no account minimum, there are options for managed accounts, and you can get up to $3,500 in bonus cash with a qualifying deposit.
Best For: Self-directed traders; beginning investors; low-fee trading
Pros: Competitive fees; no account minimums; online-only brokerage
Cons: Charges trading fees on ETFs; can only trade foreign currencies and futures through separate Ally Invest Forex account
Schwab offers a range of tools and advisory services in addition to a fee load that’s among the lowest in the industry. Its portfolio evaluation tool can supposedly help track your investments and help you understand your portfolio’s performance. You can get either robo-advice or one-on-one professional guidance from a certified financial planner via phone or video call.
Best For: Novice investors interested in accessing advice and guidance; active traders pursuing low fees
Pros: Competitive fee structures; access to a range of advisory services
Cons: $1,000 minimum to open most brokerage accounts; $76 fee on no-load mutual funds
Learn More: Best Brokers for Day Trading
Originally founded in 1982, E-Trade executed the very first online trade in its second year of existence. Today, it has 3,800 employees and some 30 retail branches across the U.S.
With a stock trading fee of $6.95, E-Trade is not among the most inexpensive options, but for anyone making 30 or more trades a quarter, E-Trade shifts to reduced fees across the board, including $4.95 stock and ETF trades and $0.50 options contracts. What’s more, some 4,400 of the 9,000-plus mutual funds available come with no transaction fee. These are the best short-term stock investments for active traders.
E-Trade also offers up to $600 and 60 days of commission-free stock and options for new accounts with at least $10,000 deposited in them.
Best For: People making more than 10 trades a month; active traders with a large balance for first deposit
Pros: Low fees for active traders
Cons: Margin rates start at 10.25 percent; higher fees if you make fewer than 30 trades per three-month period
Founded in 1946, Fidelity purchased its first computer in 1965, beginning its commitment to using technology in investing. Today, the company manages over 500 mutual funds and has over $5.6 billion in customer assets under administration.
Fidelity offers a range of tools and calculators — including the Fidelity Retirement Score — as well as articles and industry commentary through Fidelity Viewpoints. It also has trading fees that are competitive with other industry leaders, no annual account fees and the ability to trade Fidelity mutual funds and iShares ETFs fee-free. Some of the 20 best mutual funds are Fidelity funds.
What’s more, Fidelity also offers a variety of advisory and wealth management services that are available with upgraded accounts, giving novice investors a chance to get the guidance they need.
Best For: Novice investors who might be interested in advisory services; customers interested in Fidelity mutual funds
Pros: Low fees, robust advisory services; fee-free trading of Fidelity financial products
Cons: Certain accounts might require a minimum opening balance of $2,500
Learn More: How To Buy Stocks Online
Firstrade offers considerable discounts on the services offered by the rest of the industry. The $2.95 per-trade fee for stocks is the lowest available, and the brokerage also offers fee-free trading on some 700-plus ETFs. Using insider secrets will help you make the most on ETFs.
You will also receive your trade commission-free if your qualifying order takes longer than 0.1 seconds to execute, and the company’s $9.95 fee on no-load mutual funds is tied with Ally Invest for the lowest out there.
Best For: Beginning traders; active traders looking to reduce fees; ETF investors
Pros: Lowest fees; fee-free ETF trading
Cons: Requires approval to do options trading; additional fees for stocks priced below $1
Merrill Edge is a subsidiary of Merrill Lynch, the legendary trading house founded in 1914 by Charles E. Merrill and Edmund C. Lynch and acquired by Bank of America during the 2008 financial crisis.
The platform offers $2.95 stock trades with no minimum opening investment, as well as the option to upgrade to different accounts that offer guided investing or access to a financial advisor. Not only can you get guidance on building your retirement account, but you’ll get access to investment ideas and Merrill Lynch research.
What’s more, if you have at least $50,000 in your account and a Bank of America personal checking account, you can become a Preferred Rewards Platinum client and trade for free.
Best For: Investors with large accounts and a Bank of America checking account; novice and retirement investors with a need for investing advice; investors interested in access to Merrill Lynch research products
Pros: Access to Merrill Lynch research products; available advisory services
Cons: $19.95 fee on no-load mutual funds
Get Started: The Best Online Stock Brokers for Beginners
T. Rowe Price
T. Rowe Price is the priciest trading platform of the options listed here. The per-trade fee of $9.95 is already the highest option, and even that can be misleading as it only applies to accounts with 30 or more trades in the last year. Trades will cost $19.95 — four times the $4.95 rate that many other brokerages are charging — if you haven’t been active on its platform. What’s more, there’s a $30 annual account maintenance fee if you fall under five commission-generating trades for the previous year and a $2,500 account minimum for non-retirement brokerage accounts and a $1,000 minimum for a brokerage IRA.
But there are ways you can avoid those fees entirely. Most notably, you can trade a specified bundle of ETFs and mutual funds fee-free, giving passive investors a simple option for avoiding the relatively steeps costs elsewhere. The ETFs are those in the FundVest No-Transaction-Fee ETF program without fees, giving you about 170 options to choose from, and a range of mutual funds can also be traded without cost, including T. Rowe Price funds. You also get access to a range of tools to help you make investments, including the Mutual Fund Compare Tool, Morningstar Portfolio Manager and tools specifically designed for retirement investors.
Best For: Passive investors interested in ETFs and mutual funds; retirement investors interested in tools to help them shape a long-term plan
Pros: Options for fee-free mutual fund and ETF investing; tools for retirement investors
Cons: High fees, particularly for customers who aren’t active traders; $2,500 account minimum; annual account maintenance fee for inactive traders
The $0 stock trade fee is a plus for investors interested in TD Ameritrade, but that fee climbs to well over $30 a trade for trades made over the phone or broker-assisted trades. A fee of $49.99 also applies to no-load mutual funds, which is the highest, save for Charles Schwab.
But the platform offers some 300 commission-free ETFs that you can trade without paying fees, a wide range of educational resources and research tools and “elite-level” trading tools and resources available for advanced traders through its thinkorswim platform.
Related: The Best Robo-Advisors
Best For: Advanced traders looking for platform tailored to their needs; passive investors interested primarily in ETFs and mutual funds
Pros: Wide range of options for fee-free ETF trading; educational tools and resources; multiple options for trading platforms to match level of investor expertise
Cons: Minimum of $2,000 in an account to trade options contracts
TradeStation was founded by two classical violinists who immigrated from Cuba only to take an interest in the markets and how computer software could be leveraged to improve investing.
Today, TradeStation prides itself on its integration of technology to provide professional-grade tools to its clients to help them mold their trading strategies, including EasyLanguage, a code specific to TradeStation that allows investors to turn their investment strategies into coding language that TradeStation’s platform can execute.
Although these resources are geared toward knowledgeable traders and investors, even novice investors can still make use of the tools and educational resources. And, at just $5 a trade, the fee structure is competitive, including just a $14.95 fee for trading no-load mutual funds.
Best For: Advanced/experienced investors; professional day traders
Pros: Customizable alerts and trade execution for your trading strategies; low fees
Cons: Geared toward advanced investors; $50 annual fee for accounts under $2,000 or that don’t make at least five trades in the preceding 12 months; $14.95 fee for bond trades
Since its founding in 1975 by John C. Bogle, Vanguard has stood for one thing above all else: reducing fees and commissions. In fact, Vanguard was responsible for putting together the very first index fund, sparking a revolution in passive investing that continues to grow to this day.
And as such, one of the biggest perks to a Vanguard account is access to Vanguard ETFs and mutual funds without any trading costs. Learning about the best Vanguard retirement funds could be a boon to your boosting your investment returns.
Likewise, Vanguard offers a range of tools and educational resources to learn more about the benefits of ETF and mutual fund investing as well as a wide variety of other investing principles.
Best For: Passive investors interested in low-fee ETFs and mutual funds, novice investors interested in investing with minimal oversight on their part
Pros: Free trading for Vanguard ETFs and mutual funds
Cons: $7 fee for options trading, $20 annual account service fee if you opt for paper statements
Click to learn how to avoid bank fees.