Best (and cheapest) online broker

[prof12]

I have decided to start using the computer to buy and sell stocks. I have always used Scottrade with a face-to-face broker. But I am finding the costs of this luxury are becoming too great. Besides, being retired I now have more time to devote to stock picking.

What on-line brokerage house do you recommend and how are they for costs and accuracy? I appreciate the input. prof12

 

[aja8888]

You can start here: Top 5 Cheapest Online Stock Brokers in the US

Do you already have an online brokerage account?

I use Charles Schwab and Vanguard because I have accounts at both (IRA's).

I also have an ETrade account for taxable stuff. They are real good.

All in all, the discount brokers are all pretty good, but it depends on what your goals are and what kind of securities you want to buy.

 

[braumeister]

"Best" and "Cheapest" are mutually exclusive in most things, IMHO.

That said, I've been happiest with Fidelity's online brokerage. Having tried most of the others, I've stuck with FIDO for about the last half dozen years.

 

[bUU]

I've seen the question asked at least a dozen times over the last ten years, and consistently the top answers are Fidelity and Schwab, with Vanguard getting an honorable mention specifically for Bogleheads who really truly will never make use of any of the services Fidelity and Schwab customers enjoy.

 

[utrecht]

It depends on several things like how much trading you will be doing and how user friendly you need the trading platform to be. Personally, I use OptionsHouse for most of my trading. Although it sounds like its an options trading site, you can trade stocks just as easily and for only $3.95 per trade.

 

[MBAustin]

Kiplinger's evaluates online brokers every year on a comprehensive set of factors, looks like in October. Here are last year's results

Best Online Brokers for 2012-Kiplinger

 

[prof12]

Thank you, everyone, for all the great information. I think I will give OptionsHouse a try and when I move to Vanguard I will use their on-line brokerage services. prof12

 

[wingfooted]

For active / experienced traders - Interactive Brokers has tremendous flexibility and low margin rates.

 

[ownyourfuture]

I've been at Fidelity since March 1998.
No complaints

$7.95 Commissions **I think this is based on account size**

 

[NW-Bound]

I have used Schwab, Scottrade, and Ameriprise (as a self-directed online broker) for close to 15 years. I recently closed the Ameriprise account and moved it to MerrillEdge. Ameriprise recently sneaked in a quarterly fee of $10, and raised the transaction cost to $6. This for a long-time customer with a few hundred grands with them! Initially, I got 10 free trades/month, and no account fee.

MerrillEdge gave free trades, plus $600 to roll over an account of greater than $200K, or $250 for $100K. So far so good. Will see if they will renege on the free trades like Ameriprise.

What I discovered was that as B of A bought out Merrill, their operations merge such that transferring money between my checking and brokerage accounts is instantaneous. It's a small nice convenience.

I have decided to start using the computer to buy and sell stocks. I have always used Scottrade with a face-to-face broker. But I am finding the costs of this luxury are becoming too great. Besides, being retired I now have more time to devote to stock picking.

What on-line brokerage house do you recommend and how are they for costs and accuracy? I appreciate the input. prof12

I have used Scottrade as an online brokerage for 15 years. Never talked with anybody there. Well, I should not say that, as I recently had to call them regarding an option exercise. Their response was prompt, and satisfactory to me.

Schwab is also a good brokerage. They have several indexed ETFs, which have even lower expenses than Vanguard's, if you can believe that. And you can trade them free with a Schwab account. They keep adding more and more free-trade ETFs and MFs that are not theirs, such as Guggenheim bond ETFs. I like that a lot. One can be a slice-and-dice investor with just ETFs and does not have to trade individual stocks. These were not available 15 years ago. My habit dies hard, and I am trying to change.

Scottrade and Schwab stock trade fees are higher than some other discount brokers. However, as I do not day trade, I will stay with them. Low trading costs may induce me to trade more, which can be detrimental to investment returns. If I feel like doing a quick trade, MerrillEdge is where I can do that for free.

I will keep all three brokerages for a while.

PS. I also have accounts with Vanguard, but basically to test the water. So far, no trading but a place to hold a bit of Wellesley and Wellington.

 

[gauss]

prof12,

If you will be trading securities and you have a significant portfolio, then you should worry about the execution performance of your trades.

Some of the larger names may have very cheap commissions, but if they have larger spreads (ie between buy and sell prices offered) than you get elsewhere then this could easily be a much larger factor. I typically noticed this effect when my trades where is the several thousand share type level.

Illustrative Example:
If you are performing a market buy of 2000 shares and one brokerage has a buy price of .02/share difference, then this is a $40 difference.

I found that Interactive Brokers was good in this regard & in the actual commission paid, however you had to do a minimum amount of trading with them per month, otherwise you would be subject to a monthly fee on the order of $10-$20 to make the minimum commission level.

IB also had very good commissions for option trading at the time compared to others.

-gauss

 

[dmpi]

Schwab now charges fees typically around a dollar per trade. I don't mind paying fees if its a fixed amount but its some random amount. And I don't know the amount until I do the trade. I'm wondering if I do a large transaction (i.e > $500K) what would be the fee. I would be pissed if I had to pay $50 in fees.

 

[clifp]

I have/had accounts with Vanguard (mutual fund only), Fidelity, TD Ameritrade, OptionsExpress, and Schwab.

I didn't use Fidelity a ton and my impression is it is pretty comparable to Schwab.

The problem with the lower price firms Ameritrade and OptionsExpress (which is really cheap $4 stock trade $5 or $10 option trades) is you get what you pay for. Pretty lousy tools, for trading and just missing features that Schwab (and probably Fidelity) have. For example doing my taxes with OptionsExpress was way more complicated cause it took several steps to export the many options transactions into TurboTax.

With Schwab I just told turbotax what my account info was and 95% of the work filling out Schedule D was done.

Finally the other reason I like Schwab is their banking is best in breed, like the thread on best ATM card for overseas travel illustrates.

 

[bUU]

MerrillEdge gave free trades, plus $600 to roll over an account of greater than $200K, or $250 for $100K. So far so good. Will see if they will renege on the free trades like Ameriprise.

I'm not sure if this is related or not:

BofA to Revamp Merrill Fees - WSJ.com

 

[NW-Bound]

MerrillEdge is their new online brokerage for self-directed investors.

The account type that the article describes is their "full-service" traditional account with advisors.

 

[bUU]

Thanks for the clarification.

 

[LOL!]

On the Schwab ETFs versus other low-expense-ratio ETFs:

Not all ETFs are created equal. For a taxable account, the fraction of qualified dividends that an ETF pays out can change the cost of the ETF in a sneaky hidden way. A hypothetical example might be an ETF that pays 100% qualified dividends taxed at 15% versus an ETF with ostensibly the same asset class that where the dividend is only 50% qualified, so half the dividend is taxed at one's marginal income tax rate.

 

[houstenh]

prof12,

If I were given a do-over, I would first decide how many trades I plan to make each month. Also, compare trading platforms. Some have a long learning curve.

Housten

 

[jerome len]

of you have a fairly large account you can get a ton of free trades from Vanguard and then the charge becomes $2.00 I think. I think because I never use all my free trades.

I can't address spreads or any other questions because I deal mostly in buy and hold stocks, mutual funds and ETFs. My costs for everything are really cheap.....good luck to you.

 

[eta2020]

I like E*Trade and Charles Schwab because they both offer RSA Key protection.

 

[ERhoosier]

prof12-

Since you already have an account with Scottrade, why not just use their on-line service? I've been very happy with their on-line execution, and the few times I've needed their phone or in-person support I've had prompt, courteous service.

For a variety of reasons, I always use limit orders for stock trades so don't worry about spreads. For individual bonds it clearly pays to shop around.

 

[check6]

prof12-

Since you already have an account with Scottrade, why not just use their on-line service? I've been very happy with their on-line execution, and the few times I've needed their phone or in-person support I've had prompt, courteous service.

Bingo! I have used Scottrade online for years. No complaints.

 

[Fermion]

Thank you, everyone, for all the great information. I think I will give OptionsHouse a try and when I move to Vanguard I will use their on-line brokerage services. prof12

I use Optionshouse too but I am grandfathered in for $2.95 trades there. It is the best brokerage house other than Wells Fargo free trades (grandfathered in there too for 100 free trades a year).