The online brokerage community has grown by leaps and bounds in the last few years, which is great for investors who like to participate in online stock trading. The competition has forced innovation, cheap online stock trades, and additional features such as educational and training centers, articles, videos, free webinars, chat rooms and forums, social networking, free tax software to track gains and losses, and more.
Not all of these features are available at all discount brokerage firms, and some stockbrokers offer better value than others.
Our goal is to show you some of the best values in the discount brokerage space, and show you some of the top features they offer. We have focused on the more popular firms who consistently appear in the industry awards reviews, including those by SmartMoney and Kiplinger’s.
This brokerage comparison chart will give you some basic information on pricing structures, and below the comparison chart are some unique features about each of these online brokerage firms. Hopefully you can use this information to find the discount online brokerage who is best for your needs.
Best Online Discount Brokerages
|Discount Brokerage Firm||Cost Per|
|$4.95||$4.95 + $0.65|
|$6.95||$6.95 + $0.75|
|$6.95||$6.95 + $0.75|
|$2.95||$2.95 + $0.50|
|Capital One Investing|
|$6.95||$6.95 + $0.75|
Comparing Discount Brokerage Features
To determine which broker is right for you, we suggest evaluating your trading habits and needs, and comparing various features such as:
- Available Investments
- Account Types (IRA, taxable accounts, 529 plans, trusts, banking services, and more)
- Commissions (cost per trade)
- Options Trading (availability, and cost per option)
- Online only vs. Brick & Mortar
- Availability of Broker Assisted Trades
- Maintenance Fees, if any (most investment providers on this list do not charge any additional fees)
- Education & Investment Training
- Tax Software for tracking investments, long term & short term capital gains, and tax-loss harvesting
- Customer Service
More in-depth information on these topics follows the overviews of our favorite discount brokerages.
Highest Rated Discount Brokerages
Each of these brokers has some features which set it apart from the others, but generally, our recommendations are as follows:
1. Ally Invest (Formerly TradeKing)
Ally Bank acquired TradeKing, which is a personal favorite of mine. I opened my TradeKing account almost 10 years ago!
Thankfully, they transitioned into good hands. Ally Bank brings a tradition of excellence in the banking industry, and I’m excited to see where they take this partnership.
Ally Invest offers the following features:
- a slick and easy to use interface
- cheap stock trades
- an exceptional learning center
- free webinars
- free access to Maxit Tax Manager to track your gains and losses
- and more
Ally Invest’s pricing structure is among the best in the business for discount stock trades, including for investors who prefer to trade options. For more information, or to open a Ally Invest account, visit the Ally Invest website.
E*TRADE offers a full-service brokerage firm and an online bank which makes it easy to link accounts and transfer funds to and from.
E*TRADE has won numerous awards for both their brokerage services and their online savings accounts. While their trades are not the cheapest of the listed brokerages, they offer a wide array of services and features not found with many other online discount brokerages. New customers can get free stock trades for 60 days when they open a new account and fund it with a $10,000 minimum deposit within 60 days.
3. TD Ameritrade
TD Ameritrade is among the top-ranked online brokers, according to third-party ratings by Barron’s and Kiplinger’s.
Stock trades aren’t the cheapest at TD Ameritrade (see our review here), but you get one of the industry’s top education and training platforms and one of the top-rated research platforms.
Add in no account minimums, no monthly maintenance fees, and the ability to make trades online, on your mobile phone, or at one of over 100 physical locations, and you have a winning combination.
For more information, or to open a TD Ameritrade account, visit https://www.tdameritrade.com/.
Founded in 1985, Firstrade.com has one of the longest legacies of the discount brokerage firms.
Firstrade gives stock traders and investors low commissions, low margin rates, and a three-second execution guarantee.
- regular brokerage accounts
- retirement accounts
- Education Savings Accounts
All of which come with no minimum initial deposit and no maintenance or inactivity fees.
Firstrade has access to over 11,000 mutual funds and offers new customers up to 100 free trades. The standard rate is $2.95 per trade, making them one of the lowest priced options out there. Options trades are also very affordable, coming in at $2.95 plus $0.50 per contract.
5. M1 Finance
M1 Finance is an up-and-coming platform making waves in the robo advising community, uniquely blending automated investing and self-managed accounts. With M1 you can choose from professionally crafted investment “pies” made of ETFs and stocks. Beyond those 60 templates, you can also create your own portfolio, choosing your investments to target your financial goals and interests.
Then M1 keeps your accounts balanced like a typical robo-advisor to keep you on track for your goals, free of fees. When you sign up for an account, there is no minimum deposit; however, you’ll need $100 to start investing, or $500 with an IRA.
M1 gives you flexibility, free account management, and the opportunity to play a hand in your investments, melding conventional brokerages and robo-advisors in an exciting way.
Different than most of the brokerages on the list, Betterment is a full-fledged robo advisor. If you like that aspect of M1 but are comfortable with being even less involved in managing your investments, Betterment is ideal.
Rather than charging for individual trades, Betterment has no trading fees but instead charges an annual fee of .25%, which increases to .40% at the premium level and gives you unlimited access to Betterment’s CFPs.
Betterment invests your funds in stock ETFs and bond ETFs and offers tax-smart investments, automatic rebalancing, retirement planning, and advising.
7. Schwab (Formerly OptionsXpress)
Charles Schwab has combined the platform of OptionsXpress with their research and support to offer investors a comprehensive trading space. Schwab has a fee of $4.95 for standard US-based stock trades.
Options cost $4.95 with a $0.65 charge for online trades.
Schwab has no inactivity or maintenance fees regardless of how much you have in your account, and does not charge for streaming quotes or standard withdrawals.
Schwab Investing offers:
- free webinars
- free trading tools
- free advanced research
- the option of a personal coaching program
For a limited time, you can also get a $1o0 sign up bonus when you open a new account and fund it with a minimum of $500 and make a minimum of 3 trades in the first 12 months of enrollment.
For more information, you can read our OptionsXpress review.
8. Capital One Investing (formerly ShareBuilder)
Capital One Investing used to be known as ShareBuilder, which was part of the ING Direct brand which was purchased by Capital One in 2012 and rebranded as Capital One Investing. Capital One made a few important changes, many of which appear to bring their trading platform more in line with the competition.
Where ShareBuider was designed around low-cost automatic investments, Capital One Investing is a more traditional brokerage firm with low-cost real-time trades, the ability to make options trades, and much more. You can invest with a small starting investment, as there are no minimum requirements to open an account, no inactivity fees, and no minimum trade requirements. Capital One Investing announced in January 2018 that they agreed to sell their brokerage firm to E*TRADE.
Capital One Investing also offers an educational and training center and a variety of premium features. To top it off, you can easily link your Capital One 360 account to make money transfers in or out fast and easy. For more information, or to open an account, visit www.capitaloneinvesting.com.
Which Investment Firm is Best?
As you can see by the above comparison chart, there is a wide range of prices and features with these brokerages, which should cover just about anyone.
I recommend reading the section below to help you learn how to compare the different brokerages and determine which online discount brokerage is the best for your needs.
We also have a list of prominent IRA providers if you are considering opening an IRA.
How to Compare Online Brokers
Not all online brokerages are created equal. Here are some of the major areas to consider when comparing online brokerages:
Commissions and Other Trading Related Expenses
One of the first features many investors look at first is cost.
While lower is generally better, the overall cost per trade may not be the most important factor if you are not a frequent trader. Saving a $1 per trade on less than 10 trades per year won’t have a major impact on your bottom line.
On the other hand, day traders and other high-volume investors will want to look for the lowest commission per trade, and will also want to compare other expenses, discounts for high volume traders, etc.
Here are some of the different factors to consider when comparing commission costs between online brokerages:
- Commissions for Market or Limit Trades
- Options Trades
- Automatic Investing or Reinvesting
- Cost of Buying No Load Mutual Funds
- ETF trade fees
- Cost of trading on margin
Other common costs to compare:
Assisted Trades. Some brokerages charge extra if you need personal assistance when making a trade. Most platforms are easy enough to manage without this added feature, so you won’t need it for every trade. Just be sure to understand what the trading fee will be so you don’t have any surprises (and be sure to check with the broker’s online knowledge base or customer service before placing a broker-assisted trade – you can usually handle most trades on your own).
Account Minimums & Inactivity Fees. Some brokerages require customers to maintain a minimum balance to avoid fees, while others may charge customers for inactivity if they don’t make a certain number of trades within a set time frame. I am primarily a buy & hold investor, so my personal preference is to avoid brokerages that nickel and dime customers with these types of fees. Most discount brokerage firms don’t charge these fees, but be aware that some brokers do.
Differential Pricing for Commissions. Many brokerages charge a flat fee per trade, while others offer differential pricing. This is most common for accounts that maintain a certain minimum account balance, or for accounts that exceed a set number of trades per month, quarter, or year. For example, E*TRADE charges $6.95 per trade, or $4.95 when you make at least 30 trades per quarter.
Most brokerage firms allow investors to trade just about any stock held in the major US markets. But there are some different types of investments you may wish to trade that may or may not be available at every brokerage firm.
Good examples include certain mutual funds and ETFs. Here are some more factors to consider when comparing discount brokerages:
Mutual Fund and ETF Availability. Not all mutual funds and ETFs are available at all brokerages. Many of the major mutual fund and ETF families are widely available, but be sure to check with your brokerage before assuming you will have access to everything.
Dividend Reinvestment Plans. Many investors prefer to automatically reinvest their dividends so they can continue having their money work for them without having to think about it. However, not all brokerages make it easy to do this. If you want to automatically reinvest your dividends, then look for brokerage companies that offer free Dividend Reinvestment Plans (DRIPS). These plans allow investors to automatically reinvest their dividends without being charged another commission. Be sure to look for brokers that allow investors to purchase fractional shares of companies, otherwise you won’t be able to put your entire dividend to use.
Automatic Investment Plans. Some investors prefer to automatically invest the same amount of money each month in the same stock, bond, or mutual fund. This is very similar to investing in your 401k at work. This works best for investors who regularly have a little extra cash to invest each month. This feature allows investors to create their own investment schedule and stick to it. Look for n investment firm that doesn’t charge for this feature.
Types of Investment Accounts Offered
Most brokerage firms offer firms offer some or all of the following types of ivnestments:
- Taxable Investment Accounts (individual and joint)
- Individual Retirement Accounts – Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, SIMPLE IRA
- Coverdell ESA
- Custodial Accounts
- and more
Be sure to check with the brokerage if you need a different type of account, such as an account for a minor, a charitable trust, small business retirement plan, Solo 401k, or other type of investment account.
Tools & Services
This is perhaps the most exciting area which separates the different online brokerages.
Many firms offer a variety of online tools and services, including educational and training resources, webinars, advanced stock filters and research tools, real time quotes, advanced analysis, cost-basis tracking for tax purposes, and much more.
Full Service, Banking, and Other Features. Some brokerage firms are willing to hold your hand, while others expect you to be able to handle everything more or less on your own. Some brokerages offer full-service banking. This can be convenient, as you can keep all your savings, checking, and investments under one roof.
Mobile Trading Platforms & Apps. Most brokerages now offer apps for your smartphone or tablet. Not everyone wants to trade on the go, but having that flexibility can help you avoid being trapped behind a desk and give you the ability to take advantage of market movements when you’re out and about.
Promotional Offers and Sign Up Bonuses
The brokerage community is very competitive, and many brokerage firms are willing to give new customers some form of bonus for opening a new brokerage account.
Common promotions include:
- Free stock trades – usually limited to a certain number or time frame,
- Cash bonus – often a flat rate for a new funded account, or a tiered bonus based on the amount of the initial deposit
- Other bonus – I’ve seen promotional offers that include free iPads or Kindles, free GPS units, computers and computer monitors, and more.
- Transfer fee reimbursement – most brokerages charge an ACAT Transfer fee to transfer your assets out of their brokerage. ACAT transfer fee refunds are a popular signup bonus because it removes a barrier to moving funds to a new brokerage.
Here are some brokerage coupon and promo codes which can get you some free trades or free bonus money when you open a new account:
- E*TRADE – Free Stock Trades for 60 Days.
- Schwab OptionsXpress.
- Capital One Investing Promo Codes.
- TD Ameritrade.
- Ally Invest.
Customer Service and User Reviews
Don’t overlook customer service.
Many brokerage companies offer 24-7 customer service, while others may have more limited hours. You should also consider whether they offer phone support, chat, email, or other forms of service.
Individual reviews are also important. We do our best to review a variety of products and services on this website. But our use and needs may differ from yours. It’s generally a good idea to consider multiple sources.
And, if possible, give the brokerage a test drive before committing all your investments to their service. One way to do this is to see if the brokerage firm offers a “play” account, where you can open an account and make stock trades with play money while you learn how their platform operates. Many firms offer these types of accounts for free.
Another option is to open an account and test the waters before making actual live trades. Again, the purpose is to give yourself familiarity with the platform before moving the bulk of your investments to that company.
Choose Your Brokerage Base on Your Needs
Investing is personal. And every investor may have different needs.
The high volume trader may value certain features or commission structures, while the buy and hold investor may prefer a brokerage that offers other features, such as full-service banking. The above feature lists should give you a good starting point to consider which features are important to you.
Use your personal feature list to narrow down your choice to the best option for your needs. All the mentioned brokerage firms on this page should also be a good starting point, as they all offer something unique.
Do You Have More Than One Brokerage Account?
Many investors have more than one brokerage account.
There can be good reasons for this, including specialized trading needs, taking advantage of lower trading costs, utilizing premium features or services through a different broker, avoiding the expense or time involved with consolidating accounts, or other reasons.
Having multiple trading accounts can have benefits, but it can also complicate your finances.
For example, it’s one more account to look at when calculating your net worth, one more set of investments to deal with when re-balancing your assets, more sets of tax forms, etc. I can’t help you with the taxes, but I can help you with the first two problems.
If you are dealing with multiple accounts, then it’s highly recommended to link your investment and other financial accounts to an account aggregator. These software programs will link all your assets to automatically show you your net worth and other valuable information. Some of them will even show you your asset allocation and make recommendations on how and where to rebalance your portfolio.
We have a list of some free online tools to help you do this. But I’ll skip to the punch line and just recommend the one I use – Personal Capital.
Personal Capital is free, easy to use, and will help you understand your total financial picture, including your net worth, asset allocation, how much you pay in fees, and where you can rebalance to get your portfolio in shape. It’s 100% online and uses bank-level security features to track your investments.
Finally, Ask Questions!
Information changes all the time, so even something in our data above could have updated. Feel free to let me know about those, too, so we can all benefit from the latest bonuses and stay on top any free trade offers.
If you have any questions, feel free to ask them in the comments below. Someone else may have the exact same question, so we can all benefit from the discussion.