Broker Center

You may not recognize Ally Invest, but you should recognize TradeKing — the disruptive discount broker that Ally acquired in 2016 in order to blaze a trail into the investment space. This move marries the “mobile first” approach of TradeKing with the deeper pockets and consumer banking prowess of Ally. If mobile trading is a critical need for you, Ally Invest is a great option.

Joining many of its peers in the fee-free realm, Ally Invest offers $0 commissions on stocks, ETFs and options, although options come with a 50-cent contract fee.

Charles Schwab is the granddaddy of discount brokers. Four decades ago, Schwab effectively brought investing to the masses, making it easy and affordable for regular people to open a brokerage account. Today, Schwab remains an excellent option for stock, bond and ETF trading and mutual funds.

Charles Schwab is a good choice for a beginning investor or for an investor that trades relatively infrequently. Customer service is solid, and Schwab’s website interface is easy to navigate. The cost per trade is now a friendly $0, and there is no minimum to open a brokerage account. Options trades, which also tout $0 commissions, are subject to 65-cent contract fees. Schwab offers dividend reinvestment, which is a major plus for long-term investors.

For fairly active traders, Schwab also has extensive international offerings in both developed and emerging markets. Investors can make over-the-counter trades directly online, or access shares through the Schwab Global Account or with the help of a broker.

E*Trade was an early pioneer in online stock trading, and it remains a very strong competitor today. In early October, E*trade cut commissions on stocks, ETFs and options to $0. Like many of its peers, options trades come with a 65-cent contract fee. But for eager investors, making 30-plus trades per quarter brings that fee to 50 cents.

E*Trade’s ease of use makes it a very solid option for a beginning investor, but its range of products make it a viable choice for an active trader as well. E*Trade offers a broad selection of mutual funds and allows for ETF, bond and stock trading. Among all the brokers reviewed here, E*Trade also has some of the best exposure to international markets if your stock trading takes you overseas.

And finally, for the buy-and-hold investors out there, E*Trade offers automatic dividend reinvestment.

Which broker is the “best” is difficult to determine because what works for one investor might not work for another.

However, if you’re into day trading or active stock trading, Interactive Brokers is almost always going to be the cheapest option for you. Stock trades are now commission free on U.S. exchange-listed stocks and ETFs.

If you short stocks or trade on margin regularly, then Interactive Brokers is the only obvious choice. Interactive Brokers is in a class of its own in terms of inventory of stocks available to short, and its margin rates are the lowest by far. Margin rates can get as low as 0.5%, though most investors will likely pay closer to 1.7%. As a frame of reference, margin rates at most of the other brokers are well over 7%.

But Interactive Brokers is not just the cheapest option. It’s also one of the best for experienced traders. You have unrivaled access to foreign markets as well as futures and foreign exchange. And Interactive Brokers also gives you access to complex order types that most brokers do not offer (market on close, market on open, pegged to midpoint, etc.)

Is there anything not to like?

Interactive Brokers’ Trader Workstation is designed for a professional investors, so it can be difficult for a beginner investor. I would go so far as to say that a beginner investor could get themselves into trouble with it.

Interactive Brokers has slashed its minimum deposit from $10,000 to $0, and it now offers dividend reinvestment. Furthermore, there are no account minimums or inactivity fees.

So, whether you’re an experienced, active trader or just getting your feet wet, Interactive Brokers is a fine choice for your brokerage account.

Merrill Lynch has really come a long way. Since time immemorial, Merrill has been a traditional wire house broker that mostly shunned smaller, do-it-yourself investors. But with Merrill Edge, Merrill offers a competitive Self-Directed brokerage account with $0 trades, automatic dividend reinvestment and no minimum deposit.

Merrill Edge is owned by Bank of America, so if you do your regular banking with BoA, Merrill Edge might be your best option due to the integration. You can move funds back and forth from your Bank of America checking account in real-time.

If you do a lot of international investing, your options here might be a little limited. But overall, Merrill Edge is a very decent option, particularly for a novice investor.

Fidelity has really come a long way in recent years. Not that long ago, Fidelity was almost exclusively a mutual fund shop. It’s not a place you would have normally gone to open a brokerage account. But today, Fidelity offers a very competitive product at a very reasonable price. And for many services, that price is $0. Fidelity slashed online trading commissions to $0 for stocks, ETFs and options (although options come with a 65-cent contract fee). Fidelity also offers extensive access to foreign markets and automatic dividend reinvestment for long-term investors.

For a beginning investor, Fidelity is a fine option, as its interface is easy to use. But for an experienced market veteran, Fidelity also has a robust enough platform to get the job done well.

TD Ameritrade is a solid all-around option for your brokerage account. In addition to joining the list of brokers offering $0 commissions, TD Ameritrade has a large branch network, good customer service and a website that is extremely easy to navigate. All of this makes TD Ameritrade a good option for a beginning investor.

But TD Ameritrade also has quite a few tools that make it appealing to advanced stock traders as well. Its thinkorswim platform, which can be thought of as sort of a collaborative social media for investing, is popular with do-it-yourselfers and professionals alike.

An underappreciated selling point of TD Ameritrade is that they are a little more accommodating than most discount brokers when it comes to housings non-traditional assets. If you invest in hedge funds, private REITs or other non-traded investments, TD is more likely than most of the rest to be able to actually hold them.

TradeStation is a popular option for active stock trading and day trading, and its users tend to be sophisticated investors. As with Interactive Brokers, TradeStation is definitely built with a professional trader in mind. TradeStation’s trading software is arguably even better than that of Interactive Brokers in terms of its customization, capabilities and tools. And TradeStation has the best back-testing tools on the market, hands down. If you want to build a trading system, TradeStation is generally your best option.

For $0 per trade, investors have access to stocks, ETFs, options and futures all in a single brokerage account. Options trades will still be subject to 50-cent contract fees. But TradeStation can get very expensive if you have less than $100,000 in your account. Smaller accounts are subject to a $99.99-per-month platform fee to use the trading software.

Access to international markets is also limited to ADRs.

But overall, if you have an account with at least $100,000 and you want a sophisticated trading setup, TradeStation is a very strong competitor.

Like Fidelity, Vanguard is traditionally thought of as a mutual fund shop, and mutual funds are still very much Vanguard’s focus. With that in mind, all of Vanguard’s proprietary mutual funds — and about 3,000 others — can be traded online without transaction costs. But Vanguard does offer full stock brokerage services. At the start of 2020, Vanguard made the move to join the $0-commission crowd, eliminating commissions on all stocks and options. And as an added sweetener, accounts of all sizes can trade approximately 1,800 ETFs (including Vanguard’s own 80 low-cost ETFs) for free.

Another key point for investors is Vanguard’s default sweep account. If you’re mindful of what you earn on your cash, it’s good to know that Vanguard sweeps brokerage accounts into their higher-yielding Vanguard Federal Money Market Fund. The fund’s current yield is 1.59% and its expense ratio is 0.11%, or $11 on a $10,000 investment.

If you primarily invest in mutual funds and ETFs — and particularly in Vanguard’s inexpensive index products — and only occasionally trade stocks, Vanguard is your best option. Though, commission-free stock trades also make Vanguard a very compelling option for investors with larger accounts.

Like Bank of America’s Merrill Edge, Wells Fargo offers a competitive brokerage account option with WellsTrade. Online stock and ETF trades are now commission free, although each option trade comes with a $5.95 commission and a 75-cent contract fee.

As with Vanguard, the Wells brokerage option is tailored more for long-term mutual fund investors who also buy the occasional stock. Most of their online tools are designed for screening mutual funds rather than researching stocks. But if you currently do your regular banking at Wells Fargo, consolidating your finances with WellsTrade is a very sensible option with very competitive prices.