March 9, 2016

Study: Best Online Brokers for the Money - TradeKing vs TD Ameritrade vs Fidelity

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When looking for the best online broker, it's easy to become frustrated. If you rely on TV advertising to find a great one, you're going to get hit with bad fortune tellers, chimpanzees riding horses, and talking babies. It's tough to put your trust in those kinds of things, especially when your financial future is on the line.

© Ken Teegardin (CC BY-SA 2.0) via Flickr

We’re going to provide you with some substance to counterbalance the fluff that’s out there. We’ll examine three of the best brokers – TradeKing, TD Ameritrade, and Fidelity – that provide extensive services for trading and investing on the Internet.

Online brokers are certainly seeing an increase in usage. A recent Barron’s study showed assets held at online brokerages increased by nearly 18% from the end of 2013 to the end of 2014. Mobile trades now account for 7% of all retail trades ordered, and they’re increasing steadily.

It’s easy to understand why: You’re empowered to make your own investment choices, with super-quick access to financial information that you can act upon within minutes, no matter where you are.

CreditDonkey.com has put these three online brokers through the paces to help you understand which one will meet your personal needs.

5/8/2017 Update: TradeKing is now Ally Invest. Read our in-depth Ally Invest review.

ROUNDUP METHODOLOGY

Here are the main factors we considered in comparing brokerages:

  1. Commissions and fees
  2. Variety of investment offerings
  3. Research tools
  4. Ease of access and mobile options

Online brokers often attempt to separate themselves from the pack by touting their low commissions and fees, but the result is usually confusion. Some brokers will offer certain types of trades for free, or perhaps they’ll provide a discount for high-volume traders. Some trades are inexpensive if you make them yourself on the Internet, but the price increases quickly if you need assistance. Think about how you plan to invest, and then seek out the fee structure that gives you the best value for how you plan to trade.

You may conclude you’re best off finding a broker that offers the largest variety of investment types. Your needs may change over time. Nearly every online broker allows trading of individual stocks on numerous exchanges. But some may charge large fees for mutual fund trades or may offer only a limited number of ETFs (exchange traded funds). Some offer futures trading or fixed-income investing, while others don’t.

Some brokers provide full access to research to any customer with an account, but others may force you to pay a monthly fee or perform a certain number of trades before you can get your hands on any tools. We favor brokers that let you access any research tools via the format you want, whether it’s a smartphone, on a laptop, or in person. (It’s worth mentioning here that while TD Ameritrade and Fidelity offer full-service broker services, TradeKing does not.)

Similarly, any good brokerage is going to let you access its services in the way that makes the most sense to you, whether you want to use a smartphone, a computer, a phone call, or a personal visit to a local office. Online brokers are still rolling out and tweaking mobile investment options, so it’s worth paying attention to see whether they can match your needs. This is one area where one broker may have a more mature and easier-to-use mobile platform than another.

BEST ONLINE BROKERAGE FOR LOW COMMISSIONS AND FEES

  • Commissions and fees: Lowest flat-fee stock trades and lowest mutual fund trading fees – 5/5
  • Variety of investment options: Offers fewer mutual funds than others, no commission-free ETFs, futures trading available – 3.5/5
  • Research tools: Good research tools for typical trades and forex research are available – 4.5/5
  • Ease of access and mobile options: Smartphone apps available, but no retail locations – 3/5
  • CreditDonkey score – 4/5

For those seeking the lowest fees on trades, the no-frills broker TradeKing (now Ally Invest) is a great option. And as Nellie Huang of Kiplinger mentions, TradeKing has a great set of investing tools that compare favorably to full-service brokers. But don’t expect features beyond the basic Internet trading abilities here – you won’t get, for example, face-to-face broker discussions.

What We Liked
You can’t go wrong with a $4.95 stock trading fee. TradeKing (now Ally Invest) is one of the least expensive online brokers on the market. And this broker typically provides a host of promotions and offers for new customers.

Besides the $4.95 stock trading fee, another interesting feature is a $9.95 fee for a mutual fund transaction, which is one of the lowest on the market currently. Considering most brokers charge between $20 and $50 (and sometimes more) for a mutual fund transaction, this is a good price for those who primarily invest in a variety of mutual funds.

The Downsides
This is an online brokerage, which may not work for some investors who need a face-to-face option on occasion.

Who TradeKing (now Ally Invest) Works Best For
If you are tired of paying high fees to invest in mutual funds and if you feel comfortable handling the entire process online, Ally Invest is built for you. Its mutual fund fees are lower than most of the rest of the online broker market, it’s almost hard to believe.

BEST ONLINE BROKERAGE FOR VARIETY OF INVESTMENT OPTIONS

TD Ameritrade

  • Commissions and fees: Stock trade fees are at an average price if you do them online, mutual fund trade fees and assisted stock purchases are higher than other options – 3/5
  • Variety of investment options: Offers all kinds of trading, including futures and options; offers more commission-free ETFs than others – 5/5
  • Research tools: Extensive research options for a variety of investments on numerous platforms – 5/5
  • Ease of access and mobile options: Full range of mobile apps as well as good number of retail locations – 4.5/5
  • CreditDonkey score – 4.4/5

TD Ameritrade was one of the first brokerages to embrace online trading, and it has built itself into a huge company as a result. TD Ameritrade started modestly as First Omaha Securities in Nebraska in 1975 and now has more than 6 million customers. Fun fact: Pete Ricketts, son of the founder of TD Ameritrade, J. Joseph Ricketts, is now governor of Nebraska.

What We Liked
If you want to make online stock trades without any help from a broker, you’ll pay $6.95 per trade, which is a reasonable price for long-term investors. And even though you’ll pay more to have some assistance with your trades, it is nice to have that option. TD Ameritrade also has around 100 retail locations to help you if needed.

As Garth Friesen of Forbes mentions, one of TD Ameritrade’s biggest strengths is its numerous options for investments, including commission-free ETFs. You can also pick from bonds, CDs, stocks, mutual funds, options, futures, and forex investing, which is an impressive lineup. This broker’s series of research tools and mobile apps is also outstanding.

The Downsides
The fee structure for trades is a bit higher than some other online brokers, especially if you are purchasing no load mutual funds, where you’ll pay $49.99 per transaction. And if you want broker assistance with a stock trade, the price is $44.99 per transaction, which is much higher than if you make the trade yourself on your computer or mobile device.

Who TD Ameritrade Works Best For
Those who want to make investments in a variety of vehicles will appreciate TD Ameritrade’s offerings. And if you’re a little unsure of making your own decisions regarding investments, it’s always nice to know that you can have access to a broker at any time if needed.

 Ally InvestTD Ameritrade
 Visit SiteLearn More
 

Ally Invest

TD Ameritrade

SPECIAL OFFER
Open an Ally Invest account - Learn More

SPECIAL OFFER
Get 60 Days of Commission-Free Trading - Learn More

 

Benefits and Features

Stock Trading$4.95 per trade ($3.95 per equity trade special pricing for high-volume/high-balance traders)
$6.95 per trade
Options Trading$4.95 base + $0.65 per contract (50 cents per options contract special pricing for high-volume/high-balance traders)
$6.95 + $0.75 per contract
Mutual Fund Trading$0 to buy/sell load mutual funds
$9.95 to buy/sell no load mutual funds
$0 for no-transaction-fee mutual funds
$49.99 for no-load mutual funds
$0 for load mutual funds
Penny Stocks$0.01 per share on the entire order for stocks priced less than $2.00. Maximum commission per order not to exceed 5% of the trade value, with minimum commission of $4.95.
Broker Assisted Trades
$20 + Regular Commission
$44.99
Minimum Deposit
$0
$0
BankingIntegrated with banking on ally.com. Manage your Ally banking and investment accounts in one place.Cash Management account offers free ATM withdrawals, no monthly maintenance fees, free online bill pay, and free check writing.
Mobile App
Forex Trading
Futures Trading
$2.25 per contract (plus exchange & regulatory fees)
Customer Service
(855) 880-2559 (Open 24/7)
(800) 669-3900
 Visit SiteLearn More

Ally Invest: Pricing information from published website as of 01/19/2015

TD Ameritrade: Pricing information from published website as of 03/13/2017

BEST ONLINE BROKERAGE FOR EASE OF ACCESS AND MOBILE OPTIONS

Fidelity

  • Commissions and fees: Reasonable stock trade fees, but high mutual fund trade fees, which you can skip if you purchase Fidelity’s own mutual funds – 3.5/5
  • Variety of investment options: Offers large number of mutual funds, provides options trading, but no futures or forex trading – 3.5/5
  • Research tools: Extensive research options for a variety of investments on numerous platforms – 5/5
  • Ease of access and mobile options: Large number of retail locations, as well as a complete set of mobile apps that are easy to use – 5/5
  • CreditDonkey score – 4.3/5

Fidelity is a very nice, all-around online broker, offering good trading fees and great mobile options. But its extensive research and educational tools are especially strong. Fidelity offers Internet-only trades for $4.95/trade, which is a good price versus other online brokers. And you’ll have plenty of options for actually speaking to someone if you need some help.

What We Liked
Fidelity is a well-known brokerage, and it offers a variety of ways to make trades. You can make use of smartphone apps, tablet apps, the Fidelity website, live chat, or telephone service, or you can visit one of nearly 200 retail centers throughout the United States, where you can connect with a broker in person. The brokerage also has many educational and research options.

The Downsides
You’ll pay $49.95 per transaction, unless you pick a Fidelity sponsored fund, which offers free transactions. And while Fidelity does offer CDs and bonds for fixed income investors, you won’t be able to perform futures or forex trading.

The minimum deposit is also high - you’ll need to have at least $2,500 just to open an account. If you want more personalized service and one-on-one portfolio management, those perks are only for those with investments of $250,000 and above.

Who Fidelity Works Best For
For those wanting plenty of flexibility for making trades and accessing their accounts, Fidelity is a great choice. Few online brokerages can match Fidelity’s offerings, ranging from fully online trades to broker-assisted, face-to-face trades. Internet stock traders will like the $4.95 fee per trade, but if you want to purchase mutual funds, you may want to stick with the free Fidelity funds.

For long-term investors: Fidelity is highly touted in the world of mutual funds, including more than 175 of its own no-load mutual funds. The wide range of funds will satisfy those looking for long-term conservative growth and those after a short-term, more aggressive approach. Plus, their no-load mutual funds are extensive and won’t cost you a dime in commission.

 Ally InvestFidelity
 Visit SiteLearn More
 

Ally Invest

Fidelity

SPECIAL OFFER
Open an Ally Invest account - Learn More

SPECIAL OFFER
Get 500 Free Trades for 2 Years - Learn More

 

Benefits and Features

Stock Trading$4.95 per trade ($3.95 per equity trade special pricing for high-volume/high-balance traders)
$4.95 per trade
Options Trading$4.95 base + $0.65 per contract (50 cents per options contract special pricing for high-volume/high-balance traders)$4.95 per online trade, plus $0.65 per contract
Mutual Fund Trading$0 to buy/sell load mutual funds
$9.95 to buy/sell no load mutual funds
$0 transaction fee for Fidelity funds
$0 on purchase for NTF (no transaction fee) non-Fidelity funds. ($49.95 on redemption if held less than 60 days)
$49.95 on purchase for non-Fidelity funds; $0 on redemption. (Certain funds may have a $75 transaction fee).
Broker Assisted Trades
$20 + Regular Commission
$32.95 per trade for representative-assisted trades.
Minimum Deposit
$0
$2,500
BankingIntegrated with banking on ally.com. Manage your Ally banking and investment accounts in one place.Fidelity Cash Management Account includes reimbursed ATM fees, no monthly fee, no minimum balance requirement, FDIC insurance, mobile check deposit, free billpay and free checkwriting.
Mobile App
Forex Trading
 
Futures Trading
 
Customer Service
(855) 880-2559 (Open 24/7)
(800) 343-3548
 Visit SiteLearn More

Blank fields may indicate the information is not available, not applicable, or not known to CreditDonkey. Please visit the product website for details.

Ally Invest: Pricing information from published website as of 01/19/2015

Fidelity: Pricing information from published website as of 02/28/2017

Other Brokers to Consider

Vanguard and Capital One Investing are other brokers to consider. Vanguard works well for those who want the lowest possible fees for mutual funds. Vanguard’s low fees are especially evident for those who have account balances of at least $10,000. Capital One Investing (previously called ShareBuilder) provides $6.95 online stock trades, as well as providing mobile trading apps for the iPhone, Android, BlackBerry, iPad, and Kindle Fire platforms.

Selecting the best broker calls for some self-evaluation. What type of investments are you dying to make now and what may you be interested in down the road? What prices seem reasonable, and which tools seem easier to use and helpful for your needs? You may decide you love the autonomy investing online gives you, but you still want the reassurance that you can meet with a broker in person from time to time.

Be smart about your choice, and then you can enjoy the bad-fortune-teller commercials for the comedy they provide – rather than relying on them for helping you choose a broker!

Disclaimer: Opinions expressed here are those of the author's alone. Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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