Online Trading Comparisons
- The minimum amount of money required to open an investment account varies among online brokerage firms and by type of account (IRA, brokerage, etc.).
A number of service fees may apply to your account, including charges to set up an account and to receive a paper statement. You many pay an account inactivity fee if you don't trade often enough and a redemption fee if you hold mutual fund shares for a short amount of time before selling them. - The cost of buying and selling investments varies among firms. Stock trades can be as low as $7, but you might pay an additional fee if the share price of the stock is below $1. Buying mutual fund shares may cost you as much as $75 per trade. Some transactions involving exchange-traded funds (ETFs) and mutual fund trades are free. Fees listed are subject to change.
- While many investors love the convenience of placing their own trades over the Internet, some may want other options. Online firms may offer touch-tone, interactive phone menus to place your trades or assistance from brokers. Fees for placing trades with these methods are typically higher than using the Internet.
If you plan to trade from a mobile device, find out if the company offers any special software to facilitate this. - Another way to analyze firms is by looking at the number and types of investment choices they offer. How many mutual funds can you choose from, and what "families" of funds are available (Janus, Fidelity, Vanguard, etc.) Can you purchase bonds and certificates of deposit (CDs)?
Having research tools to narrow the field of investment options can be very helpful. Find out what types of fund "screeners" and analyst reports the online trading firm offers. Companies may also provide retirement planning software or consultations to help you make investment choices. - Go to the Better Business Bureau Web site (www.bbb.org/us) and click on "Check out a business or charity." Then, use the "Phone, URL, Email" tab to enter the Web site address for the online trading company, and click on "Search." Click on the "View report" link to see the business' overall rating and its history of complaints. You can also see whether the business is accredited by the Better Business Bureau.