Comparing Brokerage Fees: Where Can You Save the Most?
Compound interest is magical, but brokerage fees kill it. Even with a modest 4 percent return, an extra 0.25 percent in brokerage fees on a $100,000 investment, $250 in the first year, will cost you $10,000 over 20 years.
Brokerage fees are crucial when comparing online brokers. Even if you invest well, a brokerage account with the wrong brokerage fee structure for your trading patterns may lower your returns.
When you open a brokerage account, compare brokerage fees.
What Exactly is a Brokerage Fee?
Brokerage fees pay brokers to buy and sell stocks for you. Brokers are needed to buy and sell a stock, so you should expect to pay brokerage fees when building your nest egg.
Although fees come in all shapes and sizes, the advent of online brokerages has meant that most brokers now charge a simple, flat per-transaction fee.
Here are some examples of how much top online brokerage firms charge for their services:
| Brokerage Fees Comparison | ||||||
| Broker | Stock Trade Fee | Options Trade Fee | Cost per Options Contract | Bonds Trade Fee | Mutual Funds Fee (Load) | Mutual Funds Fee (No-Load) |
 |
$0.00 | $0.00 | 0.50 | $1.00 | $0.00 | $9.95 |
 |
$0 | $0 | $0.65 | $1 | $0 | $76 |
 |
$0 | $0 | $1.50 | $1 | Varies by fund | $19.99 |
 |
$0 | $0 | $0.65 | $1 | N/A | N/A |
 |
$0 | $0 | $0 | On a net yield basis | $0 | $9.95 |
 |
$0 | $0 | $0.6 5 |
$1 | Varies by fund | $19.95 |
 |
$0 | $9.95 | $1 | $5 | $0 | $35 |
 |
$0 | $0 | $0.65 | On a net yield basis | $0 | $49.95 |
 |
$0 | $0 | $1.50 | $14.95 | N/A | $14.95 |
 |
$0 | $0 | $1 | $1 | Varies by fund | Varies by fund |
| Accurate as of June 19, 2018 |
Online Brokerage Comparison
Choose your brokerage firm carefully with so many options. Different cost structures will result in higher or lower fees depending on how you invest, so compare brokerage fees, where they’re assessed, and what that means to you.
Ally Invest
Ally Invest promises an intuitive trading experience for investors of all skill levels with its charting tools and calculators.
Its $0.00 stock trade fee and $9.95 no-load mutual fund fee are competitive. No account minimum, managed accounts, and up to $3,500 in bonus cash with a qualifying deposit.
Best for: Self-directed traders, new investors; low-fee trading
Advantage: Low fees; online-only brokerage; no minimums
Disadvantage: ETF trading fees; only trades foreign currencies and futures through Ally Invest Forex account.
Charles Schwab
Schwab offers tools, advisory services, and a low fee load. Its portfolio evaluation tool can track investments and explain portfolio performance. Robo-advice or phone or video calls with a certified financial planner are available.
Best for: Novice investors seeking advice; active traders seeking low brokerage fees
Advantages: Competitive brokerage fees; variety of advisory services
Disadvantages: Most brokerage accounts require $1,000; no-load mutual funds cost $76.
Fidelity
In 1965, Fidelity bought its first computer to use technology in investing. The company manages 500 mutual funds and $5.6 billion in customer assets.
Fidelity Viewpoints features articles, industry commentary, and tools like the Fidelity Retirement Score. It offers fee-free trading of Fidelity mutual funds and iShares ETFs, competitive trading fees, and no annual account fees. Fidelity has 20 top mutual funds.
Fidelity also offers advisory and wealth management services with upgraded accounts, giving novice investors guidance.
Best for: Novice investors considering advisory services; Fidelity mutual fund customers.
Advantages: Low fees, strong advisory services, fee-free Fidelity financial product trading
Disadvantages: Some accounts require $2,500 to open.
Firstrade
Firstrade offers deep discounts on industry services. The brokerage offers fee-free trading on 700+ ETFs and the lowest stock trade fee, $0. ETFs benefit from insider knowledge.
If your qualifying order takes longer than 0.1 seconds to execute, you’ll get your trade commission-free, and the company’s $9.95 no-load mutual fund fee is tied with Ally Invest for the lowest.
Best for: Beginners; active traders looking to reduce fees; ETF investors
Advantages: Lowest fees; fee-free ETF trading
Disadvantages: Options trading requires approval; additional fees for stocks under $1.
Merrill Edge
Merrill Lynch, the legendary trading house founded in 1914 by Charles E. Merrill and Edmund C. Lynch and acquired by Bank of America during the 2008 financial crisis, owns Merrill Edge.
The platform offers $2.95 stock trades with no minimum opening investment and upgrades to guided investing or financial advisor accounts. Merrill Lynch research and retirement account advice are available.
Preferred Rewards Platinum clients can trade for free if they have $50,000 in their account and a Bank of America personal checking account.
Best For: Investors with large accounts and a Bank of America checking account; novice and retirement investors seeking investing advice; investors seeking Merrill Lynch research products.
Advantages: Merrill Lynch research; advisory services
Disadvantages: $19.95 no-load mutual funds
T. Rowe Price
T. Rowe Price has the highest trading fees. Even though the per-trade fee of $9.95 is the highest, it only applies to accounts with 30 or more trades in the past year. If you haven’t traded on its platform, trades will cost $19.95—four times the $4.95 many other brokerages charge. Additionally, there is a $30 annual account maintenance fee if you make fewer than five commission-generating trades in a year, a $2,500 account minimum for non-retirement brokerage accounts, and a $1,000 minimum for brokerage IRAs.
But you can avoid those brokerage fees entirely. Most importantly, passive investors can trade a bundle of ETFs and mutual funds fee-free, avoiding high brokerage fees elsewhere. The FundVest No-Transaction-Fee ETF programme offers 170 fee-free ETFs and a variety of mutual funds, including T. Rowe Price funds. The Mutual Fund Compare Tool, Morningstar Portfolio Manager, and retirement investor tools are also available.
Best for: ETF and mutual fund investors; retirement investors looking for long-term planning tools.
Advantages:: Fee-free mutual fund and ETF investing; retirement investor tools
Disadvantages:: High brokerage fees, especially for inactive traders; $2,500 account minimum; annual account maintenance fee.
TDAmeritrade
TD Ameritrade investors like the $0 stock trade brokerage fee, but phone and broker-assisted trades cost over $30. No-load mutual funds charge $49.95, the highest except for Charles Schwab.
However, its think or swim platform offers advanced traders “elite-level” trading tools, 300 commission-free ETFs, and a wide range of educational and research tools.
Best For: Advanced traders seeking customized platform; passive investors interested in ETFs and mutual funds
Advantages: Many fee-free ETF trading options; educational resources; multiple trading platforms to match investor expertise
Disadvantages: Options trading requires a $2,000 account.
TradeStation
Two Cuban classical violinists founded TradeStation after discovering how computer software could improve investing.
Today, TradeStation prides itself on integrating technology to provide professional-grade tools to help clients shape their trading strategies, including EasyLanguage, a code specific to TradeStation that allows investors to turn their investment strategies into coding language that TradeStation’s platform can execute.
Even novice investors can use these tools and educational resources. Trading no-load mutual funds costs $14.95, and trades cost $0.
Best for: Advanced investors; professional day traders
Advantages: Custom alerts and trade execution for trading strategies; low brokerage fees
Disadvantage: For advanced investors; $50 annual fee for accounts under $2,000 or without five trades in the past year; $14.95 bond trade fee.
Vanguard
Since 1975, Vanguard has prioritized fee and commission reduction. Vanguard created the first index fund, starting a passive investing revolution.
Vanguard accounts offer free trading on Vanguard ETFs and mutual funds. Discovering the best Vanguard retirement funds could boost your investment returns.
Vanguard also provides tools and education on ETF and mutual fund investing and other investing principles.
Best for: Passive investors seeking low-fee ETFs and mutual funds, novice investors seeking minimal oversight.
Advantages: Free Vanguard ETF and mutual fund trading
Disadvantages: $7 options trading fee, $20 annual account service fee for paper statements
The information is valid as of May 20, 2022.
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