For years now, you have heard about the wonders of investing in the stock market and how, over the course of many years, it always seems to go up. After saving a few dollars and taking a deep breath, you are ready to open a brokerage account and start buying some stocks. There seem to be plenty of options available: you can either hire a professional broker to handle your accounts, or you can go with online investment companies. The choice is yours, but which one is right for you?
E*TRADE
One of the most popular online investment companies, if not the most popular, E*TRADE has nearly every feature you could need in an online broker. Commissions on trading fees are very reasonable and run anywhere from $6.99 to $12.99 per trade, depending on how active you are with your investments and how much business you conduct with E*TRADE. In addition to online broker services, E*TRADE offers checking and savings accounts, credit cards, and even mortgages. As one of the best online investment companies, E*TRADE prefers the electronic, hands-off approach in terms of customer service. That is not necessarily a bad thing as you can open accounts (even IRAs or custodial accounts), submit customer service inquiries, and handle nearly everything online once you are logged in. E*TRADE also features advanced trading tools and research if you wish to broaden your horizons.Charles Schwab
Like many online investment companies, Schwab is very similar to E*TRADE in terms of its service offerings, pricing structure and reliance on technology to make things more efficient. A big difference, however, is Schwab’s expanded emphasis on personal customer service. The advertising approach Schwab takes makes this emphasis clear; you’ll often seen advertisements about “Talk to Chuck” or individuals sharing their personal stories. Compare that to E*TRADE’s approach of boasting 1,000 new accounts per day. That is probably not the message you want to hear if you are looking for friendly customer service in your search for online investment companies. Schwab also offers excellent independent research, trading tools, and fee waivers for nearly everything (except trading commissions) related to conducting more business with Schwab.Vanguard
Vanguard has become famous and successful for offering mutual funds and charging very, very low fees. Year after year, Vanguard’s expense ratios (the percent of your money that you pay Vanguard as a management fee) are among the lowest in comparison with those of other online investment companies. However, many do not know that Vanguard offers online brokerage services as well. That is, if you are looking to buy Vanguard mutual funds and occasionally want to buy stocks, you can keep everything under the Vanguard umbrella. Commissions for Vanguard’s brokerage services are higher than most of the online discount brokers, but if you prefer the mutual-fund approach, Vanguard might be the place to be. Vanguard is also very technologically savvy and relies heavily on electronic communication and account servicing. You can do nearly everything online via Vanguard.com -- including transferring funds to other bank accounts.SogoTrade
SogoTrade offers $1 trades with no gimmicks. You will often see similar advertisements like this from other online investment companies, but the $1 or free-trade offer only applies if you do things like open a savings account or get a mortgage with them. SogoTrade was the first in a wave of professional trading houses that let retail investors leverage their trading platforms and discounts. There is not much in terms of banking features, trading tools or research, but if you know what you want, there is not a better rate on commissions around. Some cool features of SogoTrade include automatic investing, which is the ability to automatically buy shares of stock, including fractional shares.Scottrade
Still owned and operated by its founder, Scottrade set out to provide the regular investor with access to professional-grade services at the lowest price. While it might seem like comparing apples to oranges, Scottrade shares many of the same principles that got companies like Dell and GoDaddy to their lofty heights, one of which is to provide better service for less money. Scottrade offers $7 trades -- no questions asked and no tiered structure. That is, you do not have to trade 1,000 times a month to get the lowest price. Scottrade also offers local branches; there are literally hundreds across the country. The trading tools and research are more than adequate and far better than you might expect from a cheap broker requiring a paltry $500 minimum deposit.ShareBuilder
ShareBuilder is owned by banking giant ING and offers an exceptional program to incrementally invest and build wealth over time. If you are not too concerned with market swings and want to automatically invest, ShareBuilder is the place to be. You can automatically invest any amount of funds per your schedule (weekly, biweekly, monthly, etc.) and get full investment of your dollars (e.g., fractional shares). Trades of this nature are just $4 and if you opt for their $20/month plan, you get 20 no-cost trades each month. This is an excellent platform for beginning and/or patient investors who are more focused on building up a nice nest egg over the long haul.breaking the broker
When choosing an online broker, you should give special attention to your investing style, needs and goals. A big part of being financially successful, particularly in the investing arena, is being on the right platform that gives you the tools to prospect and a fee structure that does not hinder you from maximizing your returns.Resources:
http://www.schwab.com/
http://www.vanguard.com/
http://www.scottrade.com/
http://www.sharebuilder.com/
https://us.etrade.com
www.sogotrade.com
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