If you've watched any TV at all in the last few years, it's highly likely that you've come across a commercial for E*TRADE. Unlike some of its major competitors, E*TRADE is a highly advertised and fairly well known online brokerage, even outside financial circles.
But does the fact that it's such a recognized name mean it's that much better than its competitors?
Long-term, low-frequency traders and beginners will probably appreciate the investor guidance tools and access to help from live financial professionals. But the more experienced, high-frequency traders may be turned off by the platform's fee structure.
Before we dive into the detailed review, let's go over the pros and cons.
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Beginner Friendly: E*TRADE's website is easy to navigate and has a great built-in investor education center. There's also the option to reach out to a broker or even open a managed portfolio with a financial advisor if you want to take a more hands-off investment approach. All this makes E*TRADE an easy-to-use online trading platform for even the most novice of investors.
Breadth of Services: E*TRADE is pretty much a one-stop shop for financial services. Besides a large spectrum of investments ranging from stocks and bonds to ETFs and mutual funds, you can also open and maintain checking accounts and IRAs, and even apply for a mortgage.
Tools: All traders have access to the basic research center, which features real-time quotes, interactive charts, and even tax advice. More active traders (30+ trades per quarter) are automatically upgraded to the E*TRADE Pro platform. This gives you additional tools like customizable watch lists, which centralizes all your investments and trading information into one place. E*TRADE Pro also comes with extended trading hours that begin at 7am EST.
Higher Fees: As per transaction costs go, E*TRADE fees are higher than many online discount brokerages. Fees are $6.95 per trade, which is more than competitors like TradeKing (now Ally Invest). Active traders do get a discount of $4.95 per trade if you make at least 30 trades per quarter.
Other products come with fees as well: the Max Rate Checking Account (a type of checking account that pays interest) includes a $15 per month fee. E*TRADE will waive this fee if you make at least one direct deposit of at least $200 per month, perform at least 30 trades per quarter, or have a combined balance across all your E*TRADE accounts of at least $50,000.
Account Minimums: You need a minimum of $500 to open an account on E*TRADE. This isn't such a huge deal, but there are quite a few other online brokerages that have no account minimum for simple investments.
E*TRADE is a useful platform for investors along all experience levels who want to open stable, long-term investment accounts.
You may want to look elsewhere if you don't like the higher per transaction fees. But if you're someone who plans to make a few stock, mutual fund, or ETF purchases and hold them, E*TRADE is an easy-to-navigate, user-friendly platform that provides you with all the information and tools you need. Business News Daily even listed E*TRADE as one of the top three "do-it-yourself" brokerages.
Tip: Beginners will also like E*TRADE's Investor Education Center. It explains how to look for stocks to buy and provides timely marketplace info that can help you make informed decisions and manage your risks.
Opening the account: If you do decide to do business with E*TRADE, you need a minimum of $500 to open a brokerage account. You can either do an electronic transfer from your bank or other financial institution, send a check via snail mail, or make a deposit into an E*TRADE branch. Within a few days of making your initial deposit, you'll be ready to go.
Always keep in mind that there are numerous other applicable fees, including those in conjunction with retirement funds and banking. The CreditDonkey comparison of E*TRADE with other top discount brokerages will help you gauge how E*TRADE's fees fare in the competitive market.
We really like E*TRADE's website, as it's loaded with helpful resources unavailable on other sites. E*TRADE's research, tools, and guidance are second to none. You'll find grids, easy-to-read fee charts, tax advice, and downloadable forms - all laid out in a user-friendly interface.
Where E*TRADE really excels is with its real-time market streaming, an invaluable asset for any investor. While you don't exactly feel like you're on the market floor, there's still a bit of a rush watching your stocks move (hopefully upward) while it's happening.
Those who want even more intensive tools and a more customizable experience could benefit from using E*TRADE Pro.
Let's say you're a novice investor who has made a little cash and got caught up in the frenzy of the market. Your trading has increased, and before you know it, you're making multiple trades a month. This is when you've hit the "big-time" as far as E*TRADE is concerned. You're rewarded with access to the E*TRADE Pro platform, which is automatically available for free to active traders who make at least 30 stock or option trades per quarter.
This more sophisticated, customizable desktop platform has technologically advanced trade tools that are not available on the basic brokerage site. And if you're trading at that level, you'll appreciate these additional tools designed to assist in positioning you as optimally as possible in the market.
Please note: while E*TRADE rewards its active investors with the bells and whistles of Pro, it doesn't eliminate your fees. You still pay the standard per trade fees, plus $25 for any broker-assisted trade. You'll also be charged an additional $0.005 per share for any extra-hours trading.
If you've seen The Wolf of Wall Street, you've heard of penny stocks and have seen the big payday they can offer, as well as their downside. Because penny stocks can take some finesse and a deft hand to trade, they're not for everyone.
The Securities and Exchange Commission defines a penny stock (also known as an over-the-counter, bulletin board, or Pink Sheet stock) as any common stock trading under $5/share. With their extreme cheapness comes risk. In fact, not all online brokerages will allow you to trade them.
First off, only limit orders (set buy and sell prices) are allowed. Short selling (trading on a borrowed stock) is not allowed, and you can't trade any stock with a market value of less than $10/share until seven business days after your account application is approved. If you need assistance on a penny stock trade, you can call customer service, but keep in mind you'll be charged that $25 fee for a broker-assisted trade.
For a non-interest bearing checking account, a $100 minimum deposit is required; there are no minimum balance requirements, no monthly fee, and a free debit card. You get free, unlimited online bill payment and unlimited transactions, as well as unlimited ATM refunds for withdrawals. This is a real plus.
E*TRADE's Max-Rate checking account is an interest earning account at a current APR of 0.05%. You have to keep a monthly balance of at least $5,000. There is a fee of $15/month for this account, but you can get it waived if you set up one direct deposit of at least $200/month, keep a total combined balance of $50,000 or more across all your E*TRADE accounts, or execute at least 30 trades per quarter. If you do a lot of business with E*TRADE and have a fair amount of money deposited with them, the Max-Rate checking account seems like a good option.
Tip: Even though their name suggests otherwise, E*TRADE isn't only an Internet-based entity. If you prefer talking to someone face-to-face, there are branches in 17 states, plus the District of Columbia.
It's never too early to start saving for retirement, and IRAs (Individual Retirement Accounts) make it possible to accumulate the wealth you need in addition to the 401(k) you get from your employer.
E*TRADE is a good place to start your first IRA investment because there are no annual fees and no account minimums. It offers several types of IRAs, including Traditional, Rollovers, and the Roth IRA. You also get many low-cost options, including 1,300 no transaction fee mutual funds and over 200+ commission-free ETFs.
If you're still a little green at investing and want some assistance, you have the option of using a professional financial advisor. E*TRADE offers a Capital Management team to help you diversify your investments and gear them towards your specific needs.
They charge on a prorated basis, based upon your portfolio's worth. Despite the fee, it might be worth utilizing, especially if you're not a financial whiz and find the whole thing overwhelming. But be aware, if you do go with an E*TRADE advisor, you can't make trades on your own anymore.
The E*TRADE free mobile app is available on both Apple and Android devices, and will essentially allow you to make trades while you're getting breakfast at the drive-thru.
You can also manage your accounts and get free real-time quotes, news, and charts. If you're on the go and see a company you're considering investing in, the mobile app allows for barcode scanning to access information about the company. It also has voice recognition (an online brokerage "Siri," if you will) and lets you make mobile check deposits into your E*TRADE account.
Some services, such as Bill Pay, are available on smartphones but not their tablet counterparts, so be sure to check E*TRADE's website to see what applications can be performed on your preferred device.
We're nearing the end of the review now, so before we get onto to comparisons with other online brokerages, let's recap the pros and cons.
Ameritrade's broker-assisted trade fees are significantly higher at $44.99 per trade. Ameritrade does offer a great trading platform and superior research offerings that will suit more experienced investors.
Checking account offers no minimum balance requirements, free online bill pay, and unlimited debit card and check transactions. Cash Management account offers free ATM withdrawals, no monthly maintenance fees, free online bill pay, and free check writing.
Fidelity is another great comprehensive online brokerage offering a wide range of services and in-depth research.
$25 + Regular Commission $32.95 per trade for representative-assisted trades.
Checking account offers no minimum balance requirements, free online bill pay, and unlimited debit card and check transactions. 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.
Ally Invest offers stock trades at $4.95 per trade with no minimum deposit. In comparison, E*TRADE has a $500 minimum deposit.
Checking account offers no minimum balance requirements, free online bill pay, and unlimited debit card and check transactions. Integrated with banking on ally.com. Manage your Ally banking and investment accounts in one place.
You get what you pay for, and in E*TRADE's case, you get a lot. More than just a discount brokerage, E*TRADE borders on being a full-service financial institution, with many options at your disposal. It can assist you in developing from a beginner to an active investor. At the same time, realize there is no such thing as "get rich quick"; you can and will likely lose money when you invest in riskier products, like stocks, so you need to tread carefully, know your risks, and, as always, do your homework.
FYI. Streaming CNBC discontinued as of 1/12/18 for all customers. Confirmed with customer service this week after receiving an email about it. Being replaced with Bloomberg, which is already widely available.
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The name "penny stock" can be misleading. To the untrained investment ear, it sounds like an easy trading gig with little at stake. However, nothing can be further from the truth, as it's a very volatile market that should be researched thoroughly before trading, especially by novices. It's more for seasoned traders who understand the pitfalls and the risk involved; it takes some finesse to trade in this arena — and be profitable at it.
Discount brokers are game changers. They allow individual investors to be self-reliant.