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Roundup of Discount Brokerage Firms for 2024

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Discount Brokerage Firms

Discount brokerages have become the dominant model online. By historic terms, the online brokerage business is still just in its infancy.  Most brokerages are still trying to decide on the long-term business model of their industry in the internet era. This has made prices particularly volatile. As firms compete for business prices have fallen steadily downward, until over the past several years almost all mainstream firms have settled on the discount brokerage business model. We’ve put together a roundup of the best discount brokerages below. You can also work with a financial advisor who can manage your investment portfolio for you.

Understanding the Dominant Discount Brokerage Model

Generally speaking, a “discount brokerage” is a brokerage firm that conducts trades at a low (or “discount”) rate. This firm offers brokerage services in that it actually does complete the transaction orders for its clients. This is as opposed to a trading platform, which simply communicates buy and sell orders to a third party.

In addition to its rates, a discount brokerage is generally characterized by its limited services. This firm typically won’t offer specific financial planning or trading advice to its clients. They also don’t tend to offer portfolio management or other investment services.

Some discount brokerages will offer these services in addition to their standard accounts at an extra charge. For example, a discount brokerage may offer broker-assisted trading or operate retail financial advisors, but none of these services will be part of the basic prices.

The low-service model of discount brokerages means that they tend to focus on retail clients. They rarely pursue institutional investors or high-net-worth clients because they don’t offer the kind of services that those portfolios require.

By now almost all mainstream online brokerages offer a discount pricing model. This doesn’t mean that they exclusively offer minimum services. Instead, many major brokerages offer their basic platform as a discount brand and then offer premium services for more sophisticated traders.

Based on our research, in today’s market, the standard discount brokerage pricing model follows these ranges:

  • Stocks and ETFs: Free (usually fees for broker-assisted trades)
  • Options: Between $0.50 – $0.65 per contract depending on the service
  • Mutual Funds: Between $30 – $60 per trade depending on the service

While firms will vary on more specialized assets such as futures contracts and will have some differences when it comes to specific fees and other charges, almost all share the same basic pricing model when it comes to stocks, ETFs, options and mutual funds.

Roundup of Discount Brokerage Firms

Discount Brokerage Firms

Almost all major brokerages these days offer a discount product. The main exceptions are brokerages that specifically target a sophisticated subsection of investors. For example, brokerages built for day traders tend not to pursue a discount pricing model.

While by no means a comprehensive list, these are some of the firms you should keep in mind as you look for your next trading opportunities. Readers should note, this list only includes platforms that offer free stocks and discount options. While many platforms offer low fees for equity trading, those have been omitted.

E*TRADE

Fee Rates– Stocks/ETFs: $0
– Options: $0.65/contract
– Mutual funds: $0
Account Minimum– $0

E*TRADE offers a clean trading environment with an emphasis on usability. This has been one of the biggest retail trading operations since it launched in the late 90s, and that pedigree shows in the platform’s feel and design. More sophisticated users can pay a little more to trade on Power E*TRADE, the broker’s advanced platform.

TD Ameritrade

Fee Rates– Stocks/ETFs: $0
– Options: $0.65/contract (online)
– Mutual funds: $49.95
Account Minimum– $0

TD Ameritrade is one of our favorite trading platforms. This is a particularly good pick for investors who either have some skill at investment or who want to develop it, as even their base platform comes with quite a lot of bells and whistles. Meanwhile, thinkorswim, TD Ameritrade’s advanced platform, is quite simply one of the best on the market.

Fidelity

Fee Rates– Stocks/ETFs: $0
– Options: $0.65/contract
– Mutual funds: $0 or $49.95
Account Minimum– $0

Fidelity is a particularly good choice for investors just learning the ropes. The firm’s many retail locations mean that you can seek advice in person if you need help (for an additional charge though), while its platform emphasizes educational and informational tools. Like many of its competitors, you also don’t need to invest a minimum amount to open a brokerage account with Fidelity.

Charles Schwab

Fee Rates– Stocks/ETFs: $0
– Options: $0.65/contract
– Mutual funds: Starts at $0, up to $74.95
Account Minimum– $0

Charles Schwab is a good pick for technically-minded traders and those who want to emphasize mutual funds. This platform offers a wide range of technical data, as well as more no-fee funds than most competitors. For mutual funds, the fee range above may seem high, but Schwab offers plenty of no-transaction-fee options as well.

Webull

Fee Rates– Stocks/ETFs: $0
– Options: $0.55 per contract
Account Minimum– $0

Webull is a robo-advisory that also allows you to trade individual stocks, ETFs and options. However, you’ll notice it does not offer mutual fund purchases. This is a great choice for investors who want to take a largely hands-off approach while still taking some direct control of their portfolio.

Ally Invest

Fee Rates– Stocks/ETFs: $0
– Options: $0.50/contract
– Mutual funds: $0
Account Minimum– $0

Ally Invest is one of the lesser-known trading platforms, but a great choice for traders who want to minimize costs. In particular, their mutual fund fees are some of the lowest on the market. Ally is also a banking institution, giving customers the ability to keep many of their accounts under a single roof.

Merrill Edge

Fee Rates– Stocks/ETFs: $0
– Options: $0.65/contract
– Mutual funds: $0 or $19.95
Account Minimum– $0

Merrill Edge has strong customer service options and terrific general research tools. In particular, Bank of America customers will find this a very useful tool. Like some of the other options on this list, the brokerage also offers a robo-advisor that you can utilize alongside your traditional investing account.

Vanguard

Fee Rates– Stocks/ETFs: $0
– Options: $1/contract
– Mutual funds: $20
Account Minimum– $0

Vanguard is a particularly strong choice for investors who want focus on mutual funds. This broker offers one of the largest no-fee fund lists on the market, with many outstanding choices. So if your focus is mutual funds, there are few better options out there than Vanguard.

TradeStation

Fee Rates– Stocks/ETFs: $0
– Options: $0.60/contract
Account Minimum– $0

TradeStation is a great platform for high-volume investors. It’s rare to find a discount brokerage with tools for active investors, so this is a good opportunity for investors who want to move stocks and options. Mutual funds are not available to buy or sell through TradeStation, though.

Robinhood

Fee Rates– Stocks/ETFs: $0
– Options: $0.03/contract
Account Minimum– $0

Robinhood is worth discussing on a budget platform roundup because Robinhood largely established the era of no-fee trading. Once it offered zero-dollar equities and ETFs, many other major platforms followed suit. However, while Robinhood can be largely credited with establishing the new definition of budget trading, some may find it to be less robust than its counterparts across the brokerage market.

Bottom Line

Discount Brokerage Firms

In the last few decades, discount brokerages have become the dominant business model among online trading platforms, and that’s great news for investors. Other changes may be in the offing: the relative newness of this model, evolving technology and industry competition may bring on more developments. While it can be hard to tell these firms apart, you can find the right solution from our list above that feels like the right fit for your situation.

Tips for Investing

  • No matter what trading tool you use, there’s no substitute for well-planned trading. A financial advisor can help you be more informed about certain trades or they can handle the entire portfolio management for you. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Whether you’re considering getting started with investing or are highly experienced, an investment calculator can help you figure out how to meet your goals. It can show you how your initial investment, frequency of contributions and risk tolerance can all affect how your money grows.
  • You don’t need to choose on price alone! In fact, when selecting an online broker there are five things that any investor should make sure they pay attention to.

Photo credit: ©iStock.com/airdone, ©iStock.com/Orientfootage, Etrade.com, TDAmeritrade.com, Fidelity.com, Schwab.com, Webull.com, Ally.com, MerrillEdge.com, Vanguard.com, TradeStation.com, Robinhood.com, ©iStock.com/Drazen_

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