The Best Online Brokerage Accounts For Beginners To Experienced Investors
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Advertisements for online brokers are plentiful, and of course, they all claim to be the best. A new analysis by MoneyRates. Differences in commissions, fees and margin rates offer choosy investors the opportunity to save hundreds of dollars. But perhaps an even bigger financial reward comes from finding a firm with useful research resources and a history of delivering its services with a minimum of problems.
Motif Investing came out on top overall, scoring particularly well on its cost-effectiveness for small investors, and for having a spotless regulatory history so far. Optionshouse, which despite its name also accommodates ordinary stock trading, took the second position overall, followed by a tie between Capital One Investing and Just2Trade.
Whether you would find these particular firms best for your needs depends on what you are looking for, so the following sections break down the results according to each of the four major categories in this study.
A characteristic popularized by online brokers is the flat-rate commission. Traditionally, commissions would be based on cents per share though perhaps with a minimum commission amount rather than a flat rate per trade.
The flat rate becomes more attractive the greater the size of each trade, so smaller investors need to pay special attention to finding a low flat rate. Similarly, small investors are especially affected by maintenance or inactivity fees, since these represent a larger portion of their portfolios. Finally, small investors need to look for a broker where they won't be frozen out by a large minimum account size. Tied as the best online brokers for small investors were Motif Investing compare optionshouse and tradeking brokers Optionshouse.
Bear in mind when assessing costs that there are plenty of other charges that brokers may assess, depending on your actions. Everything from receiving paper copies compare optionshouse and tradeking brokers statements to wiring money out of the account might trigger a fee, so look at the full fee schedule and think about your likely usage before choosing a broker.
Brokers often charge for each security transferred out of the account, so when you leave a broker, it is often best to liquidate compare optionshouse and tradeking brokers portfolio so you can make a single cash transfer out rather than incurring several charges by transferring security-by-security.
The key is to compare transfer charges with the round-trip commissions you would incur if you liquidated your portfolio and reconstructed it at your new broker. Also be compare optionshouse and tradeking brokers to consider the tax implications of liquidating your portfolio.
When going on margin, an investor leverages the portfolio by investing money borrowed from the broker. As with any loan, there is an interest rate charged compare optionshouse and tradeking brokers the amount borrowed. This interest rate is vitally important to a margin strategy, since in order to be successful, the return on investments has to exceed that interest rate. Interactive Brokers stood out by offering a margin interest rate of just 1.
With a relatively high minimum and a monthly maintenance fee, Interactive Brokers might not be the right choice for smaller investors, but then again, margin strategies are not for everybody anyway. Two types of events are included: Almost inevitably, when you sign up with a broker, but you will have to agree to take any disputes to arbitration rather than to a court of law. So, knowing how often arbitration comes into play can give you a sense of how often a company has had serious disputes with its customers.
Since some firms have much longer histories than others, MoneyRates. So far in its relatively short history, Motif Investing has no regulatory events or arbitration cases on its record. Just2Trade took the runner-up spot in this category with just one regulatory event on its record. These records are subject to change, so you are encouraged to look up any broker's history at www.
You can look up both firms and individual brokers on this database. Pretty much all the online brokers reviewed for this study provide some level of investment information and compare optionshouse and tradeking brokers. However, there were great differences in the variety and robustness of the resources available. News feeds and data tools are common, and while these are useful, they are fairly generic. They provide more in the way of raw information than interpretive analysis.
Some online brokers also create investor communities where customers compare optionshouse and tradeking brokers share insights, but these are of dubious value.
Not only don't you know the qualification of the user providing the information, but forums like this can be prone to attempts at stock manipulation, as investors try to get others to buy into hype for positions they own.
The richest resources come from online brokers that provide research from multiple, credible sources. This is the same kind of support investment professionals use for industry and company-specific background. For investors who like to thoroughly research their ideas, firms offering a wide variety of these resources might be most useful, including Fidelity, which scored best on this basis. Each of these top firms makes available data and analysis from a dozen or more independent sources.
In addition to low trading fees, TradeKing has no account minimums. Investors can view quotes on the go via TradeKing Live, an active-trader platform compatible with computers, tablets and mobile phones.
The brokerage also offers a suite of technical analysis tools free of charge to better manage portfolios. After its acquisition by Ally, the company is expected to have an integrated consumer platform in earlygiving customers the power to compare optionshouse and tradeking brokers their Ally accounts and take advantage of the compare optionshouse and tradeking brokers management services for which TradeKing is known.
Again, there are several ways to compare online brokers, and this study should give you a sense of which firms consistently rank ahead of their competitors. Most of all though, the different categories explored by this study should help you identify some of the issues involved in choosing an online broker, so you can decide what is most important to you.
After all, the right choice is a function of both the brokerage firm's characteristics compare optionshouse and tradeking brokers your needs and habits as an investor.
July 12, Research-center. Best Online Brokers - Overall Winner: Motif Investing Motif Investing came out on top overall, scoring particularly well on its cost-effectiveness for small investors, and for having a spotless regulatory history so far. Optionshouse, Capital One Investing and Just2Trade Optionshouse, which despite its name also accommodates ordinary stock trading, took the second position overall, followed by a tie between Capital One Investing and Just2Trade.
Compare optionshouse and tradeking brokers Investing and Optionshouse Tied as the best online brokers for small investors were Motif Investing and Optionshouse. Interactive Brokers Interactive Brokers stood out by offering a margin interest rate of just 1.
Motif Investing Since some firms have compare optionshouse and tradeking brokers longer histories than others, MoneyRates. Just2Trade Just2Trade took the runner-up spot in this category with just one regulatory event on its record.
Best Online Brokers for Research Resources The richest resources come from online brokers that provide research from multiple, credible sources. Fidelity For investors who like to thoroughly research their ideas, firms offering a wide variety of these resources might compare optionshouse and tradeking brokers most useful, including Fidelity, which scored best on this basis.
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