Best Discount Stock Brokers

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A broker gives you access to the markets for investing your money and growing your financial freedom.

discount brokersThis doesn’t mean you need to pay a broker high fees and commissions which cut into your earnings — especially in 2021 when almost all leading brokers offer free trading.

Platforms with free trading and no account minimums don’t always come with the full power of a traditional brokerage house.

But for most millennials just starting to invest, a free broker can provide just enough muscle.

7 Best Discount Brokers

Here are some of my favorite free and discount stock brokers, all of which have no-commission trades and no minimum account balances:

  1. Robinhood
  2. TradeStation
  3. TD Ameritrade
  4. Interactive Brokers
  5. E*Trade
  6. Fidelity
  7. Charles Schwab

1. Robinhood

Robinhood lets you make an unlimited number of stock, ETF, and even option trades — all commission free. Now you can even make free crypto trades, too.

Free trading is as good as it sounds. It means you can invest even more of your money into your future.

You can set up a Robinhood account for free, and you won’t have to maintain a minimum balance in order to invest. And, most users like Robinhood’s customer service and mobile app even though you can’t get free help over the phone.

How does Robinhood offer so much free of charge to its nearly 6 million users?

Primarily by earning interest on uninvested cash in users’ accounts. Robinhood also has a paid upgrade, Robinhood Gold, for more advanced investors, which generates some revenue.

Robinhood’s business model has put pressure on other brokers to offer free trades.

Pros

  • Solid app and site
  • Free stock share with new account
  • Commission-free trades
  • Fractional shares for investors with smaller account sizes

Cons

  • No retirement accounts such as Roth IRAs
  • No free phone customer service

To Learn More:

2. TradeStation

TradeStation is a direct access broker that got its start in the early 1980s as a service for investment bankers, institutional investors, and other serious traders.

These days, TradeStation attracts advanced and casual investors alike, because of its easy-to-use software, fast execution speeds, and advanced features that rival any of the other popular brokers.

They’ve also teamed up with TradingView, so that you can connect your account to the popular charting platform and execute trades right from there.

TradeStation offers two pricing plans: TS Select and TS Go. TS Select has a minimum deposit of $2,000, while TS Go has no account minimum.

Both plans offer $0 commissions, but TS Go charges $10 per trade if you use their award-winning desktop platform. Instead, you’d be using a trimmed down mobile or web-based version. TS Select also has slightly lower fees for options and futures contracts.

Pros

  • Easy to use software available in web, desktop and mobile versions
  • Earn interest on your crypto investments – including 4% on U.S. Dollar Coin
  • Feature-rich for advanced traders, including a powerful screener and custom indicators
  • Full access to TradeStation’s educational resources, including paper trading accounts

Cons

  • Higher margin rates than competitors
  • No fractional trades

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3. TD Ameritrade

Let’s get this out of the way first: Charles Schwab is in the process of buying TD Ameritrade, which means any new Ameritrade account you open will eventually become a Schwab account.

But the firm still is accepting new clients and is a stand out in the business, so it’s still on this list.

Ameritrade resembles other traditional market leaders, such as Schwab and Fidelity, with its wide variety of securities and a robust array of educational and research tools.

But its thinkorswim platform is considered the gold-standard for many advanced traders. The platform is fully customizable – allowing everything from custom screeners and indicators, backtested strategies, to nearly algo trading.

Beginning investors, on the other hand, like Ameritrade’s educational resources, which include live seminars (online and in-person) along with detailed videos and even quizzes. It also offers paper-trading, so that you can learn the market before risking any actual cash.

As with Fidelity, expect to pay a 65-cent contract charge for options and a high fee for broker-assisted trades, though these policies will likely fall in line with Schwab’s price points after the acquisition is complete.

Pros

  • Good variety of securities
  • Top-notch educational tools for beginners
  • Great selection of low-cost mutual funds

Cons

  • High fees for broker-assisted trades
  • Firm and its accounts should soon be part of Schwab

To Learn More:

4. Interactive Brokers

Serious traders like Interactive Brokers because of its nearly unmatched variety of securities, which include foreign markets, commodities, margins, and futures.

In the fall of 2019, Interactive launched a new platform, IBKR Lite, for more casual investors looking for free and discounted trades.

The new platform delivers unlimited free trades of stocks and ETFs from domestic markets, along with a solid selection of commission free mutual funds.

While IBKR Lite does not have all the features of Interactive’s original platform, now known as IBKR Pro, the Lite platform performs respectably and offers a simple, streamlined approach for new investors who’d like to make regular ETF, stock, bond, options, or mutual fund trades.

And, Interactive has a solid robo-advising option with management fees as low as 0.08 percent for some of its 70 or so portfolio options.

Pros

  • Simple dashboard
  • Fractional shares available

Cons

  • Some educational tools cost extra
  • Inactivity fees (only if you upgrade to IBKR Pro)

To Learn More:

5. E*Trade

E*Trade has also joined the $0-per-trade club, eliminating its $6.95-per-trade fee in October of 2019.

This means E*Trade has become yet another option for free trading. But E*Trade stands out to me because of its options trading platform, Power E*Trade, which gets its power from the firm’s acquisition of OptionsHouse back in 2016.

Power E*Trade’s charts let you visualize potential trades — a helpful feature with something as abstract as options. If you’re a beginner who’d like to learn how to win with options, give Power E*Trade a close look.

As with other leading brokers, E*Trade charges a 65-cent-per-contract fee, which it lowers to 50 cents for active traders. Power E*Trade also comes with futures trading.

Along with Power E*Trade, the company has two other platforms, E*Trade Web and E*Trade Pro, which is designed specifically as a desktop application. All three platforms have free trading and an impressive dashboard where you can analyze, trade, and track seamlessly.

Pros

  • Great for learning options
  • Chart-driven dashboard on all three platforms
  • Solid educational resources

Cons

  • $19.95 fee for mutual funds not on free list (free list has about 4,400 funds)
  • $75 fee to transfer all funds out of E*Trade

To Learn More:

6. Fidelity

You probably know Fidelity Investments as a leader in mutual fund investing, but the firm has a growing brokerage arm which now offers commission free trades.

Fidelity also has one of the best robo-advisors for more passive investors.

You can now trade stock and ETF shares commission free with Fidelity, but options contracts require a 65-cent-per-contract fee.

Fidelity excels with its market research and tax-advantaged retirement funds. And, of course, the firm’s mutual fund offerings are second to none.

Compared to other brokers, Fidelity’s website feels a little dated and cumbersome, but its apps are sleek enough.

You’ll get access to solid customer service, but if you make a broker-assisted trade, you’ll face a steep fee. As of this writing, Fidelity’s broker-assisted fee is $32.95 per trade.

Pros

  • Variety of securities
  • Great market research
  • Wide selection of mutual funds

Cons

  • Non-invested cash hardly earns interest
  • High fees for broker-assisted trades
  • Average user experience on web site

To Learn More:

7. Charles Schwab

Charles Schwab has been connecting clients with investment markets since 1971. With more than 12 million active investors, Schwab is an industry leader and a full-service broker.

Now, thanks in part to pressure from upstarts like Robinhood, you can invest commission free on Schwab’s site.

Schwab’s performance resembles Robinhood’s, but with half a century of client service, Schwab has more to offer in the area of market research. Also, Schwab can usually offer a wider variety of securities — mutual funds, ETFs, and stock shares.

You’ll get free phone customer support 24 hours a day. If you really need help, Schwab has 300 offices around the country. (Expect to pay for this kind of customer support.)

The down side? Uninvested cash in your Schwab account will generate very little interest for you. Schwab will keep the vast majority of those earnings to pay for your commission free trades.

This won’t matter so much if you don’t let your money sit uninvested, and since Schwab lets you invest in partial shares, keeping your money active should be easier.

Pros

  • Good app and desktop experience
  • Great variety of securities
  • Top-notch market research
  • Partial share investing available

Cons

  • Miniscule earnings on non-invested cash

To Learn More:

FAQs

Investing shouldn’t be confusing, yet new investors come across terminology and insider knowledge that seems intimidating.

Many brokers use this kind of language, which confuses new investors even more. You can ease the confusion by reading through these FAQs before getting started:

Why do I need a broker?

Brokers have the authority to buy and sell securities on exchanges such as the New York Stock Exchange and Nasdaq.

Brokers are licensed to do business on your behalf. You’d need to become a broker to make trades directly with the markets.

Brokers can also offer advice to investors, but financial planners usually have a broader perspective.

How do I choose a broker?

The list above features my favorite options for discount (and now free) online brokers, but you can also work with a traditional broker in person if you’re good with paying the fees and commissions.

Make sure the broker you choose can give you access to the markets you want to invest in.

For example, if you’d like to focus on mutual funds, choose a broker with a wide variety of funds. Almost every broker on my list above meets this requirement.

How do I pay my broker?

Traditional brokers take commissions from your account balance and charge fees to access the markets. Of course, you’ll avoid these charges with free and discount online brokers.

Online brokers still make money, primarily by investing the money in your account that’s not currently tied up in securities. A broker may earn 2 percent on your non-invested money and pay you a fraction of that amount.

If this set-up bothers you, look for an online broker offering fractional shares to limit your non-invested funds. Or, stick with a conventional fee- and commission-charging brokerage account.

What do commissions and fees pay for?

If you want to discuss your trades with a broker on a regular basis, you’d still do best to go with a traditional client-broker relationship.

Most free and discount online brokers offer customer service, but you’ll typically pay more for speaking with a broker.

Another option: Start a relationship with a financial planner who can help you see future needs while using a discount or online broker to carry out the trades free of commissions and fees.

Investing Step One: Just Get Started

When you’re new to investing or just thinking about the idea of investing, getting started — opening a free account with Robinhood or another leader on my list — seems like a challenge.

But opening an account, and then looking around its dashboard, and then transferring in some money to invest has a way of removing the mystery. Investing will begin to make more sense.

And once you start to see the power of your money making money while you think about something else, you’ll be motivated to learn and invest more.

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