The trend of commission-free trading makes investing more accessible to more people, especially as account minimums disappear.
It’s important to understand that when a broker offers commission-free trading, it really just means they don’t charge their own fee for helping execute the trade. There might still be other fees involved. Remember, too, that exchange-traded funds, or ETFs, come with an expense ratio, and those fees are still charged, even if there isn’t a commission for buying or selling the fund.
As with any investment, it’s vital to know what you’re getting into, understand the terms and ensure you’re prepared for potential losses. If you’re looking for a commission-free online broker for your investment needs, here are 10 that don’t charge trading fees:
— Charles Schwab
— You Invest by J.P. Morgan
— Interactive Brokers
— Merrill Edge
— Ally Invest
A well-known discount broker that dropped its trading commission to zero in 2019, Charles Schwab’s ( SCHW) free trading applies to ETFs and stocks. There is no account minimum, so opening an account and funding it is relatively easy. Schwab also offers a number of research tools and educational materials. On top of that, the broker has its automated investing platform, Intelligent Portfolios, for those who are interested in a robo advisor product. Schwab recently bought TD Ameritrade Holding Corp., joining two of the largest publicly traded brokers.
You probably think of Fidelity mainly in terms of retirement account management — and that’s definitely a product available. However, Fidelity also offers its own discount trading platform that doesn’t come with an account minimum. On top of that, you can trade stocks and ETFs without paying commissions. Because it’s Fidelity, it’s no surprise that there’s a huge body of investment education and research tools that can be used to help you make informed investing decisions.
You Invest by J.P. Morgan
This digital platform from JPMorgan Chase & Co. ( JPM) may be a good commission-free broker for beginning traders. It provides zero commissions on stocks, mutual funds, ETFs and options trades, as well as screening tools to help users define their strategy. No account minimums in both taxable and retirement accounts make it easy to get started investing for any financial goal. And if you prefer a less hands-on approach, you can always invest with the platform’s robo-advisor component for a 0.35% annual advisory fee. Just be aware that there is a $500 account minimum for the robo-advisor service.
Interactive Brokers ( IBKR) made its name as an options-trading website. However, it’s possible to trade stocks and ETFs, as well as options, without paying a commission. There is no account minimum, so getting started is fairly simple. This broker offers an interesting range of tools designed to analyze your portfolio and options choices, including the ability to use “what if” scenarios, which lets you create a hypothetical portfolio based on your actual portfolio so you can see how changes may impact your results. On top of that, the index arbitrage meter is an interesting tool that can be used to determine whether futures prices on indexes are fair value.
For Bank of America ( BAC) customers, the natural choice for a commission-free broker may be Merrill Edge. The BAC subsidiary allows you to link your Bank of America banking account with your Merrill investing account so you can view and manage everything from one platform. It also offers commission-free trading online for stocks and ETFs to complement a fairly robust suite of research tools. With no account minimum, it’s easy to get started.
How many investors remember the E-Trade baby and those clever commercials? Well, E-Trade has gone from being one of the more expensive brokers in the past to offering commission-free trading on stocks, options and ETFs. There is no account minimum requirement, so that creates a situation where it can make sense to get started. E-Trade also offers a number of research tools and different platforms and charting options to better analyze the data and choose investments that are most likely to help you meet your goals.
Ally Financial ( ALLY) originally started as an online bank, offering high-yield accounts. Now, it also offers investment services. Today, Ally Invest will let you open an account with no minimums, as well as trade stocks and ETFs without worrying about trading commissions. Ally Invest has some solid investment education resources, as well as access to streaming quotes, charts and calculators designed to help you make informed decisions.
Known for low-cost investing, Vanguard’s large fund selection makes it a great option for long-term investors. As of January 2020, the broker also offers commission-free trading online for stocks and ETFs, in addition to its mutual funds. That said, the company still caters more to buy-and-hold investors by not providing a lot of tools or calculators for short-term trading. It also doesn’t list leveraged ETFs on its platform, which can involve considerably more risk. The platform does provide digital advice in both purely robo form through its Digital Advisor and a hybrid form with the Vanguard Personal Advisor Services.
Originally, TradeStation was best known for its access to futures trading and penny stocks. However, it’s possible to open an account and trade stocks, ETFs, options with no commissions, although there is a $500 account minimum for futures accounts. One thing to be aware of is that there can be a steeper learning curve with this platform than many others. TradeStation was originally aimed at advanced traders, and it still shows. That said, this can be a great platform for day traders.
When Robinhood first launched its service, offering the ability to trade stocks and ETFs without commissions, it made a bit of a splash. However, the company ended up leading the way, and other more established discount brokers have followed suit. There is no account minimum, and Robinhood is well-known for making it easy to trade stocks. Robinhood doesn’t have as many research tools available as some of the other online discount brokers, but for those who are looking for a great mobile app and an easy way to trade, it’s a solid choice.
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