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3. Broker for Intermediate

Figure Out the Fees

While there may be other things that matter more to you than fees, you should start out with a pretty clear idea of how much you’ll pay to use any particular brokerage.

For some, a small premium may be justifiable if the platform offers features that its cheaper competitors lack. In general, however, you want to lose as little of your investment returns as possible to accounting fees and trading commissions.

By starting with the bottom line, you can easily determine which stock brokers are too pricey to consider and which simply aren’t compatible with the type of investment activity you’re focused on.

Broker Account Fees

Does the broker charge a fee for opening an account?

Is there a deposit minimum? Bear in mind that mutual funds often have investment minimums of $1,000 or more, but that’s not the same as a brokerage requiring that you deposit a minimum amount of cash just to open an account.

Are there any annual or monthly account maintenance fees? If so, are they waived for larger accounts or is there an easy way to avoid them even if your account balance is small? For example, Vanguard waives its annual fee if account holders agree to receive documents electronically.

Does the broker offer access to a trading platform as part of their free membership? If you’re just starting out, the free platform may suit your needs perfectly.

Is there a Pro or Advanced trading platform that is pay-to-play? If you’re a more advanced investor, it’s important to know whether or not you’ll need to pay to upgrade your account to access tools and resources that are up to your speed. Some advanced platforms are free for customers who agree to place a minimum number of trades per year or invest a minimum amount.

What are the margin rates? Margin trading is only for very experienced investors who understand the risks involved. If you’re a new investor, this point won’t apply to you.

What’s the minimum loan amount and account balance? Most brokerages will offer lower interest rates for larger amounts, but don’t let that be the reason you borrow more than you should.

Trading Commissions

Do trading commissions depend on how much you have invested through the brokerage or how often you trade? For example, Vanguard’s trading commissions vary depending on account size, while E*TRADE offers a reduced commission to customers who trade more than 30 times per quarter.

Commissions at Charles Schwab are lower than competitors, but you must deposit at least $1,000 to open an account. Make sure you look at the prices that will most likely apply to you based on your anticipated account balance and trading activity.


Account
Level

Standard
Less than $50,000

Voyager
$50,000 – 500,000

Voyager Select
$500,000 –
$1 million

Flagship
$1 – 5 million

Flagship Select
More than
$5 million

Stocks/ ETFs

First 25: $7
Then: $20
Phone: $25

Online: $7
Phone: $25

Online: $2
Phone: $20

First 25: Free
Then: $2
Phone or Online

First 100: Free
Then: $2
Phone or Online
stock broker etrade's pricing breakdown

Are there different commission rates for different securities? If you plan on trading more than stocks, make sure you know what the fees are to trade options, bonds, futures, or other securities.

If you’re interested in mutual funds or ETFs, are there fee-free options? What is the minimum investment? Make sure that mutual funds that allow you to buy and sell for free (often called No Transaction Fee, or NTF, funds) don’t charge other types of fees instead. Mutual funds often come with a number of different kinds of expenses, some of which can sneak up on you. Make sure you review the prospectus of any fund you’re considering to ensure you understand all the costs involved.

Does the brokerage offer any free or reduced-price trades? The number of ‘bonus’ trades you receive may depend on your account balance, so make sure you check on what’s offered for the account level that would apply to you. Also be sure to check on what kinds of trades qualify for the discount—if it’s just for stocks and if ETFs, options, or fixed-income securities count.

stock broker etrade offers a promotion

Is the commission schedule conducive to the kind of trading you’d be doing? Are you rewarded or penalized for more active trading? For example, Vanguard’s commission rates increases after the first 25 trades for Standard and Flagship customers, or after the first 100 trades for Flagship Select customers, as you can see in the chart above. This means that customers that focus on passive, buy-and-hold investing reap the most benefit.

Conversely, E*TRADE offers reduced commissions after the first 30 trades in any given quarter, so active traders are rewarded for using the platform more often.

If the broker offers advisory services, how much do they cost? Is there a minimum account balance required to qualify for those services? If you’re not looking to manage your own portfolio for whatever reason, make sure you pay attention to advisor fees very closely.

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