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Best Online Brokerages for a Young Investor

7 Jun

The transition from college to the real world isn’t an easy one.  In college, 100% of your mind was devoted strictly to three things: getting as hammered as possible, girls, and classes, usually in that order.  What little money could be scraped together was used for the cheap as dirt rent and cases of natty ice, while your student ID card could be used for almost everything else (groceries, all meals, books, school supplies, etc).  With the start of the real world came real responsibilities.  Astonishingly, rent in a major city was more expensive than in the middle of nowhere.  Food suddenly cost real currency.  Drinks were no longer purchased in $10 cases; rather, they were served in bars offering $13 pitchers….really?  Meanwhile, the whole prospect of hooking up with strangers in the real world was proven a lot more difficult than expected.  Suddenly, you have to be “someone’s friend” or go to the right parties to even have a chance.  Meanwhile, you wistfully watch as older adults party on their yachts with a bevy of girls and wonder, when will that be me?  Will it be when I’m 65 and I just worked 45 years?  Will I have to pay $150,000 for an MBA just to get a high paying job?  The way to do it is to start investing on that first paycheck.  Sure, 401k’s provide a steady stream of money and a nice base for retirement, but I’m not living my whole life in poverty just to celebrate in Del Boca Vista in 2062.  But what online brokerages are the best out there for someone starting out?  Since no one has the capital in their early twenties to pay out the ass in fees, choosing between online brokerages is extremely important.  Sure, E*Trade has those hilarious talking babies, but is it actually a good brokerage?  After the jump, ConsumerSearch recently performed a full review of thirteen of the top online brokerages, outlining pros and cons of each and including important tenants such as minimum investments and trade fees. Now start making some money before you’re too old and wrinkly to really enjoy it.

Fidelity:

Pros:  Great Research Tools, full range of financial services, wide range of investment products, lower commissions than last year

Cons: Minimum Balance of $2,500

Commissions: $7.50 per trade.  More than 1,600 no-load, no transaction fee mutual funds

Minimum to Open an Account: $2,500

TradeKing:

Pros: Low-cost trades, great customer services, no minimum deposit required, good research tools

Cons: Relatively narrow range of investment products, no in-person help

Commissions: $4.95 for any type of trade

Minimum to Open an Account: None

ThinkOrSwim:

Pros: Flat-rate commissions, great mobile access, three free mutual fund trades per month, cutting-edge trading technology

Cons: Not great for international traders, more bells and whistles than some might want, takes $3,500 to open an account

Commissions: $9.95 per trade, Options $0.95 to $2.95 per contract

Minimum to Open an Account: $3,500

TD Ameritrade:

Pros: excellent research and trading tools, above-average customer satisfaction, clear commission rates

Cons: More expensive than some, minimal banking services, fewer investment vehicles than some

Commissions: $9.99 per online trade up to 150 per quarter

Minimum to Open an Account: $2,000

Scottrade:

Pros: High customer satisfaction, lower transaction fee, more than 400 branch offices, $500 minimum opening balance

Cons: Not much research help, online tools fairly basic, relatively narrow range of investment products

Commissions: $7 per trade

Minimum to Open an Account: $500

Charles Schwab:

Pros: Easy-to-use website, broad range of investment offerings, customer service available 24/7, banking services

Cons: Higher Commissions, $1,000 minimum initial investment

Commissions: $8.95 per trade

Minimum to Open an Account: $1,000; waived if you open a linked checking account or establish a minimum monthly deposit of at least $100

Interactive Brokers:

Pros: Low trading costs, sophisticated trading tools, direct-access trading, access to more than 90 markets worldwide

Cons: $10,000 minimum to open most accounts, trading platform not user-friendly, best for professional traders, not average investors

Commissions: Estimated $0.005 per share, minimum $1 per trade; $10 minimum per month

Minimum to Open an Account: $10,000

E*Trade:

Pros: Good access to foreign markets, banking services, mobile apps, access to good research

Cons: Relatively high trading costs, account maintenance fee

Commissions: $9.99 per trade.  Reduced commissions for those who make more than 150 trades per quarter.

Minimum to Open an Account: $500

OptionsXpress:

Pros: Cutting-edge trading technology, no account minimum, mobile apps, top-notch investor education

Cons: Limited banking services, high commissions than some

Commissions: $9.95 per online trade

Minimum to Open an Account: None

OptionsHouse:

Pros: Low Commissions, no account minimum, no account fees, mobile apps

Cons: Emphasis on options trading, trading technology not the best

Commissions: $3.95 per online trade; $9.95 for mutual funds

Minimum to Open an Account: None

Vanguard:

Pros: Good customer service, large selection of low-cost mutual funds, low costs for buy-and-hold investors

Cons: Higher costs for frequent traders, no mobile apps, minimum investment $3,000

Commissions: $7 per online trade for for the first 25 trades each calendar year; then $20 per trade

Minimum to Open an Account: $3,000

ShareBuilder:

Pros: Includes tutorials, primers, automatic investments costs $4, no minimum balance required

Cons: Market orders cost $9.95, fairly basic trading tools, narrow range of investment products, no banking services

Commissions: $4 automatic trades; $9.95 per trade for market orders

Minimum to Open an Account: None

Zecco:

Pros: No minimum-deposit requirement, no inactivity or maintenance fees, lower commissions per trade

Cons: Lower customer service scores, rudimentary research and trading tools, narrow range of offerings

Commissions: $4.50 per trade. 10 free trades per month if you have $25,000 in your account

Minimum to Open an Account: None

For more info, visit Consumer Search

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2 Responses to “Best Online Brokerages for a Young Investor”

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  1. Around The Web | iBlackedOut.com - June 8, 2011

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