Online Stock Brokers: Compare Online Stock Brokers

written by: Tyler Banfield

June 25, 2006

investing online ~ picking the right online broker
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Have you ever thought about investing online? Maybe you are ready to make to build your own compare_stock_brokers portfolio, but have no idea where to start. If this sounds familiar, then this is the guide for you. It is written specifically for individuals who want to invest online but don't know where to start. We cut out all the fluff and technical terms and get right to what you need to know about investing online and the best brokers available.

So What Can I Do With an Online Portfolio?

Gone are the days when purchasing a stock required looking in the newspaper for the symbol, calling your broker and placing a purchase over the phone. Since the advent of online brokers, the way individual investors trade and research stocks has changed drastically. Most online brokers offer extensive research tools, including market news, company profiles, stock news, graphing tools and analyst research. This information is compiled into one easy to use platform. In addition to research, online brokers offer everything you need to build and manage your portfolio. You can buy or sell stocks and options with market orders, stop order or limit orders. A quality broker should also offer real-time stock quotes (although Level II quotes normally require an additional fee). Online brokers also cater to different types of investors. Whether you are looking to occasionally invest, build your retirement fund or become an active trader, there is a service for you.

In addition to researching and investing in stocks, options or mutual funds, many brokers offer a full service system to manage your money. You can choose a checking, money market or credit card account. These accounts are similar to that of online banks, and offer plenty of features such as online bill pay, ATM cards and online banking statements.

Now that you understand what you can do with an online broker, you may be wondering how you should choose a broker. It really depends on your needs as an investor. We've broken all of the major online brokers into three categories and give an overview of their prices, strengths and weaknesses.

compare TOP PICKS
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You love the stock market and everything about it. Each day, you try to take in as much information about it as you possibly can, whether its researching specific stocks on the internet or watching MSNBC for the latest news. Once you pick an online broker, you plan on actively trading. There are too many stocks for you to pick from to just choose three or four to sit in your portfolio, so you plan on making frequent trades. One important note, if you plan on consistently making a large amount of trades each quarter, you will most likely have to open a margin account. This usually just requires you to deposit more money when you open your account, but make sure to carefully read your brokers' specifications before opening an account.

E-Trade is the most popular and well-known online broker. Recently the sponsor of the MSNBC Squawk Box Portfolio Challenge, E-Trade is known for their superior trading platform and reliable orders. With four commission levels ranging from $6.99 (over 1,500 trades per quarter) to $12.99 (under thirty trades per quarter), E-Trade rewards you for frequent trading. In addition to lower commissions, frequent traders are eligible for E-Trader Pro. E-Trade Pro can be downloaded to your desktop or run as a Java program. It offers the latest investment tools, along with free access to real-time Level II Quotes (which normally cost $9.99 per month). An E-Trade account can be opened with $1,000, while a margin account can be opened for $2,000.

An economy investor can actually be an active investor or a long-term investor, but in your eyes, the most important feature of an online broker is value. You aren't worried about all the bells and whistles, you just want to be able to make trades for the lowest commissions available. If you are looking for value, make sure to put extra time and consideration into the broker you pick. Although there are many reputable and reliable discount brokers, there are some discount brokers that sacrifice service for price. Pay particular attention to reviews from other customers.

Scottrade offers a flat $7 commission fee for all stocks over one dollar (for stocks under one dollar, a half percent is added to the principal value). Signing up for Scottrade can be done through one of their many branch offices with as little as $500. Scottrade offers three trading platform options, free wireless trading and over nine thousand mutual funds. Although Scottrade is a discount broker, they do not make any sacrifices in the quality of service. Scottrade has an average trade execution time of under two seconds.

Unlike the active investor, you do not want to constantly check your portfolio. You are a stock market enthusiast, but you don't concern yourself with the day to day fluctuations of the market. You want to be able to pick stocks based on their long-term growth potential, put them in your portfolio and let them grow without worrying about constantly monitoring your portfolio. Although brokers that cater to long-term investors normally charge higher commissions, they offer excellent customer service and peace of mind.

Fidelity offers the highest level of customer service and assistance. Although Fidelity charges a $19.95 commission for standard customers (Fidelity requires $2,500 to open an account), anyone with over $50,000 in household assets can receive a $10.95 commission fee. Fidelity has experienced representatives available twenty-four hours a day. Perfect for long-term investors, Fidelity offers market alerts, which allow you to be notified of changes and events in stocks, bonds or mutual funds. Fidelity also provides access to the largest amount of market commentaries and reports. The superior customer service and reliable reputation make Fidelity the perfect choice for any long-term investor looking for an online broker.

About the Author:
Tyler Banfield is frequent guest contributor for WhatNotReviews.com. You can visit his stock and financial focused blog by clicking his name at the top of this review.