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SmartMoney s Top 10 Discount Brokers
Discount brokers are everywhere. Not long ago, only a few companies offered the ability to trade stocks with low commissions. If you wanted to trade with a full-service brokerage, it might have cost $30 for each transaction. For this fee, you would talk with a broker assigned to your account, who would help you make trading decisions. Of course, the transaction fee and the promise of earning money encouraged these full-service brokers to suggest trading as much as possible.
Companies soon realized that they could offer a self-service model of stock investing, reducing overhead costs by eliminating the human broker, and passing that savings onto investors through reduced trading fees. In order to keep the volume of trades high, some discount brokers offer incentives to encourage more buying and selling.
SmartMoney recently looked into a number of discount brokers in detail in order to determine the best among a variety of categories:
For our 18th annual ranking of brokers itself top-ranked by the Web site ConsumerSearch we scrutinized a wide range of factors, from trading commissions and account fees to the cost of certain banking services and margin rates. In addition to parsing survey responses from the brokerages, we consulted with research firms and put brokers through our usual litany of customer-service tests.
Here is SmartMoney s top ten discount brokers:
My mortgage had paid in full 6 years ago, I work until I turn 55 then I can draw my early retirement. I don t own nobody money, (no c.c. debts) and I do not need someone to advice how to manage my own money. Am I doing the right thing?
You can t go wrong when you have no credit card debt, and if you re planning to take an early retirement, you must be doing something right.
How come ShareBuilder didn t make the cut?
Hi Flexo, Nice succinct treatment of discount brokers. I m adding the link to the appendix in my upcoming eBook on investing. Regards, Barb (fellow Yakezie :))
I find Scottrade lacking in some areas. The biggest problems is with a margin account. Every Friday the scan all accounts and if they don t like something in your account the make a highter margin requirement. One Friday the market closed and I have $9000 cash available and by 5PM they had a margin call of $57,000 dollars and my total account value only was down $8,000 for the day in this bad markets. I expected I might have to come up with some cash but not that huge amount. I no longer trust Scottrade. At the market close that day my net value for the account was about $250,000 so I feel that was unreasonable. The next morning the margin call was raised to $62,000. DO NOT TRUST SCOTTRADE WITH A MARGIN ACCOUNT, you cannot be sure of how the rules change from day to day.
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