SEPT 5: Which Online Stock Trading Company should you choose?

by David Jenyns on September 5, 2006

If youíre looking for an online stock trading company you have your work cut out for you. There are more than a few to choose from. Letís look at a couple of them.

Iíve used sharebuilder.com so letís start with them. I signed up for their free basic account which is a good place to begin when youíre just starting out. I was able to fund my account using my debit card which did take a few days to process. I placed a buy order and within a few days I was a shareholder of Imation.

It only costs me $4 in brokerage fees for the buy. With a standard account, which costs $12 per month you get 6 free automatic investments per month and any additional ones only costs $2. This would be worth it if you were planning to purchase even a few different stocks. As I only wanted to get my feet wet with one, I stuck with the basic plan. They also have an Advantage plan which allows you 20 automatic investments per month for a charge of $20.

The biggest difference between Sharebuilder and other sites like Ameritrade and E*trade is there is no minimum balance requirement with Sharebuilder. Ameritradeís minimum opening balance is $2000 while E*tradeís is $1000. Fidelity and Schwab both have a minimum opening balance of $2500. Therefore, if you are a novice like I am and just want to find out what itís all about, I definitely recommend Sharebuilder for your online stock trading company.

Letís take a quick look at Ameritrade though. In April 2006, Ameritrade merged with TD Waterhouse and is now TDAmeritrade and so you can find them at tdameritrade.com. Now, if you can stop looking at Sam Waterston (ooolala) long enough to look around, youíll notice there is no monthly maintenance fee with TDAmeritrade. Thatís a big plus if you can afford or have an inclination to make the initial $2000 deposit.

Another plus by using TDAmeritrade as your online stock trading company is that they only charge $9.99 for internet equity trades as opposed to $11.95-15.95 depending on your monthly plan with Sharebuilder. The free plan I signed up for charged $15.95 per trade. E*tradeís brokerage fee for trades is $12.95 and Fidelity and Schwab both charge $19.95.

There are certainly other factors to consider in addition to fees charged. Youíll want to look around and see which services each online stock trading company offer and choose one based on your individual needs.

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