Three Best Online Brokerages

Scottrade is the best, period. I also like Ameritrade Izone and BrownCo. One could make a defendable argument that Ameritrade Izone is better than Scottrade for regular brokerage accounts and BrownCo for IRA accounts.

All the other brokers, in my humble opinion, simply aren't worth the extra money.

I personally invest with Scottrade and have my Roth IRA account at BrownCo.

Here are my thoughts:

  • Scottrade
    I consider Scottrade the very best online broker. $7 trades across the board - limit, stop loss, market - with no annual fees, fast execution, a great web interface, local branches all around the country, and excellent customer service. My emails to them always get answered within a few hours. Everyone should do their trading with these guys.

  • Ameritrade Izone
    They only offer regular brokerage accounts - no IRAs allowed. But, all orders, both limit and market, are $5.00. Ameritrade Izone is certainly the most economical way to go for regular brokerage accounts, though you give up the convenience of having a Scottrade branch near you.
  • BrownCo
    Like Scottrade and Izone, BrownCo also has no annual fees (an absolute must!). BrownCo beats Scottrade on market order commissions at $5.00 (awesome!), but their limit orders cost $10.00 (a tad pricier). The web interface isn't as complete as Scottrade's as well (no gain/loss tracker, a bit less intuitive) but it's got all you need to do the job. You also have to meet higher minimum requirements in order to get a BrownCo account - $50k net worth and $15k in initial funding for a regular brokerage account or $5k in initial funding for a Roth IRA.

    BrownCo's integration into E-Trade is a question mark. According to E-Trade, the BrownCo commission structure will stay the same through December 31, 2006, but it doesn't mention what will happen after that.

    What is interesting to me is that E-Trade offers unlimited ATM reimbursements to any of its banking customers that keep a minimum of $5,000 in their checking accounts or that have $50,000 in linked accounts - which will include BrownCo accounts, of course. I like the idea that simply having $50,000 in, say, a Roth IRA with E-Trade, would allow me to withdraw money free from any ATM anywhere should I open a checking account there.

That is my verdict! What about Schwab, Fidelity, Ameritrade, TD Waterhouse, E-Trade, and the others, you may ask? With Scottrade setting the bar with such great service at a $7.00 commission level, there is no reason to even consider these other guys IMHO. Companies like Schwab talk about adding value, but it seems like all they really do is offer more crappy sell-side research than their competitors and charge $10(+) commissions (Schwab's are $30) and annual fees for it. It's hard to make money investing if you're shelling out big bucks to your broker!

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