There are many online brokerage firms out there and each have their upsides and drawbacks. But before analyzing them, you first have to figure out who you are and what your expectations are. According to Letters to a Young Poet
Plenty of Fish…
Once you have figured out whether you are a long haul investor, or a trader, or maybe a little bit of both, then you can really start looking at what each site or company has to offer and how they match your objectives. Online brokers come in many flavors and there will almost always be something for every person out there.
The No Nonsense Type
At Zecco I have found that the commissions for each trade to be very inexpensive compared to other sites out there and I think this is good if you plan on making lots of trades (buying and selling). Because commission fees can eat away at your overall profits it makes sense to consider sites that charge less. Others sites that also offer cheap trades include Tradeking, Just2Trade, SogoTrade. These companies offer very low cost with no other gimmicks.
The Dependable Type
Then there other online companies that charge a little more but offer more bells and whistles. My two cents? E*Trade has always provided very good customer service (whenever I needed it) and their research tools are exceptional. Of course, they also charge almost three times more than Zecco. Scotttrade and TDAmeritrade are two very comparable sites to Etrade from what my friends tell me.
The “loyalty is everything” Type
If you do not mind keeping a good portion (like say at least 25000 dollars) of your money in one place then some banks like Wells Fargo or Bank of America might be good choices. They offer trading accounts that have 100 free trades per year or 30 free trades per month.
Commitment Issues?
After deciding which company to go with, the moment of truth comes. You have to link your bank account to your online brokerage account and transfer some money there. The whole transfer process takes about three to four business days but your money should show up no later than that.
Happily Ever After
With the money in your new online brokerage account, you can then start investing for the long term or trading day to day. It really just depends on what you think you are capable of doing and what your financial goals are.
What other trading sites have you used? Is it worth paying more just to get more features?
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Doing on October 22, 2009
Great post. I have used Etrade since the mid 90s. They were always great until recently. Their customer service has gone way downhill in the last 2-3 years and they have screwed up paperwork on me several times. I think they are having trouble because of their own financial problems. Just be warned that I agree they have always been fantastic in teh past but they have been very bad recently.
Mike on October 22, 2009
Hi there thanks for the comment and I’m glad you liked the post! Sorry to hear about your bad experiences with Etrade. I used to use Zecco but heard good things about ETrade so i’ve stuck with it. I’m still pretty new on the platform and from what I can tell they definitely have a lot of useful tools such as the Market calendar, etc.
Although I did notice that our performance graph isn’t showing up correctly. This is really important for us too since this is what we use for http://www.mintingpennies.com/peoples-account/ so we need to have this graph reflect market changes on a daily basis.
Have you tried any of the other alternatives out there? If you were thinking of switching who would you go with?
Kyle on November 2, 2009
Interesting post. I just opened up an ING Sharebuilder account. Being a student, I don’t really have a ton of money for it (I put it about $200) but their $50 dollar sign-up bonus and week of free trades was too much for me to pass up. I think it’s good to get my feet wet at least.
Karl on November 3, 2009
i highly recommend getting your feet wet. that’s awesome. be careful however of “intro offers” cause i thought that there was a recurring fee every month with them. they might get that sign up bonus back in a few months so keep an eye out for those fees. they really eat away at your profits. i could be wrong. anyway, good luck with your investing and if you find something good, please do not hesitate to share your two cents.
Gerald Jones on November 23, 2009
Good article. I’m new to investing as well and this post really has given me some insight into things I need to be aware of. I don’t have a lot of money to invest but I’m ready to start with what I have. Thanks for the post.
karl on November 23, 2009
gerald,
thanks for the kind words. my two cents is, it’s not about how much you start with (check out people’s account) but how much you end up with. hopefully we can get community going here and help each other get to where we want to get to. please keep us posted on which broker you decide on. thanks again.
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