Online discount brokers

Scottrade

Scottrade is reviewed by many people because they have an enormous consumer base and with more customers come more reviews. Many readers enjoy the commission offered by Scottrade which is per trade. Customers enjoy no fees for inactivity or maintenance seen with other online brokers along with an extremely low minimum deposit.

JD Powers and Associates named them the Highest Investor Satisfaction with Self Directed Services in 2008. For new customers Scottrade will cover up to $100 in fees to transfer your account to Scottrade from another brokerage.

OptionsHouse

OptionsHouse delivers extremely inexpensive commissions at a flat rate per trade of $2.95. They have the claim to fame of being Barron’s 2009 “#1 in Trade Experience”.

OptionsHouse is similar to Scottrade in offering new customers up to $100 in transfer fee coverage.

Zecco

Zecco is best known for their free of charge stock trades. If you are an investor that enjoys investments in ETFs instead of mutual funds and don’t want to pay commissions, Zecco is a better online broker than others for you.

Zecco has a qualification process for free online trades. If you don’t qualify for free online trades or use up the allotment amount they provide, Zecco has a base commission rate of $4.50 for each trade.

TradeKing

An attraction of TradeKing for many investors is their online abundance of investment tools. They have been rated one of the best online brokers by Barron’s. In addition, their customer service has been rated #1 by SmartMoney. The commission rate for online trades is $4.95 per trade.

E*TRADE

 E*TRADE has been identified as a convenient online broker. E*TRADE delivers a high yield savings account in addition to their online broker services. This online broker has been praised by both SmartMoney magazine and Money magazine as one of the best online for investors.     

Although E*TRADE has a slightly higher per trade commission of $6.99 compared with their online counterparts, but make up for that in online trading tools and a very user friendly interface.

Sharebuilder

ING Direct backs the Sharebuilder online broker company. Sharebuilder has no account minimum for trading along with no account inactivity fees. At $4 per trade they are highly competitive in the marketplace.

These are the best of the online brokers for investors searching for a way to get the finest service for the least amount of money by way of their online broker services. 

Many new investors ask what the cost is for using a broker. Buying investment opportunities such as certificates of deposit, money market accounts, money market funds and stocks using a broker will cost you a fee. This will vary among brokerages.

Understanding your own needs and requirements is the first step to choosing the right type of broker.

There are brokers that deliver a great fit for investors on a budget. Discount or online brokers characteristically offer customers the lowest fees for performing broker functions. These brokers usually only take your order information and don’t provide much in the way of investment advice. Investment information and advice are functions you will have to perform on your own.

Orders are achieved online in most situations and costs are low overall typically per transaction. Starting out with small transactions through these types of brokers is an ideal way to learn your way around the world of investing in certificates of deposits, money market accounts and other low risk and high yield investments which are the direction for many beginner investors.

If you feel more comfortable with more one on one attention for your investment needs, there are brokers that can deliver. You are searching for traditional stock brokers. Full service stockbrokers offer customers this type of service.

Full service brokers will visit and learn more about your needs to give you better advice; but their fees would be higher.

Full service stockbrokers visit with you and learn your personal needs and wants. This includes an individual perspective of your finances, what you hope to gain from your investments, your income, and debts. Brokers are educated and very knowledgeable with the stock market and other investments that include but aren’t limited too CDs, money market accounts and other investment options. These services do come with an expensive price tag.

Several things should be considered when deciding what type of broker works best for you personally. How much you have to invest and how comfortable you feel with the marketplace is important.

If you are investing a small amount of money and don’t want to pay a large fee, online brokers may work best for you. If you are well-informed about the world of investments and know where you want to put your money, online brokers for a small fee are probably more beneficial.

On the other side of the coin, if you aren’t experienced in the market with a large amount of capital and want to learn more about options and what is available for your money a full service broker may be worth the extra expense.

Certificates of deposit are a commitment to leave your money invested for a specified term for a specific rate of interest.

There are other sources besides the traditional lending institution such as a bank or credit union where a CD can be purchased. Brokerage firms are a resource some investors utilize for obtaining certificates of deposit. A lender will pay a brokerage firm a commission to sell CD on their behalf. Purchasing CDs through brokerages do offer investors some advantages.

There are advantages to purchasing CDs through brokers rather than through an individual lender or lending institution. When using a brokerage an investor can buy CDs from a wider range of lenders which typically results in finding higher and more competitive interest rates. For example, using a brokerage you aren’t limited to banks in your specific area. A brokerage may find you a more competitive rate of interest at a better term because of the amount of lenders they have access to.

Another great reason for using brokerages for CDs is if you happen to be an investor that would like to invest more than currently covered by the FDIC ($250,000). Using a brokerage you are able to have your FDIC insurance coverage for more than $250,000 worth of CD investments.

Enlisting help from a financial broker certainly has its advantages; but you will incur additional fees.

FDIC or Federal Deposit Insurance Corporation is a federal organization that insures your certificate of deposit with the lender if the lender would happen to fail. FDIC covers CDs up to the maximum allowed by law, $250,000 per person per lender. FDIC coverage does protect any certificate of deposit brokered CDs or CDs obtained through brokerage firms or brokers.

Purchasing through a brokerage you can purchase a CD at more than one bank.  For instance, if you invested $280,000 in one bank, FDIC will only cover $250,000 of your $280,000 investment. If you used a brokerage for buying CDs, you can have $250,000 in Bank A certificates of deposit and $30,000 in Bank B certificates of deposit and have your total $280,000 covered by FDIC insurance.

When purchasing CDs using brokerage firms read the contract terms very carefully and understand all requirements tied to your CD. There may be fees or charges realized when working with a broker for certificates of deposit that aren’t identical to contracts when buying CDs directly from your traditional lending institution. However, there are great benefits for using brokerages for certificates of deposit for many investors.

Read the terms of your contract carefully before signing anything