A Discount Broker is a brokerage firm with the lowest pricing for commissions and fees. Having lower fees and commissions can definitely play a major roll in you future returns. This list includes not only the lowest cost, but also a few low cost brokers that offer more than most Discount Brokers in terms of added features. Following is a list of the top 3.
Robinhood is a true zero cost discount broker. No fees charged for trades including stocks and options. For some states Bitcoin is also available to trade for free. There are limitations though in terms of investment options. They do not include bonds or mutual funds and have limited research. If you know the investments you want to purchase this is a zero commission option.
PROS
- No commissions or fees
- No minimum balance
- Unique interface
- Bitcoin Trading
CONS
- No retirement accounts
- Limited initial funds availability
- Limited customer service
Etrade does have higher than average trade commissions for a discount broker but they make up for that with excellent investment and research tools and great customer service They also participate in a number of IPO’s but, it’s a random allocation and many times you might not be allocated shares. Here’s a tip that has worked for me before, after opening an account ask to match a competing broker for 4.95 trade commissions.
PROS
- Exceptional investment tools
- IPO participation
- Excellent customer support
- Great mobile app
CONS
- Not the lowest trade commissions at 6.95
- Expensive broker assisted trades
- Paper statement fees
- Some mutual fees have transaction fees
Alley invest offers 4.95 trade commissions which is one of the lowest as well as advanced investment and research tools. They also have no account minimums. Ally is suited for both expert and beginning traders. Another advantage is they are rated one of the top savings banks so you can park your savings in CD’s and money markets at the same location.
PROS
- No account minimums
- First-rate trading platform
- Excellent Bank for CD’s
- Low commissions
CONS
- No participation in IPO’s
- No physical branches