Best Online Discount Brokerage Firms

Below is a list of the best online discount brokerage firms I've come across while doing research for opening my own personal investment accounts. These firms aren't listed in any particular order, and I can't say that any one firm is better than any of the others.

Choosing the right online discount broker really depends on your particular situation and how you intend to use your account. Day traders and buy-and-hold investors have different needs, and no one broker can cater perfectly to the needs of each.

So choose the firm that's right for you...

Zecco
Zecco.com
Roth-IRA fee: $30 Annual Fee
Charge per trade: $0.00-$4.50
Minimum Initial Investment: None
Free Automatic Reinvestment of Dividends: Yes
Zecco charges a $30 annual fee to maintain a Roth IRA, but this cost is more than offset if you maintain a balance of $25,000+ or if you plan on making more than 25 trades per month.

While we don't personally recommend making 25 or more trades per month within any brokerage account (much less a Roth IRA), we realize this is a strategy you might want to explore. If so, visit the Zecco website for more information on the actual pricing structure... It varies depending on your average balance and trading activity.

Read our full Zecco Roth IRA review >>>

OptionsXpress
www.optionsXpress.com
Roth-IRA fee: No
Charge per trade: $14.95
Minimum Initial Investment: None
Free Automatic Reinvestment of Dividends: Yes
OptionsXpress charges a whopping $14.95 per trade on stocks and ETFs. So even though they offer free automatic reinvestment of dividends, they aren't a great pick if you're looking to invest in stocks. They transaction costs are just too high compared to other alternatives.

However, if you're looking to trade options in your Roth IRA, then that's the specialty of OptionsXpress. Their commissions for options trading are notably lower than other online discount brokers, so you can benefit from lower transaction costs by using them if you're into options trading.

Outside of trading options, though, I can't recommend OptionsXpress...

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TradeKing
www.tradeking.com
Roth-IRA fee: No
Charge per trade: $4.95
Minimum Initial Investment: None
Free Automatic Reinvestment of Dividends: Yes
TradeKing only charges $4.95 per trade on stocks and ETFs. They also offer free automatic reinvestment of dividends, which is great for your Roth IRA account.

From what I hear, the customer service is excellent. However, TradeKing does charge a $50 termination fee if you close out or transfer your Roth IRA somewhere else, but this is a one-time fee which only applies if you move the entire balance of your account.

Visit TradeKing For More Information >>>

Sharebuilder
www.sharebuilder.com
Roth-IRA fee: No
Charge per trade: Varies
Minimum Initial Investment: None
Free Automatic Reinvestment of Dividends: Yes
Sharebuilder offers three (3) different pricing structures to choose from, so your commissions vary from $0 to $4 for automatic investments, all the way up to $9.95 per trade for real-time individual security purchases. The advantage of Sharebuilder is its automatic investment program. The program allows you to set up a plan to purchase a set dollar amount of stock on a monthly basis.

For instance, let's say you buy $25 dollars of Coca-Cola (KO) stock on a once-a-month basis. If Coca-Cola is trading at $50 per share, Sharebuilder would enable you to buy half a share per month.

This is great news if you have a small amount of money to invest. You can build a diversified portfolio without wasting the majority of your annual contribution on trading fees.

It's also great for dollar cost averaging...

Visit Sharebuilder For More Information >>>

Firstrade
www.firstrade.com
Roth-IRA fee: No
Charge per trade: $6.95
Minimum Initial Investment: None
Free Automatic Reinvestment of Dividends: Yes
Firstrade is the discount broker I use for my own Roth IRA. They have no minimum initial investment requirement, and they charge only $6.95 per trade. But the most important factor in my decision to use Firstrade was their option for free automatic reinvestment of dividends. You can also set up an automatic weekly or monthly contribution amount as low as $10.

Visit Firstrade For More Information >>>

SogoTrade
www.sogotrade.com
Roth-IRA fee: No
Charge per trade: $3.00
Minimum Initial Investment: $500
Free Automatic Reinvestment of Dividends: Yes
SogoTrade looks like one of the best discount brokerage deals on the Internet... if you've got $500+ to initially fund your account. Note that the $500 account minimum is ongoing equity minimum that must be met. So if you open an account with $600, and the value of your account declines to $499, you no longer meet the minimum.

But hopefully, you have so much money this won't effect you!

If so, SogoTrade's $3.00 equity trades are a bargain. Remember, cutting down on your transaction costs will have a substantially positive impact your Roth IRA returns. And $3 trades definitely cuts down the cost of trading...

I haven't personally used SogoTrade, so I can't comment in that respect. But from what I hear, most customers are satisfied with their experience...

Visit SogoTrade For More Information >>>

Scottrade
www.scottrade.com
Roth-IRA fee: No
Charge per trade: $7.00
Minimum Initial Investment: $500
Free Automatic Reinvestment of Dividends: No
Scottrade only charges $7.00 per trade on stocks and ETFs. Unfortunately, they do NOT offer free automatic reinvestment of dividends, which as you know, is a factor I greatly emphasize.

Despite this shortcoming and the $500 minimum initial investment, Scottrade does offer a number of features you won't find on the websites of similarly priced competitors. Their trading tools and self-help products are more extensive and advanced than most, and their customer service department offers the advantage of local branch offices, where you can receive one-on-one human assistance if it's ever needed...

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eTrade
www.etrade.com
Roth-IRA fee: No
Charge per trade: $12.99
Minimum Initial Investment: None
Free Automatic Reinvestment of Dividends: Yes
eTrade charges $12.99 per trade, which is rather expensive compared to your alternatives. Although commissions can go as low as $7.99 per trade if you make more than 150 trades per month. But in a Roth IRA, what kind of sense does that make? At $7.99 per trade, 150 trades costs $1,198.50...

That's almost 24% of your annual Roth IRA contribution limit!

Even though eTrade offers free automatic reinvestment of dividends, their high trading commissions relative to their peers make them a less attractive Roth IRA alternative in my mind...

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