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Broker Commission Fee Schedule Comparison

Thinking about investing in some securities? Well you’re going to need a brokerage account. While it’s hard to compare the qualitative differences between each brokerage [3], it’s easy to compare one of the big quantitative differences – fee schedules. So, below I’ll compare the fee schedules of each of the major brokerages in easy to understand language and hopefully it’ll make your decision just that much easier. In the discussion below, I only talk about online trades – no phone or in person (broker-assisted) transactions.

TradeKing [4] – Two time winner (2007 and 2006) if Smart Money’s best discount brokerage award, TradeKing leads the pack with its $4.95/trade commission schedule. I have yet to hear any bad things about this brokerage.

TD Ameritrade [5] – TD Waterhouse and Ameritrade recently combined to form TD Ameritrade and they lowered many of their fees. Market and limit orders are $9.99 regardless of your trading frequency. I use TD Ameritrade for my Roth IRA because they have the lowest fees of the brokerages I looked at (at the time).

ETrade [6] – ETrade recently acquired BrownCo, which had $5 real time trades, and they have a tiered fee schedule [7]. If you have less than $50k and trade fewer than 29 times a quarter, it’s $12.99 each. If you make over 1500 trades (wow), it’s only $6.99 each.

Vanguard [8] – Known for the performance of their mutual funds, Vanguard has pretty hefty fees. An online trade costs a whopping $25, or 0.025 per share (whichever is greater). My Roth IRA used to be at Vanguard but I felt the interface was a little too dated (slow, clunky), they may have since improved it (they’ve overhauled their website). My SEP-IRA is here because I can invest in Vanguard funds.

Fidelity [9] – Also known for their mutual funds, second only to perhaps Vanguard, Fidelity has $19.99 trades in a tiered schedule [10] as well.

ShareBuilder [11] – Sharebuilder is a little different than the other brokerage houses, the idea with them is that you’re constantly investing small amounts, dollar cost averaging, in various securities. It’s $4 if you schedule your purchases (always onto a Tuesday) and it’s $15.95 if you want real time trading (all sales are real time). Limit orders are $19.95. I would not recommend ShareBuilder for anything other than for a long term investment plan in which you want to dollar cost average your positions. Also, ShareBuilder has been known for having a lot of free money promotions [12] (follow the link for an explanation on how they work and for promotional codes).

Did I leave out your favorite brokerage firm? Let me know and I’ll add them to the list.