Started in 1982, E*TRADE is one of the oldest online stock brokerages around. It is a full service financial institution that provides customers with a user-friendly platform, great educational library, low cost mutual funds, stellar retirement planning, free bank accounts, automatic investing (“robo-advising”), and 24/7 customer service.
E*Trade isn’t the most affordable online brokerage, and there are better stock brokers out there in terms of both pricing, comparable customer service, and investment education and research libraries. While the company excels in innovating trading technology (its mobile app and robo-investing), it simply isn’t enough to counter-balance its $500 entry fee and high commission rates when compared to the other online brokers in the industry. Many of E*Trade’s competitors have no minimum deposit and a commission rate that’s nearly half as much. Where E*Trade really shines is investment education and research, retirement planning, customer service, and its user-friendly platform — especially with its mobile app.
|Price||$6.95 (and below) + $0.75 contract
$4.95 (30+ trades/quarter)
|Costs & Fees||Options: $6.95 + $0.75 contract
Mutual Fund Trades: $0 - $19.99
Broker Assisted Trades: $25.00
Account Fee: $0
Minimum Account Balance: $500
|Misc. Fees||$1.00 Bond Trade Fee
$0.00 Treasury Trade Fee
$0.00 CD Trade Fee
$9.99 IVR Trade Fee
$0.00 IRA Annual Fee
$60.00 IRA Closure Fee
$25.00 Forced Margin Sellout Fee
$0.00 Returned ACH Fee
$0.00 Returned Wire Fee
$0.00 Stock Certificate Processing Fee
$75.00 Stock Certificate Delivery Fee
$2.00 Paper Statement Fee
$0.00 Paper Confirmation Fee
$25.00 Domestic Wire Fee
$25.00 International Wire Fee
|Account Types||Full service brokerage (stocks, bonds, other fixed income assets)
8,000+ Mutual Funds
Commission-free Exchange Traded Funds (ETFs)
IRA (SEP, Simple, Individual 401K, Roth, profit-sharing)
Coverdell Education Savings Account (ESA) for minors
Business Accounts (sole proprietorship, partnership, or corporation)
Accounts for Investment Clubs
|Best For||Beginner investors
Frequent and active traders
Investment research and education
|Not For||Infrequent or casual investors|
|Margins||8.44% Under $24,999.99
7.94% $25,000.00 to 49,999.99
7.44% $50,000.00 to $99,999.99
6.14% $100,000.00 to $249,999.99
5.14% $250,000.00 to $499,999.99
4.14% $500,000.00 to $999,999.99
3.89% Above $1,000,000.00
|Services||24/7 customer service (phone, e-mail, chat) + branches
E*TRADE Bank integrated checking account
Advice (Consultation, Adaptive Portfolio, etc.)
401K and Retirement Planning
Web Seminar Archive
|Branches||30 cities in 17 states (see: branch locator)|
|Platform||Desktop platform (PC & Mac)
|Standout Features||Large selection of mutual funds and bonds
|Awards||#1 in mobile in Kiplinger's 2016 biennial survey (2016)
4 out of 5 stars in Barron's comprehensive 16-firm survey, and scored high marks in Research Amenities, Customer Service, Education and Security, as well as Mobile (2016)
3 Gold e-Monitor Awards for Investor Education, Quotes and Trading, and Mobile Capabilities in Corporate Insight’s 2015 e-Monitor Awards report (2015)
#1 in Loyalty and Overall Satisfaction for four years in a row in Group 5 Stock Plan Administration Satisfaction Survey (2015)
E*Trade doesn’t claim to have the least expensive online brokerage service, but its investment education, retirement advice, and mobile app are superior to the competition — so it’s worth the additional cost.
Is it True?
Pretty much. E*Trade does offer a wide selection of investor information and tools through its trading platform, and its 24/7 customer service means there will always be somebody around to answer any questions customers may have. It’s a quality brokerage, by any standard. For most people, however, the higher than industry average commission fees won’t be worth it.
The E*Trade Investor Education Center is impressive: customers can download an enormous library-worth of stock information, charts, grids, tax forms, investment advice, archived webinars, blogs, tutorials, videos, and more — all conveniently located in a big, user-friendly online database. Much of the information is downloadable, so you can read and save most documents from any device. E*Trade’s Investor Education Center is probably the largest out of all the online stock brokerages I reviewed.
E*Trade could easily boast about its Mutual Fund opportunities as well. E*Trade currently offers around 8,000 mutual funds, and approximately 1,300 of those are no-load — numbers higher than many of the other online stock brokers out there. If you just want to invest in mutual funds, E*Trade is a good option, with funds prices at or below $19.99, as compared to $49.99 with TD Ameritrade, $49.95 with Fidelity, and $76.00 with Charles Schwab. The major online stock brokers that include competitive mutual fund prices with E*Trade are Merrill Edge ($19.95), OptionsHouse ($20.00), and Ally Invest ($9.95).
It would also serve E*Trade to highlight its retirement options, though it doesn’t currently promote it well. New users would be hard pressed to find out that one of E*Trade’s stronger selling points is what it offers in terms of retirement planning. E*Trade’s trading platform has a nice retirement calculator that will help you budget, analyze, and project earnings for retirement. It estimates expenses for the future, and really shows users what to expect if they follow a certain financial plan upon retirement — a great tool that many of the other online stock traders lack (the others usually just have a basic budget calculator tool). Users can also find a large selection of up-to-date retirement planning information in the Education Center.
Our Deep Dive
- Learning curve: It took me about 20 minutes to open an account with E*Trade. First time customers are required to deposit a minimum of $500 to start trading, so it could take a few days if you use an e-check to make the deposit. New users are also required to sign a user and account agreement with E*Trade before they can start trading stocks — a normal requirement for any online or brick-and-mortar stock broker.
- The Platforms: E*Trade has two trading platforms: E*Trade 360 and E*Trade Pro. The E*Trade 360 platform is used for investors who simply want to make basic trades, track their performance, manage their portfolio, create a favorites or “watch” list for potential investments, and view free streaming market data and information. This is the basic platform you start out with once you make the $500 deposit. E*Trade Pro, however, provides more to intermediate or experienced investors, but to use it, you need to keep a minimum balance of $250,000 or make 30 stock or options trades every three months (per quarter).
- Costs: Once you get the hang of it, the platform is easy to use. It’s great for managing and keeping track of a large variety of trades — and E*Trade made it this way for a reason. Tiered trading prices ($6.95 + $0.75 contract; $4.95 for 30+ trades/quarter, so E*Trade obviously knew it had to make a robust but user-friendly platform to manage a large variety of investments.
- Pulling quotes: E*Trade’s main interface couldn’t be simpler for doing this. Users can just search for a publicly-traded company and real-time data appears: company overview, current activity, buy and sell functions, news headlines, and a price analysis from Trefis Research. Users can even set up alerts in case they want to be notified if the stock does something interesting.
- Chrome Plug-in: Google Chrome users can use a plug-in that allows access to the E*Trade trading platform through a Chrome browser. Using the search power of Google, users can scan and search for a variety of updated information from the web, and perform basic market research functions without navigating away from the platform.
- Education: Users have access to the Investor Education Center that provides an impressive library of demos and other information and media categories that would be valuable to beginner investors, like trading strategies, market commentary, tax advice, and various types of financial planning (retirement, college, etc).
- Course Catalogue: E*Trade offers a useful library of online courses like Stocks 101, Basic Investing, and ETF Best Practices. Investors can learn how to make wise investment decisions, mitigate risk, and analyze and manage their portfolios.
- Market Research: Users can also access up to four reports from third-party research providers (MarketEdge, SmartConsensus, Standard & Poor’s, and Thomson Reuters), a feature not often available with other online stock brokers. However, TD Ameritrade and Fidelity have access to at least six.
- Mobile app: E*Trade has received a first place award for its mobile app by Kiplinger’s 2016 biennial survey. The app is free and available on all platforms (iOS, Apple Watch, Android, Windows, Amazon phone, Kindle Fire) and users can basically do everything you could do through the platform — make stock and options trades, look up stock information, obtain real-time quotes, watch videos from the Education Center, and even watch CNBC video On Demand.
- Customer support: 24/7 customer service by phone, e-mail, or chat. E*Trade also has branches in 30 cities in 17 states (find the nearest to you in the branch locator) staffed by experienced financial consultants.
- Integrated Checking Account: E*Trade offers a free checking account that can be integrated into your investment account, which makes it fast and easy to trade and transfer money. Users receive free unlimited checking, a debit card, online bill pay, and free refunds on ATM fees at no charge.
- Account Protection: If you use any investment brokerage, you are insured for up to $500,000 in net equity for each account by the Securities Investor Protection Corporation (SIPC), including up to $250,000 in cash balances. E*Trade also has “excess SIPC” coverage that covers $150 million per customer and up to $900,000 in cash (this is for broker failure — not for declines in the market value of customer’s investments). The FDIC also covers users up to $250,000 and E*Trade offers a $0 liability for unauthorized use of customer accounts (trading, transfers, bill pay, and ATM use).
- Account Security: E*Trade uses the Symantec Virtual Digital Security Token that generates encrypted passcodes in real time, making account breaches nearly impossible
- Robo-Advisory: E*Trade will soon be rolling out a robo-advisory tool, an automated “set it and forget it” type function that allows users to create a personalized investment that toggles itself according to the parameters they set. It will be a great way to ensure investors can maintain their investment behavior without having to log in to E*Trade to make adjustments, for example, while they are on vacation or busy at work.
- Optionshouse: $4.95 flat free trade plan; $0 minimum deposit. OptionsHouse is extremely affordable, offering stock trades at half the price of many of its competitors like TD Ameritrade and E*Trade. It often tops the list of online stock broker reviews.
- TD Ameritrade: $9.99 flat free trade plan; $0 minimum deposit. TD Ameritrade is known for being a well-rounded and affordable broker but also one of the more expensive brokers out there in terms of its trading fees.
- Merrill Edge: $6.95 flat free trade plan; $0 minimum deposit. Owned by Bank of America since 2010, Merrill Edge is affordable and would be beneficial for those who already have various BoA accounts.
- Ally Invest: $4.95 flat free trade plan; $0 minimum deposit. Ally Invest has gone through several evolutions since its formation in 2005. It has now emerged as a formidable competitor with affordable rates that are attractive to new investors.
E*Trade is going to cost you $500 to enter the market. But that alone should not dissuade you from this online broker. Remember — you’ll have to deposit something into an account in order to trade, no matter which online broker you go with. So while E*Trade’s $500 minimum may seem a bit high, is is a deposit you’d probably want to make anyway, in order to make any sort of substantial investment in stock, options, mutual funds, or even starting an IRA account.
Users will feel more of a hit in terms of cost from E*Trade’s tiered pricing on trades. For modest investors who don’t trade that often (less than 30 trades per quarter), E*Trade is going to charge you $6.95 per trade. Infrequent traders may not care about the charge if they aren’t trading that much, but there are other online stock trading services that are cheaper for modest traders. Frequent to hyperactive traders will be rewarded with dollar discounts: $4.95 for 30 trades or more. With the higher cost to entry with E*Trade’s minimum deposit requirement and trade fees, customers are essentially paying for the expansive and updated Education Center, solid retirement plans, lower mutual fund fees, 24/7 customer service, and by far the best mobile app platform of any of the major online stock brokerages.
Cheaper (or Free!) Alternatives
There’s no way of getting around the $500 minimum deposit to access E*Trade, so if you’re looking to get around a minimum deposit, you can easily go with Merrill Edge, Ally Invest, or TD Ameritrade, all of which have no minimum deposit. Again, you’ll have to deposit something into an account to begin trading, so don’t let a $0 minimum be the only reason that sways you away from a broker like E*Trade.
Many online stock traders charge $50 or more for mutual fund trading, and one of E*Trade’s strong points was lowering its charge for mutual funds to $19.99. Unfortunately, in recent years, it has lost out to others that have also decreased their prices on this – Options House charges $20.00, Merrill Edge charges $19.95, and Ally Invest charges only $9.95.
What Others Are Saying
- E*Trade announced its acquisition of OptionsHouse in 2016. The companies are expected to merge in 2017, but what this means to customers of both platforms only time will tell.
- The New York Times reported on E*Trade’s latest investment into “Robo-Advisory” technology, remarking that: “Unlike the self-directed investing that E*Trade Financial once championed, robo-investing, for the most part, embraces a ‘set it and forget it’ approach, using exchange-traded funds and automatic portfolio updating.
- Fortune reported in May 2016 on E*Trade’s bounce back from the subprime mortgage crisis, noting: “E*Trade still emphasizes the technology behind its 3.3 million brokerage accounts (and it’s avidly pro-smartphone just about anywhere but behind the wheel). But it now offers much more human-to-human hand-holding for a clientele that is increasingly wary of the markets. That change of emphasis is central to E*Trade’s revival.”
- FINRA fined E*Trade $900,000 in 2016 for “failing to conduct an adequate review of the quality of execution of its customers’ orders and for supervisory deficiencies concerning the protection of customer order information.”
The Bottom Line
E*TRADE is good for beginner investors and especially those that make use of its robust library of investment information and education. It’s very user-friendly and has a wealth of retirement-planning options that may be of interest for casual investors. Coupled with low-priced mutual funds and 24/7 customer service, E*Trade is a perfectly adequate online broker, but has above industry-standard pricing for most of its other trading services.