E*Trade Review: If a Talking Baby Can Do It, So Can You
Just about everyone recognizes E*Trade. The company is known as one of the earlier brokers in the online trading space, and the famous "E*Trade Baby" commercials have served to increase brand recognition.
E*Trade is more than just clever marketing, though. It is a solid discount brokerage that makes it easy for beginners to start trading. There are even advanced tools that seasoned veterans can enjoy (although the cost can start to add up for active traders).
Why Choose E*Trade
E*Trade is a solid all-around choice for a brokerage. It offers a wide variety of trading tools and solid research. Additionally, the transaction fees, though not the cheapest, are in line with other brokerages in the space. For beginning investors, the easy-to-use platform and exceptional research tools can partially offset the higher transaction fee.
Fees and Account Minimums
E*Trade features a flat-rate commission structure. For most investors, the cost per transaction is $9.99. If you are a little more active, and you make at least 150 trades per quarter (that's an average of 50 trades per month), your transaction fee is $7.99. These flat fees apply to options trading, where the transaction fee plus $0.75 per contract is applied.
One of the nice things about E*Trade is the fact that it has a wide selection of commission-free ETFs to choose from, nearly 100. If you don't want to invest in the ETFs on the commission-free list, you will pay the standard stock transaction fee (and the expense ratio, of course, which is the percentage the fund manager charges to cover its expenses).
E*Trade also offers a selection of no-load, no-transaction-fee mutual funds. Stick with these funds, and you can avoid the standard $19.99 fee for mutual funds. There is no fee for trading US Treasury bonds.
You will be required to make a minimum deposit for many of E*Trade's accounts. For a "regular" investment account, the minimum is $500. The E*Trade OneStop Rollover IRA requires a $25,000 minimum deposit. But this is a managed account, so this makes sense. If you open a Traditional or Roth IRA, or if you rollover your retirement account without the management option, there are no account minimums.
There are no account services fees with an E*Trade investment account.
You can access E*Trade's customer service 24/7, but it takes a little hoop-jumping to get there. Instead of having customer support numbers and access in easy to find places, E*Trade makes you go through the FAQs provided in the self-help section of the customer service. Getting to the service information is a little more complex than one click.
Once you do get through to someone, though, you usually speak with a helpful and knowledgeable representative. E*Trade is also known for its outstanding email customer support. Only the weekend customer support is a little weak. So, if you have a problem, it's usually best if you can wait until Monday to hash it out (or email about the issue).
There is a live chat option as well, and E*Trade also has retail locations, so there is the possibility of meeting someone face to face.
Research and Education Tools
This is an area where E*Trade really shines. Their research tools are easy to use and provide you with essential information quickly and easily. E*Trade uses third-party providers for research, and they are heavy-hitters. Morningstar provides the mutual fund research. You can also get research from Standard & Poors, MarketEdge, and Thomson Reuters.
It's possible for you to customize your research and education settings so that you can pull up studies to sit next to event data, giving you a complete picture of events and how they might have impacted performance. You can even display trading activity that takes place post-hours.
Set up alerts so that you can take advantage of changes in the situation quickly and easily. Beginners can benefit from this information, and the real-time news and charting capability can also help seasoned traders as they strategize.
Other Features and Services
E*Trade also receives high marks for its mobile trading platform. It's easy to use, and you can make trades on the go. The platform is available in a web-based version and a desktop version. The desktop version, though, is a bit expensive at $99 per month, unless you meet certain requirements. However, the Elite platform provides a number of tools that active traders can appreciate.
It's also worth noting that E*Trade offers banking services. You can use this account for bill pay and other transactions, and you don't have to worry about ATM fees. E*Trade banking also offers unlimited ATM fee refunds when you use other banks' ATMs. You can get checks and a debit card to aid in accessing the money in your E*Trade bank account. This account make it easy to transfer money to and from your investment account.
How Does E*Trade Compare to Other Brokerages?
E*Trade is a little more expensive than some of the other discount brokerages. However, it does offer commission-free ETFs in line with what other brokerages offer. Additionally, the research tools are fairly advanced. While they don't quite offer the depth that you might see with a TDAmeritrade or a Scottrade, they are nonetheless more than adequate for most investors.
How E*Trade Could Be Better
It would be nice if the Elite platform were available to more traders. Additionally, the $500 minimum means that some investors need to save up — unless they are opening a "regular" IRA. E*Trade could also make its customer service more accessible, rather than forcing investors to deal with self-help before being able to gain access to a customer support specialist.
Who Is E*Trade Good For?
While E*Trade tries to lure super-active traders with promises of $6.99 trades when you make at least 150 trades in a quarter, the reality is that active traders might do better with brokerages that charge less. These active (and experienced) traders can usually get by without all the in-depth research.
Instead, E*Trade is good for beginning to intermediate investors looking for reasonably priced trades. This brokerage is especially friendly to the fund investor. If you plan to invest in mutual funds and ETFs, E*Trade is great because of its selection of funds that come without transaction fees. It's even better if you decide to open an IRA, because then you can avoid the need for a minimum. The long-term investor saving for retirement can really benefit from E*Trade.
E*Trade is a solid choice for just about any investor. However, those looking to buy and hold mutual funds and/or ETFs in an IRA are going to see the most benefit.
Are you an E*Trade customer? What has your experience been?