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Thursday, March 5th, 2015


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Online Investing Made Simple

You’re a college student who has a little bit of money to play around with. You decide on investing in the stock market. You also would like to pick your own stocks and funds. The next decision you have to make is which brokerage to go through.

Do you want a walk-in brokerage house or one that’s centralized on the Internet? How much money do you have? How often will you trade? Those are some of the questions you’ll have to ask yourself before choosing the best investing option for your needs.

If you decide that you really like the convenience that comes with investing via the Internet, then there are three well known online discount brokerages that are worth checking out: Ameritrade, Scottrade and ShareBuilder. However, keep in mind that there are plenty of options for brokerages besides the three mentioned in this article.

Ameritrade: A minimum amount of $1,000 is needed to open an individual account with Ameritrade. A quarterly maintenance fee of $15 is charged if the account has less than $2,000 of liquidation value. The fee can be waived if there have been at least four executed trades in the previous six months, if the account is an IRA or beneficiary account, or if the account has been open for less than six months.


To execute a market order (real-time trade at current market price) of a stock, a $10.99 commission is charged. If a limit order (buy or sell at a specific price) was to be implemented, the commission would also be $10.99. Regarding mutual funds, there are commissions of $17.99 on the executions of buying and selling of no-load funds and no fees for buying a load mutual fund (a load refers to the fee charged by the fund manager).

Ameritrade offers margin (borrowing loan) accounts and short (borrowing securities) accounts for investors with a higher risk tolerance. The company also has many walk-in branches located around the country ready to assist customers.

Scottrade: The minimum balance required to open an individual account with Scotttrade is $500. There is no inactivity fee with individual accounts. The market order commission is $7, whereas the commission on a limit order is $12. There are no transaction fees on mutual funds, both load and no-load.

The company offers margin and short accounts as well. Your account also gives you access to free real-time streaming quotes, charts and stock market news. Scottrade has hundreds of office branches around the country to provide customer service.

ShareBuilder: This service allows members to build diversified portfolios in more than 4,000 stocks and exchange-traded funds, or buy and sell real-time. Investors can select from three distinct recurring investment plans: Basic, Standard and Advantage. Investors can also control how much they want to invest, how often they want to invest and when they want to invest. You simply designate a specific dollar amount for monthly or weekly deduction from your checking or savings account. Then, ShareBuilder handles the rest.

And, ShareBuilder is affordable. With no monthly fee, the company’s Basic program charges $4 per investment, as well as provides access to real-time trades at $15.95. Real-time limit orders are $19.95. ShareBuilder’s Advantage program allows investors to buy stocks and ETFs (Exchange Traded Fund) for as low as $1 with 20 automatic investments, all for a monthly fee of $20. Investors also receive discounted real-time trade commissions of $11.95, plus they can take advantage of financial tools, including a portfolio performance tool. Finally, there are no account or investment minimums and no inactivity fees at ShareBuilder.

The three online discount brokerages discussed above offer some sound options for young investors. However, please note that this article may not provide you with enough information to make an educated choice. If you are interested in online investing, please do some research first to find a program tailored to your specific needs. Finally, each of these companies run special promotions frequently so keep an eye open for additional savings.

BROKER NAME/WEBSITE

COST PER STOCK TRADE

MUTUAL FUNDS BUY AND SELL FEES

Ameritrade

$10.99

$17.99 per buy or sell, except free on load mutual funds

Scottrade

$7

No additional fee

ShareBuilder

$4 (recurring orders)

$15.95 (real-time orders)

Not applicable

© 2008, Young Money Media, LLC. All rights reserved.

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