Best Brokerage Firm for Small Investor
Optionshouse is the best discount online brokerage firm for small investors in 2014
(small account balance) since there is no minimum deposit requirement, no hidden fees, and no penalties for having low balance, or not making any trades.
Prospective customers can open cash account
with just $1,000. The firm also offers extremely low cost pricing: $4.75 per stock or ETF trade, and $10 per mutual fund trade.
Compare it to big brokerage houses: $10 for stocks and $50 for mutual fund trades at TD Ameritrade,
$9 and $76 per trade respectively at Charles Schwab, $8 and $75 per trade respectively at Fidelity Investments.
It's extremely important to get the best pricing for small account balance since high commissions will take a huge bite
out of your account. For example, let's say account balance is $1,000 and an investor decides to buy a mutual fund. If the cost of
transaction is $76 (as it is at Fidelity) it means that investors will spend 7.6% of their portfolio just on that one
transaction! It's a huge expense! Compare it to $10 per mutual fund transaction at Optionshouse or just 1% of a small account balance.
Some online brokers charge inactivity fees: the fee is imposed when a customer does not make a specified amount of trades during a month (Interactive Brokers),
or a year (TradeKing). If you are a small investor, it is likely that you will not be making a lot of trades, because active trading will just eat
away your money. Thankfully, Optionshouse doesn't charge inactivity fees.
There are also companies that impose special fees that could destroy a small account investor - Low Balance Fees. These fees are
charged if client has account balance lower than required by a brokerage house (Interactive Brokers), or it could be charged if the amount invested in a
mutual fund is too low (Fidelity Investments, Vanguard). Optionshouse does not charge any above mentioned fees.
Because there are no IRA setup, termination, or maintenance (also called "annual IRA") fees, Optionshouse is also one of the
Best Brokers for IRA.
Read full Optionshouse Review.
Best Brokerage for Small Investor: Commissions
|Stocks and ETFs|| $4.75|
|Stocks and ETFs broker assisted|| $4.75|
Plan 1. Up to five contracts for $5; each additional
Plan 2. $8.50 + 0.15/contract (great if trading over 10 contracts)
Plan 1. Up to 10 contracts for $10; each additional
Plan 2. $12.50 + 0.15/contract
|Mutual funds|| $9.95|
|U.S. Treasury bonds and listed corporate bonds||Orders are accepted by phone|
|Investments|| stocks, options, mutual funds, bonds, ETFs|
|Optionshouse minimum deposit to open account|| $1,000 for cash account, $2,000 for margin account|
- Low commissions
- Free streaming quotes
- No fee IRA accounts
- No volume requirements, or maintenance or inactivity fees
- Free check-writing privileges
- Free DRIPs/Dividend Reinvestment (complete, non-fractional shares only)
- Very low margin rates
- Free virtual trading
This article was updated on 11/5/2014.