Best Discount Brokers


Best discount brokerage companies in 2021. 2 top rated discount online brokers for low cost stock trading. Best discount stock brokers accounts for self directed investors.



Ally Invest rating

Ally Invest


Ally Invest Commissions


Ally Invest's charge on stock and exchange traded funds (ETFs) is $0 per trade. But what makes the firm even more special is $9.95 rate on all no load mutual fund transactions. To see all fees and commissions charged by the Ally Invest follow this link.

Ally Invest Advantages

  • $0 or very low commissions
  • $0 to open an account
  • No minimums, or maintenance, or hidden fees
  • Free real-time quotes
  • Fee-free IRAs
  • Free DRIPs (dividend reinvestment plans)
  • Low cost professional portfolio management

Review


Ally Invest has been one of our top ranked discount brokerage firms for the last six years. In 2021, we have rated it one of the Top Discount Brokerage Firms for individual investors. Ally Invest's investment commissions remained consistently low through its 15-year history: the company charges $0 for stocks and ETFs, and rock bottom $9.95 for no-load mutual funds. Ally Invest received lots of awards from financial magazines: Barron's magazine named it "Best for Option Traders" and among the "Best for Long-Term Investing." In Smart Money magazine's annual broker survey, it was the best discount brokerage firm in Customer Service.


Ally Invest Live


One major disadvantage Ally Invest has compared to competition is the absence of NTF mutual funds. The broker is not the best choice for investors that want to trade stocks priced under $2.00, or trade during after hours.

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Up to $3,000 cash bonus + $0 commission trades.

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4.5-star brokerage rating

Webull


Webull Commissions


For anyone who wants to invest exclusively with the lowest cost firm, Webull is the best discount brokerage firm. It charges $0 commission on all stock, crypto-currency, option, and ETF trades.

Webull Advantages


Best Discount Broker Review


Webull has been one of the top choices for customers looking to open an investment account at one of the best priced discount brokerage firms in the country.


Best broker paper trading


Webull is one of the most popular discount brokers among stock and ETF investors. There are no account inactivity or maintenance fees at the company for both IRA and taxable accounts.

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Get 2 FREE stocks valued up to $1,850.

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Overview of Traditional Brokers and Discount Firms

On-line discount brokerages were created to offer services that traditional brokerage houses don’t provide. In addition to more competitive commission schedules, best discount brokers today offer other nice features that most old school brokers don’t furnish.

Discount Brokers Commissions and Fees

The primary reason on-line discount brokers were established was to capture a consumer desire for lower brokerage fees. Sure enough, they succeeded. Today, discount brokers continue to push prices down even further. Ally Invest's stock and ETF commission is just $0. With no annual account fee, the broker is very inexpensive.

Other top discount brokers have low commissions as well. Today, there are many discount brokerage firms that have no account fees, no balance requirements, and low trading costs.

Most traditional firms have minimum balance requirements and an annual fee, sometimes on top of an asset-based management fee. For example, Raymond James, a traditional brokerage house, charges $50 per year for accounts below $100,000. The broker also charges $10 for stock and ETF trades and up to 2.25% annually for its portfolio management.

Self-Directed Accounts

One of the major advantages of choosing one of the best online discount brokers is the ability to make trading decisions in your account. Traditional broker-dealers usually make all investment decisions for their clients. If you’re confident enough in your own financial acumen, it makes reasonable sense to open a securities account with a discount broker and manage your own investment portfolio. Doing so can save a lot of money over the long term, and most brokers who offer self-directed accounts provide plenty of resources to help you along the way.

Many discount brokers today who offer self-directed accounts also provide investment advice and portfolio management. For example, Ally Invest offers both account types. Its management services cost between 0 and 30 basis points annually with a $100 account minimum. These numbers are lower than what all traditional brokers require.

Robo-Advisory Services

Recent advances in technology have produced a new type of investment management in the brokerage world: the robo-account. A computer program makes all trading decisions, with very little human oversight. While most traditional brokerage houses do not offer this service, many low-cost firms do offer it today. Discount firms that offer the new style of portfolio management include Schwab, WellsTrade, Fidelity, Betterment, Wealthfront, and TD Ameritrade.

The primary advantage of the robo model over traditional management is cost savings. The annual asset-based fee is typically around 0.30%, although Schwab has managed to provide its service for free. The highest fee on our list is Betterment’s Premium plan. It costs 40 basis points and includes unlimited phone calls with licensed human advisors.

The new robo model presents a major challenge to traditional management due to its ultra-low cost. Old-school brokers will have to justify their higher fees or risk losing clients.

Educational Materials

Because traditional brokerage houses take care of most financial decisions, they have no need to provide their customers with large amounts of educational materials to help them learn more about securities and trading. Top discount brokers, on the other hand, have a reason to publish these materials. If their clients are going to manage their own accounts, they need the necessary financial understanding to make investment decisions.

Schwab is an example of a low-cost on-line broker that provides many learning materials on its website. There are articles and videos that explain many financial topics. These include retirement planning, stocks, bonds, options, saving for education, and much more. There is also information on estate planning. With these extensive tools, it is possible to manage your own financial life instead of hiring a more expensive traditional broker.

Technology

Because traditional brokers take on the burden of managing their clients’ financial accounts, they have no reason to provide their clients with advanced technology or other trading tools. Discount firms, on the other hand, usually provide a suite of tools to help investors make better financial decisions.

For example, TD Ameritrade provides robust screeners on its website that can search for bonds, stocks, ETF’s, and mutual funds. These tools can perform searches based on a wide variety of criteria, such as P/E ratio, manager tenure, and Morningstar ratings.

Banking Features

Cash management tools are now commonly offered at many best discount brokerage houses. Traditional firms have been slower to provide these services, and when they do, they are usually more expensive than discount firms.

For example, banking features at Merrill Lynch Wealth Management cost $125 per year. The annual fee can be waived by maintaining at least a quarter of a million dollars in Merrill Lynch financial accounts. The cash account’s balance is protected by SIPC, not the FDIC. The broker-dealer waives all ATM fees incurred at Bank of America cash machines.

Fidelity, by comparison, offers a cash management account with no fees and no minimum balance requirement. The company also reimburses all ATM fees incurred nationwide with its Visa debit card. Fidelity provides a cash-sweep program utilizing up to five participating banks, which creates FDIC insurance up to $1,250,000.

Best Discount Brokerage Firms Recap

Traditional brokerage firms provide competitive services for retirement savers and other investors who have large balances, but lack the time or skill to manage their money. Not everyone falls into this category, and America’s top online discount brokerage firms often provide a better value for many different types of investors.