TD Ameritrade is a powerful online broker with wide appeal: The company’s customer service, $0 minimum balance requirement and large selection of commission-free exchange-traded funds and no-transaction fee mutual funds make it a strong candidate for IRA account holders and beginner investors, but seasoned traders also gravitate to the company because of its premium trading platforms, research and data. The downside: The company’s trade commissions are on the high side at $9.99.
February 5, 2016
- Commissions: $9.99 per trade
- Account minimum: $0
- Promotion: Up to $600 cash bonus
TD Ameritrade is best for:
- Beginner investors
- Advanced traders
- Commission-free ETFs
- Trading platforms
- Research and data
TD Ameritrade at a glance
|Stock trading costs||$9.99|
|Options trades||$9.99 + $0.75 per contract
|Account fees (annual, transfer, closing, inactivity)||No annual or inactivity fee; $75 outgoing transfer fee|
|Trading platform||Two robust platform choices accessible to all customers: thinkorswim and Trade Architect|
|Mobile app||Mirrors the desktop and Web platforms|
|Mutual funds||More than 2,000 no-transaction-fee mutual funds|
|Commission-free ETFs||More than 100 commission-free ETFs
|Research and data||Free and extensive|
|Tradable securities||• Stocks
• Mutual funds
|Customer support/branches||24/7 phone support; live chat and email support; 126 local branches.|
|Promotion||Commission-free trades for 60 days plus up to $600 in cash bonuses|
Where TD Ameritrade shines
Investment selection: TD Ameritrade offers a full selection of investment products, including futures and forex. The company’s list of over 100 commission-free ETFs was curated by Morningstar, a highly respected (and independent) investment research powerhouse. The group includes a diverse mix of equity funds, bond funds, international funds and commodity funds, with reasonable expense ratios. Investors looking for ETFs could easily create a diversified portfolio at TD Ameritrade, and the ability to trade commission-free means you can dollar-cost average into them at no charge.
TD Ameritrade also offers a mutual fund Premier List, also compiled by Morningstar and updated quarterly. The list provides independent recommendations in over 45 different fund categories, with approximately three top funds chosen in each. All funds on the Premier List are no-transaction fee.
Research: TD Ameritrade gives investors free access to research and data that would cost extra at many other online brokerages, including streaming CNBC and analysis from the likes of Morningstar, S&P Capital IQ, and MarketEdge. Investors can also speak to one of the company’s trading specialists — by phone or in person — for free, as well as access the company’s MyTrade social community and use virtual trading tools to test strategies risk-free.
Trading platforms: TD Ameritrade acquired thinkorswim, a trading platform, several years ago, then revamped it last year, strengthening its lineup: Investors can now choose between that platform, which caters to active traders who want to test trade strategies and analyze potential risk and reward, and its Trade Architect platform, which is Web-based and slightly less robust but still offers advanced features like a market/options heat map, screening tools and streaming news. TD Ameritrade also offers mobile trading via its Mobile Trader app, which virtually mirrors its trading platforms with live-streaming news, full options order capabilities and customization.
Account minimum: An account minimum of $0 is rare among online brokers, which often have minimum initial deposits of $1,000 or more. TD Ameritrade’s low minimum makes it easy for novices to get started, which is why we picked it as one of the best brokers for beginner investors. (Investors who want to trade options or utilize margin trading must have a $2,000 balance.)
Customer service: The company is frequently lauded for its customer support, which includes 24/7 phone support, as well as email, live chat, and over 100 local branches so investors can meet with a representative in person.
Where TD Ameritrade falls short
Stock commissions: The company’s trade commission of $9.99 is higher than deep-discount brokers such as OptionsHouse and TradeKing, and even surpasses the trade commissions at the likes of Fidelity and Charles Schwab, where trade commissions are $7.95 and $8.95, respectively. (To compare fees at all online brokerages, use NerdWallet’s Online Brokerage Tool.) As noted above, investors do get access to premium research, data, analysis and multiple trading platforms for free, so depending on how often you use those tools, the higher cost for stock trading here can easily be worth it.
Broker-assisted trades: If you need assistance from a broker, you’ll be charged $44.99 for the trade; comparable online brokers charge closer to $25 on average. Investors can avoid this by completing trades solo (and as mentioned above, TD Ameritrade’s trading platforms are extremely robust).
ETF short-term trading fees: Investors must hold ETFs for a 30-day period; otherwise, TD Ameritrade will levy a short-term trading fee of $19.99. The presence of this fee is standard in the industry, but TD Ameritrade’s is on the high end of the spectrum compared to other online brokers. (Fidelity’s fee, for instance, is $7.95.)
The bottom line
TD Ameritrade’s major shortfall is its higher-than-average trading commissions, but it makes up for that with better-than-average service, research and trading tools that will make everyone from beginner investors to active traders happy. The service and account features offered are above average for this price point and more than sufficient for most retail investors, and the barrier of entry for beginners is low with a $0 minimum deposit. Whether you’re looking to open an IRA after maxing out your 401(k) at work, or you’re interested in trading in a taxable account, TD Ameritrade should be on your list of online brokers to consider.