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Charles Schwab Review 2018

January 2, 2018
Brokers, Investing

Charles Schwab is the online broker for investors of all stripes. Beginners will find the information they need to navigate the world of investing, while sophisticated tools — including two robust trading platforms — will appeal to active traders. Thanks to high-quality customer service, competitive trading platforms and a large selection of commission-free exchange traded funds and no-transaction-fee mutual funds, Schwab is among our best online brokers for stock trading.

There’s not much to knock at Schwab, but customers who go beyond its low-fee fund options may experience sticker shock, and the minimum investment requirement, while still low, is higher than at many other brokers.


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Quick Facts

  • Commissions: $4.95
  • Account minimum: $1,000
  • Promotion: $100 referral award for first-time clients
Get started on Charles Schwab's secure site

Compare Charles Schwab with other brokers

Charles Schwab is best for:

  • Beginner investors
  • Advanced traders
  • Investors seeking commission-free ETFs
  • Investors seeking no-minimum index funds
  • Investors who rely on premium research

Charles Schwab at a glance

CategoryRatingDescription
Overall

Account minimum$1,000; often waived with automatic monthly transfers of $100 or more
Stock trading costs$4.95
Options trades$4.95 + 65 cents per contract
Account fees (annual, transfer, closing, inactivity)No annual or inactivity fee; up to $50 account closing or transfer fees
Commission-free ETFsMore than 200 commission-free ETFs
Mutual fundsMore than 4,000 no-transaction-fee mutual funds
Tradable securities• Stocks
• Bonds
• Mutual funds
• ETFs
• Options
• Futures
Trading platformTwo platforms offered with no trade minimums or fees
Mobile appAbove-average capabilities
Research and dataFree and extensive
Customer support options24/7 phone support; live chat and email support; more than 300 local branches
Promotion $100 referral award for first-time clients

Where Charles Schwab shines

Commissions and fund expenses: Schwab is one of the lowest cost online brokers, offering trading commissions of $4.95. That cost is especially a bargain considering the company’s high-quality trade platforms and investment selection (more about both below). Schwab also offers some of the lowest expense ratios for index funds and ETFs, and it did away with mutual funds that carry loads, or initial sales charges. The company waives these charges on the load funds it does carry.

Investment selection: With nearly 250 commission-free ETFs and more than 4,000 no-transaction-fee mutual funds, Schwab really delivers. That’s why it’s among NerdWallet’s picks for best online brokers for investment selection and beginner investors.

Customers benefit in two ways. First, the selection is impressive and easy to navigate. Schwab offers an ETF Select List, which features its picks for the best fund in selected categories (more on this below). You can sort the list by feature, including expense ratio, Morningstar category and benchmark index. There’s also the Schwab ETF Portfolio Builder tool, which guides you in creating a diversified ETF portfolio based on risk tolerance. Second, Schwab is aggressively competing on costs. Rated as one of the best IRA providers, retirement savers should note that Schwab has rolled out mutual funds and ETFs that are competitively priced against funds from Vanguard and Fidelity.

Customer service: Like many online brokers, Schwab offers around-the-clock phone support. But the company’s chat support is just as good, and we found it to be a quick way to get answers to our questions. Schwab also has a large network of branches, where you can attend complimentary workshops and meet with financial consultants by appointment. And Schwab has a robo-advisor offering, Schwab Intelligent Portfolios, if you want complete management.

Research: Schwab’s research offerings are hard to beat, perhaps the best available from an online broker. The company provides its own equity ratings, along with reports from Morningstar, S&P Capital IQ, Market Edge, Ned Davis and others. In addition to real-time news and earnings reports, the broker offers a variety of research reports and market commentary authored by experts.

Schwab’s investment screeners are easy to use and let you save your screens. Select Lists, like the previously mentioned one for ETFs, are compiled by the company’s experts and released quarterly to give you a pre-screened selection of mutual funds and ETFs. The funds on the list are divided by category, so you can easily see the company’s picks for, say, large-cap stock mutual funds.

Account and investment minimums: Schwab’s account minimum is mid-range at $1,000. That’s lower than Fidelity’s, but it’s possible to find great brokers that require no minimum, including TD Ameritrade. However, Schwab waives minimums on many of its accounts for customers who agree to automatic monthly transfers of $100 or more.

The real highlight here, though, is that the company recently removed investment minimums on all Schwab index funds. This means you can get into one of these funds even if you have a small amount of money and maintain your momentum with small, regular investments.

Trading platforms: In addition to the basic trading capabilities on Schwab’s website, the broker offers two robust trading platforms. The StreetSmart suite of platforms spans web-based tools, downloadable software and mobile trading, while Trade Source is an online trading platform. Both StreetSmart and Trade Source are available to customers who opt in to the broker’s trading services, with no related trade minimums or fees.

The broker’s trading platforms are available to customers where (and how) they prefer to trade, with tools catering to various types of traders. Basic trades can be placed on Schwab’s website, while the two platforms offer more sophisticated features. Schwab’s web platform, StreetSmart.com, is ideal for beginners. The next step up is the broker’s downloadable desktop platform, StreetSmart Edge, which is available for Windows and as a cloud-based solution accessible online. In late 2017, the broker expanded on its suite of programs with StreetSmart Central, for options trading, and StreetSmart Mobile, which pretty closely mirrors the capabilities of the web platform. OptionsXpress customers were given first access to these programs. (We have an introduction to options trading for those who need to back up a bit.)

StreetSmart Edge is designed for efficiency, with simple navigation and easy customization. It also has many advanced features. The platform lets you create multiple customized trading layouts, as well as multiple charts of the same stock. The Balances Bar gives you a quick overview of your account and buying power, and an account detail window lets you see your portfolio, orders and trade history. Through the platform’s Symbol Hub, you can quickly research a symbol, view streaming market data and news, and enter an order.

Trade Source lets traders monitor their portfolio and the markets, access research and view technical data. Trade Source features an intuitive trade ticket for stock, ETF and options orders that incorporates current market information.

» Need some guidance? Read about how to buy stocks

Where Charles Schwab falls short

Transaction-fee funds: With Schwab’s long list of no-transaction-fee funds, it’s easy to avoid these. But if you want a fund that isn’t on that list, you’ll pay for it at Schwab. The fee to buy transaction-fee funds is a whopping $76, one of the highest charges of all the brokers NerdWallet has surveyed.

Schwab vs. similar brokers

Trade Fee

$4.95

$4.95

Account Minimum

$1,000

$1,000

Promotion

$100

$100

cash bonus with a qualifying deposit

Trade Fee

$6.95

$6.95

Account Minimum

$0

$0

Promotion

$100-$600

$100-$600

in cash bonus with a qualifying deposit

Trade Fee

$6.95

$6.95

Account Minimum

$500

$500

Promotion

60

60

days of commission-free trades with a qualifying deposit

The bottom line

Charles Schwab is one of our favorite online brokers because of its low commissions, high-quality research, strong trading platforms and commission-free ETF selection. Beginner investors will love Schwab’s no-minimum index funds, helpful customer service and in-person educational support.

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About the authors