What is an ETF?
While mutual funds are priced just once a day based on their net asset value, ETFs trade on public exchanges just like stocks, making them extremely liquid and tradable. But instead of a single stock, ETFs are funds that invest in dozens or hundreds of stocks, commodities and/or other securities all at once, allowing investors to achieve major diversity all in one swoop. There are two types of ETFs: index-based ETFs and actively managed funds. Best Brokers for ETFs Investing. There is also some confusion about ETFs vs. Mutual Funds as the best way to invest.
Read What’s an ETF Stock? What You Need to Know Before Investing.
Why Buy ETFs?
For some, ETFs (like Vanguard ETF) are the right choice. Here’s why you may want to invest in them:
- Limit risk: Investing in a basket of stocks versus an individual stocks spreads risk around.
- Save time: You don’t have to do the research on each individual company’s stock.
- Have lower fees: For the most part, ETFs have low fees, but pay attention to the expense ratio.
- Bought and sold during market hours: Unlike mutual funds, you don’t have to wait until the market closes to trade ETFs.
TradeStation – Best Brokers for ETFs Investing
TradeStation offers over 2,000 commission-free ETFs making it a valuable option for anyone interested in trading ETFs.
TradeStation’s platform leverages cutting edge trading technology for both active and passive individual traders in the U.S. TradeStation has fully customizable market monitoring, charting and analysis tools that allow you to identify and act upon opportunities.
TradeStation also boasts a spectacular mobile platform which investors on the go can access on their iOS or Android device. Your mobile account automatically synchronizes with your online accounts in real time.
TD Ameritrade – Best Brokers for ETFs Investing
Best For
- Beginner investors
- Advanced traders
- Investors who want portfolio-building advice.
You’ll find today’s price change, last price, gross expense ratio, net expense ratio and ratings on one easy-to-understand page. iShares, Wisdom Tree, and First Trust are among some of the popular ETFs that TD Ameritrade offers.
Read Finding the Best Emerging Markets ETF.
E-Trade
Best For
- Mobile traders
- Traders looking for research and data
- Investors looking for retirement planning guidance
Like its competitors, E-Trade offers over 250 commission-free ETFs, including some of the most popular ETFs among traders. E-Trade makes doing ETF research easy, too. Their comprehensive list of ETFs tracks historical data from ETFs in a variety of asset classes in one easy-to-use webpage.
Quotes are only delayed by about 15 minutes, too, making the data truly actionable.
If you’re looking to trade outside the of the commission-free ETFs, E-Trade charges $6.95 per ETF trade. This rate is a few dollars higher than their competitors, so if you’re looking to trade outside of the free ETFs, keep this in mind.
Wealthfront – Best Brokers for ETFs Investing
Best For
- Passive investors
- Lower fees
- Beginning investors
- Investors who don’t want to manage money on their own
Wealthfront’s trading algorithm automatically rebalances the portfolio when assets generate uneven returns. It also reinvests dividends, adjusts to changing market conditions and automatically takes advantage of tax-loss harvesting opportunities. Aside from fees, mismanaging taxes is one of the most common reasons long-term investors miss their targets. The average expense ratio of Wealthfront ETFs is only 0.12 percent. In addition, Wealthfront manages the first $10,000 of customer assets completely free of charge.
For investors looking for a set-it-and-forget-it portfolio, Wealthfront is the place to be. Just open up an account, set your personal preferences, and let the algorithm do all the heavy lifting.
eOption
Best For
- Active traders who make multiple trades a day or week
- International traders looking for options support
- Users who want an automated trading experience
- Users who are most concerned about commissions and fees cutting into profits
eOptions has become known for more than options trading. Their notorious low costs of $3 per trade, even on ETFs, alleviate the high fees of active trading.
They’re a great option for traders that know what ETFs they’re looking to invest in, as their resource center and educational tools are not the most extensive.
To make your trades, eOption does have an easy-to-use and intuitive trading platform.
You can access your watchlist, news, charts, research, account information and more from their desktop platform or mobile trading app.
Charles Schwab – Best Brokers for ETFs Investing
- Beginner investors
- Advanced traders
- Investors seeking commission-free etfs
No matter how many ways you look at it, 245 commission-free ETFs is tough to beat. But if you add low expense ratios, Schwab’s ETF Portfolio Builder tool, its quarterly list of prescreened ETFs and its world-class customer service team, Schwab becomes the top online destination for ETF investors. Investors can customize a portfolio of ETFs based on their personal risk tolerance and financial goals. They can also browse through the categorized prescreened ETF lists and make sure their portfolio covers all the bases.
Schwab is still actively adding offerings to its commission-free ETF OneSource program, and investors never have to worry about early redemption fees. Outside of the program, commissions are free, expense ratios are low, and face-to-face feedback is as easy as going down to the local branch. Schwab has everything an ETF investor could ever want and offers a great starting point for retirement investors.
Ally Invest
- Active traders
- Beginners looking to start trading
- Low fees
Ally Invest, one of FintechZoom’s favorite online brokerages, started offering over 100 commission-free ETFs on its online trading platform. Ally Invest‘s commission-free ETFs include the WisdomTree Smart Beta ETFs, iSHARES, and most of their popular ETFs. In order to trade free, you’ll have to hold the ETF for at least 90 days.
If you sell before the 90 day period is up, you’ll be charged a $9.90, which is basically equivalent to their standard pricing for a buy and sell. Outside of the commission-free ETFs, the standard pricing with no minimum balance is $4.95 per ETF trade. The select pricing, if you have a minimum balance of $100,000, is $3.95 per ETF trade. On top of commission-free ETFs, Ally Invest currently holds promotions for sign-on bonuses, has great customer service, and mobile experience.
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