Best Online Discount Brokers for 2021

I’ve been investing nearly 25 years, long before online brokers came on the scene. During that time I’ve used several of the best online discount brokers, including Scottrade, OptionsHouse, and even Vanguard’s brokerage services. Based on that experience and a lot of research, I’ve compiled this list of the top options.

Note that I have accounts at each of these firms and have personally tested their trading platforms, research, and other tools. Here's a quick look at the top brokers.

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Best Online Discount Brokers Firms of 2021

TD Ameritrade: Ideal for more experienced traders looking for a rich set of tools and resources.
E*TRADE: offers trading platforms and tools for any investment style
Ally Invest: Best for new investors and those looking for a very easy website to navigate.
Fidelity: Best for those looking for a robust broker with offices nationwide.
You Invest by J.P. Morgan: Best for free trades and cash bonuses

Over the years I've learned three important things about brokerage firms.

First, there are a lot of them. You’ve probably heard of many discount sites that allow you to trade stocks online, but I’m guessing there are a lot of online brokers you’ve never heard of (Sogotrade may be one example).

Second, while on the surface they can all seem similar, when you dig deep into what these brokers offer, you'll find big differences. For example, not all of them offer the same account types. With some you can't buy mutual funds, while others offer more mutual funds than most. And the stock trading tools available to you vary from one discount broker to the next.

And the third thing I've learned is that the cost of these discount firms can be tricky to understand, and in the end, may not be the most important factor. Because I watch every dime we spend, it may seem odd that cost isn't the most important factor to me (after all, we are talking about "discount" sites, not full-service brokerage firms). The reality, however, is that unless you are an active trader, the cost of a few trades a year will be small.

Summary Of The Best Online Discount Brokers

TD Ameritrade

The now least expensive discount broker on our list, TD Ameritrade, offers some of the best online trading tools. Its platform “Trade Architect” is my favorite portal to use, specifically designed for casual investors like myself. If you’re looking for a more hardcore approach, they also have a thinkorswim platform that offers more data, more 3rd party research and more functionality.

Again, decided to cater to both casual and advanced investors by creating two separate mobile apps.

TD Ameritrade Mobile (for the casual investor)
Mobile Trader (for the advanced investor)

TD AmeritradeSummary:

Trade Stocks: $0 flat fee
Margin Rates: -0.75% to +1.25% of a base rate (base rate = 8.25% as of 11/12/2020)
Broker Assist Fee: $25.00
Mutual Funds (Load): $0
Mutual Funds (No Load): $49.99
Minimum Deposit: None
Sign up Bonus:N/A

For more information check out our TD Ameritrade review or visit TD Ameritrade.

E*TRADE

E*TRADE has been on a buying spree. Back in 2014 TradeMonster and OptionsHouse merged. Now E*TRADE has acquired the combined entity. E*TRADE offers trading platforms and tools for any investment style. It offers low costs even for infrequent traders, like myself. E*TRADE also offers E*TRADE Pro for active traders. And of course, it offers an excellent mobile experience.

E*TRADE Summary:

Trade Stocks: $0
Trade Options: $0 ($0.65 per contract or $0.50 per contract w/ 30+ trades per quarter)
Margin Rates: Ranges from 7.00% to 10.50% based on debit balance
Mutual Funds: $0 to $19.99 per trade

Read More: E*TRADE Review

Ally Invest

I've banked at Ally for years. Its website is one of the easiest to use among all banks, including online banks. Its fees are low to non-existent, and its banking rates are some of the best you'll find on deposit accounts. So it was no surprise that Ally brought the same consumer-friendly approach to investing.

At Ally Invest stock and ETF trades are just a flat fee of $4.95. For you options traders out there, Ally charges just $0.65 per contract plus a $4.95 base. If you have a $100,000+ average daily balance and/or more than 30 trades per quarter the cost per stock or ETF trade drops to $3.95 and options contracts fall to $0.50 + $3.95 base. It’s hard to imagine a lower cost.

Ally also offers a Cash Enhanced Robo Portfolio. Like other robe-advisors such as Betterment or Wealthfront, Ally Invest manages the portfolio, including dividend reinvestment and rebalancing. Ally charges 0% for the service. The minimum investment is just $100.

Capital One Investing

Formerly ShareBuilder, Capital One Investing offers a full range of trading services. In addition to online trading, it also offers managed portfolios. While its fees are generally reasonable, its managed portfolios require a $25,000 minimum investment and charge 0.90% of assets under management. Due to the fees, we don't recommend Capital One Investing'smanaged portfolio.

Capital One Investing Summary:

Trade Stocks: $6.95 flat fee
Trade Options: $0.75 + $6.95 base
Margin Rates:5.20% to 8.20%
Mutual Funds: $0 or $19.95
Bonus: Up to $600 based on the amount of deposit

Merrill Edge

Merrill Edge is one of my favorite platforms. In addition to online DIY investing, they offer a managed portfolio. You can invest with an advisor, if you so choose. And the website is incredibly easy to use.

Managed portfolios require a $5,000 minimum and cost 0.45% of assets under management. While this fee isn't the lowest, it's reasonable for those looking for some extra help.

Trade Stocks: $6.95 flat fee
Trade Options: $0.75 + $6.95 base
Margin Rates:5.50% to 9.625%
Mutual Funds: $0 or $19.95
Bonus: Up to $600 based on amount of deposit

How Much Will You Pay To Buy And Sell Equities Online

All of the firms make a point to advertise how much you pay to buy or sell stocks, mutual funds, options, or other equities. Today most trades at discount sites run from about $2.50 to $12 per trade. The key to remember, however, is that many of these firms charge additional fees, depending on how you use your account. These additional fees may include fees for large buy or sell orders, fees to buy or sell stocks trading at less than $1, account maintenance fees, account inactivity fees, and of course interest if you buy on margin.

Because these fees vary among discount brokers, the starting point is to understand how you will use your stock trading account. Will you trade frequently or just once or twice a month (or quarter)? Do you want to set up an automatic investment plan? Will you be buying stocks and mutual funds, or do you also plan to trade options? The answers to these questions will help you narrow the selection and ultimately pick the best broker for you investing needs.

Factors To Consider Other Than Cost

But just like most anything we buy, the cost is just one of many factors to consider. And the same is true when selecting a discount broker. So what are the factors besides cost that we should consider when selecting a discount stock broker? There are several, and they include ease of use, customer service, types of accounts offered, investing tools, type of investments you intend to buy, and account minimums. I've highlighted these and other factors below in the summary of the best online discount brokers. But just like cost, it's important to know your investing goals when you evaluate your options. For example, account minimums may be a non-issue for you if you plan to invest a significant amount of money. Likewise, if you are looking for a specific account time (like an IRA), you can quickly eliminate those discount stock brokers that do not offer that account type.

Discount Broker Consolidation

Several brokers have acquired other online trading platforms. Ally Invest was previously TradeKing, until the online bank purchased the broker in 2016. TD Ameritrade has entered into an agreement to purchase Scottrade. E*TRADE acquired OptionsHouse.

The flurry of acquisitions has left the industry in a state of flux. How smoothly will customer accounts transfer to their new home? How will the loss of competition in the space affect fees and features?

Time will tell. As the dust settles, we’ll continue to update this list.