The more popular ETFs have become, the more they’ve popped up. Here’s a look at the best online brokerages for ETF investors. Investors who want to get exposure to the high returns of the stock market without risking the potential downside of individual stocks are increasingly choosing to invest in exchange-traded funds or ETFs.
Best Online Brokerages for ETF Investing:
- You Invest by J.P. Morgan
- TD Ameritrade (thinkorswim)
- Charles Schwab
- Ally Invest
You Invest by J.P. Morgan
If you’re already a customer with Chase Bank, Chase You Invest by J.P. Morgan is a no-brainer. You can easily research, trade and manage your investments from your mobile device. You Invest provides online tools to search for investments, track companies and rollover your assets.
Only U.S. clients are able to open a You Invest account but it takes, on average, just a day to open and you’re able to apply fully online. Equipped with portfolio reports and pie charts, the mobile app is simple and user-friendly. The app is available for both iOS and Android devices.
With Chase You Invest you’ll have access to roughly 5,000 stock exchanges. There are plenty of research and educational tools provided on the app. Overall, we recommend the Chase You Invest platform for stock trading because it’s easy to open and fund an account. It’s also reliable thanks to its strong parent company, J.P. Morgan.
TD Ameritrade currently offers over 300 commission-free ETFs. Like E-Trade, TD Ameritrade’s ETFs are coupled with Morningstar research so investors can make most informed decisions.
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.
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.
See our TradeStation Review
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.
For investors who are looking to leverage the full power of diversification and technology, letting the Wealthfront robo-advisor manage your portfolio of ETFs could be the best option. Wealthfront offers ETFs from 11 different asset classes, including emerging market stocks, real estate, commodities, and government bonds.
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. Wealthfront also topped Benzinga’s Best Robo-Advisors list for 2019.
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.
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, one of Benzinga’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.
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.
Why Buy ETFs?
For some, ETFs 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.
Here’s what you’ll have to watch out for. You can check the ETF’s prospectus via a Google search or the SEC’s EDGAR for this information:
- Objective: What is the fund trying to achieve.
- Historical performance: Not all ETFs are created equal. Check out the ETFs performance over time before you invest.
- Investment strategy: How will the funds be managed and achieve its objective.
- Risks involved: Specific risks should be outlined in the prospectus.
What to Look for in an ETF Brokerage
If you decide that you want to invest in ETFs, you’ll have to open a brokerage account. Both the big and small name brokerages offer ETF investing and the number of options can be a little overwhelming. Here’s what to look for before you open an account to invest in ETFs:
- Low commissions: Most ETF brokers offer some form of free trading or commissions for new clients. If the brokerage does charge commission, it usually hovers around $5 per trade.
- Selection of ETFs: The bigger the selection, the better. Some brokerages offer over 200 ETFs to choose from.
- Research: The brokerages should make it easy to look up data about the ETFs they offer. This includes the origin, objective, strategy, and historical performance.
Now that you understand a bit more about ETF investing and brokerages, take a look at our picks.
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