Here in Fooldom we've long promoted stock ownership for most, if not all, Americans (and others). You usually can't own stock without going through a brokerage of some sort, though, so we also promote brokerages, partly through our Broker Center, which features much information on how to select a brokerage and how to use one. [Note that you can bypass brokerages when buying stock in many companies by using "Drips" -- learn more about them.]
It occurred to me recently that you, our readers, may not want to just take our word on brokerages. So I invited the denizens of our Discount Brokers discussion board to explain why they like the brokerages they use. Read the whole thread -- this is a great time to take advantage of our free 30-day trial of our entire discussion board community. [The fact that there are more than 44,000 posts on that board alone should give you an idea of how large and opinionated our online community is.]
Anyway, here are some Fools and their thoughts on their brokerages:
Lorenzo2 said, of BrownCo:
"Good execution on trades, low margin rates, and best of all, no fees and the lowest commissions in town ($5 market, $10 limit). Decent research from JP Morgan Chase (NYSE: JPM ) and Standard & Poor's (BrownCo is a subsidiary of JP Morgan Chase). Internet/telephone service only -- no walk-in offices. Not for inexperienced investors! In short, no frills, but also no B.S. and great value."
Smyr chimed in, adding that:
"I like that they send quarterly reports, trade confirmations, etc. by snail mail if you wish at no additional cost for now. and I also like that whenever I had a problem (rare but my experience is limited) their response was prompt and helpful. Their interface is very good [in my opinion]. They offer check writing, but [the] minimum check [amount is] high ($500).
"Cons: Do not accept non-resident aliens (grrrr).. Above 5,000 shares the commissions change, something important for people who trade higher amounts or lots of penny stocks.
"I'd like to emphasize what kahunaFCA, lorenzo2 and others are saying about inactivity fees: [in my humble opinion], for people who do not trade often, such fees are more important than $10 of difference in commission price schedules."
[Smyr makes an excellent point -- that inactivity, or "maintenance," fees can hurt your performance much more than slightly steeper trading costs. Look into what such fees your brokerage charges and whether your account would qualify or be exempt.]
Latinus said, of Ameritrade (Nasdaq: AMTD ) :
"[Regarding] Ameritrade, .they have devised an excellent way of linking to bank accounts for ACH [electronic funds] transfers. Probably better at this than any other financial institution."
"I like Ameritrade and of all the negatives I've heard about them, most of it was unfounded. I've never had a technical problem and have never had a customer service question they didn't answer immediately. Recently, they did begin to make security improvements, which was the only item on my list I thought they needed to do. This company has had growing pains and as such, sometimes there have been goofs, but most objective and technically capable customers of Ameritrade have found them to be solid."
Hatch252 praised ShareBuilder, saying,
"I am new to the investment game (a total of 2 months) and I am currently using ShareBuilder. I like it for several reasons.
"1. No minimum investment on regular stock or IRA accounts.
"2. No maintenance fees
"3. Free dividend reinvestment
"4. $4 trades (although I signed up for the standard program which offers six free trades per month and discounted market and limit orders).
"5. You can buy fractions of shares [as with Drip accounts]. Being a microinvestor, I invest $100 into my account a month and am able to buy a fraction of a share depending on price.
"1. In order to sell, you pay the current market rate according to your program (basic, standard or advantage).
"2. The amount of stocks and bonds you can invest in is limited."
Kauhnacfa related much experience with several brokerages:
"I have used many brokerage firms in the past. In historical order: 1969-1973, Merrill Lynch (NYSE: MER ) in Honolulu Hawaii. My broker, Ron, often took me out to lunch and regularly made more in trading commissions than I did on my investments. I used the technical analysis approach and traded frequently for short-term gains or losses. Closed the account in 1973. [Note: at Fool HQ we generally avert our eyes from technical analysis -- learn why.]
"Then returned to school in 1972... Took my first real full-time investment position as a security analyst in the fall of 1976. Also opened an account with Smith Barney [now part of Citigroup (NYSE: C ) ]. [Later, another] account was transferred to Schwab (NYSE: SCH ) , then to Scottrade in June 2003 because of high $45/quarter account inactivity fees that Schwab started to charge for small, infrequently traded accounts.
"[I'm] basically happy with Schwab for my IRA (no fees) and with Scottrade for my smaller joint account."
Auslander praised Scottrade for the following reasons:
"1. For the enormous selection of no-transaction-fee funds in their mutual fund supermarket.
"2. For the local branch office where somehow they manage to personally answer the telephone by the third ring, each and every time I call.
"3. No-fee IRAs -- no setup fees, no annual custodial fee, no termination fees."
In another thread, Theo63 recommended:
"Try E*Trade (NYSE: ET ) . Their banking and brokerage work flawlessly together. Have used them for years and they just keep getting better."
KenatPCs discussed TD Waterhouse, a unit of Toronto-Dominion Bank (NYSE: TD ) :
"Many (but definitely not all) of the complaints I've read about them concern their fees on smaller accounts. If your account has $250,000 or more, you'll pay $12 for market orders, $15 for limit. If you trade a lot, you'll pay $3 less. But, regardless of a few bucks here or there, I've found my NYSE fills to often get price improvement from the current bid/ask, which I often do not get at other brokerages. I don't have enough experience with [Nasdaq] trades to say anything about them.
"If you use mutual funds, [TD Waterhouse] has some funds available that aren't generally found at other places. I've found the combination of TDW and Scottrade gives me a VERY large selection of [no-transaction-fee] funds.
"As for customer service, I haven't found it better or worse than others I've tried (and I've tried a lot of 'em)."
On another board, jhw888 remarked about HarrisDirect:
"If anyone is interested, HarrisDirect is now offering trades at $9.95 [with no maximum number of shares purchased.] for accounts with net worth/balances of $500,000+. Accounts can be linked [IRAs, custodial accounts, etc.] to meet the minimum balance.
"It's rather a sizable amount just to get trades at $9.95, but I've been pleased with the Preferred service [minimum balance of $100,000 with $19.95 trades]. I've only traded online, but it's fast and efficient with confirmation via e-mail almost immediate.
"Customer service has always been super in answering questions. I believe a live person is only one selection away on the automated phone system and they answer almost immediately 24/7. If they don't have an answer, they find out nearly instantaneously and are knowledgeable, helpful and courteous.
"The research is also fairly decent."
This is just the tip of the iceberg. If you have a few minutes or hours, you'll find many more opinions and experiences regarding these and many other brokerages on our discussion board. You'll even see Fool staffers chiming in, as TMF Bobala did regarding dividend reinvestment. [Finding a brokerage that reinvests your dividends in additional shares of stock can turbocharge your portfolio's performance.] He said, among other things:
"So, I think Scottrade is fine choice for low-cost trading if you're putting your money in companies without dividends. If you want the dividend reinvestment, you might look elsewhere. But I'd call and ask. For example, we like Ameritrade here too, but when we started our Income Investor newsletter (which looks for dividend-paying stocks) we quickly found out that even Ameritrade doesn't reinvest dividends for every stock. So, if that's important to you, call and find out.
"Otherwise, you'll find just about every broker out there has been panned and praised on this board.
"Here's a handy comparison table for the brokers we do business with here at the Fool.
"And if you're interested in dividend investing, you can take a free trial of our Motley Fool Income Investor newsletter."
Best wishes on finding the brokerage that will serve you best!
Selena Maranjian has been marveling at the Fool's vast discussion board community since 1996. For more about Selena, viewher bio and her profile. You might also be interested in these books she has written or co-written:The Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. The Motley Fool is Fools writing for Fools.