Merrill Edge vs. E*Trade: Comparing Brokerage Accounts for Investors

Becoming an investor has never been easier. By opening an online brokerage account, you'll have access to invest in everything from individual stocks to ETFs and traditional mutual funds right from your own computer. Two common brokerages, Merrill Edge and E*Trade, have a lot to offer individual investors, but how do their services compare for your needs?

Trading costs and commissions

You'll be pleased to find that E*Trade and Merrill Edge both offer competitive commission prices that won't break the bank.

Data sources: Company websites.

For most trades, the difference in costs comes down to a little more than $3 per trade, but some investors will pay much less than the published price. Some qualify for special offers for IRA accounts, including commission-free trades and cash bonuses. In addition, both brokerages have thousands of funds that can be bought and sold without paying a transaction fee.

Commission-free ETFs and NTF funds

Many brokers waive commissions and transaction fees on select ETFs and mutual funds. Here's a comparison of commission-free ETFs and no-transaction-fee (NTF) mutual funds by broker.

Data sources: Company websites.

Depending on your needs, you may find that one brokerage is a better fit. E*Trade offers more commission-free ETFs, but if your favorite funds aren't on E*Trade's commission-free list, then the trade would be less expensive to place through Merrill Edge. Check to see whether your preferred funds are designated as no-transaction-fee or commission-free before signing up.

Account minimums

You won't need to empty your savings account to open a brokerage account. Merrill Edge has no minimum initial deposit requirement, whereas E*Trade requires a $500 minimum initial deposit. Neither brokers' minimums are too high to exclude many investors on the basis of minimum deposits.

Start small with low- and no-minimum account requirements at Merrill Edge and E*Trade. Image source: Getty Images.

Trading platform

The Motley Fool prefers a buy-and-hold strategy in which we seek to invest in well-run companies for the long haul. For this reason, we don't trade much, and don't really have a preference for a sleek trading platform.

You can find plenty to like about platforms offered by Merrill Edge or E*Trade. In general, we tend to think that it mostly comes down to personal preference rather than an objective comparison. Many brokers offer the ability to test their platform without opening an account, which can be a good way to see which platform matches your style.

International stocks and ADRs

Clients of Merrill Edge and E*Trade can invest in foreign companies by trading American depositary receipts (ADRs). However, neither brokerage currently offers access to trade international stocks directly on foreign exchanges. 

Access to international markets may be important to you. However, many large foreign companies have ADRs, and both brokerages open up foreign investing through funds that hold foreign stocks. 

Research quality and tools

We generally believe that having more information can be an advantage, particularly for investors who take a do-it-yourself approach to investing. E*Trade and Merrill Edge deliver with access to third-party research that includes S&P Capital IQ and Morningstar, for example.

Proprietary research is also plentiful at either brokerage. Merrill Edge clients can tap into stock picks from Bank of America Merrill Lynch, while E*Trade customers can access the company's proprietary charting and screening tools. You'll find a vast library of research that can supplement your investment process as a user of either brokerage.

Mobile app

If you like being able to trade from anywhere, you'll be pleased to find that Merrill Edge and E*Trade both have mobile apps that bring you the markets anywhere you have an internet or cell connection. Here's how each brokers' users and clients rated their mobile capabilities on iOS and Android (as of Dec. 10, 2016).

Data sources: Relevant app stores.

Best brokerage account: Merrill Edge or E*Trade?

Truthfully, either broker could be a fine choice for a particular investor. Merrill Edge offers low-cost commissions, in addition to a number of commission-free trades each month for qualified customers. E*Trade's commissions are slightly higher, but its commission-free ETFs may make it the better choice for fund investors. Ultimately, it's all about how the pros and cons of each broker fit into the unique qualities of your portfolio.

To be clear: The Motley Fool does not endorse any particular broker, but we can help you on the brokerage hunt. Two Fool.com resources, the Brokerage Center and IRA Center, make it easy to compare and contrast several leading brokerage account providers on one page.