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OptionsHouse vs. TradeKing: Better Broker for an IRA?

By Jordan Wathen - Apr 2, 2017 at 8:07PM

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Here's how OptionsHouse and TradeKing compare for investors who want to open an IRA.

An individual retirement account can be a brilliant way to save for the future. Traditional IRAs enable you to grow your wealth tax-deferred. Roth IRAs grow tax-free and can even be used to make a down payment on your first home.

To start saving, though, you'll need to decide where to open IRA. Here's a look at how two popular brokerages, OptionsHouse and TradeKing, compare for IRA accounts.

What you'll pay to trade

While buying and selling investments almost always comes with a fee, commission prices are declining over time. Note that OptionsHouse and TradeKing now price most trades at less than $5.00 each, to buy or sell.

Brokerage

Stocks and ETFs

Stock Options

Mutual Funds

OptionsHouse

$4.95 per trade

$4.95 + $0.50 per contract

$20.00 per purchase

TradeKing

$4.95 per trade

$4.95 + $0.65 per contract

$9.95 per purchase

Data sources: company websites.

As a general rule, the biggest difference in pricing tends to be in mutual funds and stock options. Both brokers offer more than 12,100 mutual funds that you can buy for $9.95 or $20.00 per transaction, depending on the brokerage. Thanks to some special offers for IRAs, you might be able to further reduce your average trading cost.

Minimum deposit requirement for IRAs

Like commission prices, discount brokers' account minimums are trending toward zero. Neither TradeKing nor OptionsHouse has a minimum deposit requirement, so you can fund your account as you see fit. The IRA contribution limits are currently $5,500 for people younger than 50, and $6,500 for those who are 50 and above.

A clear glass jar filled with cash and coins.

Image source: Getty Images.

 

Investing in foreign stocks and ADRs

Investing overseas is a complicated subject, but most brokers will enable you to buy and sell foreign companies through American-listed American depositary receipts. ADRs represent ownership in foreign companies, and rise and fall just as a company's stock price does on its home market.

Investors who want to send their trades to international stock exchanges will need to look for a different broker, however, as neither OptionsHouse nor TradeKing currently offer the ability to send trades overseas. To be completely fair, only a minority of discount brokers have international trading capabilities.

Mobile app reviews

If you have a phone or tablet and an internet connection, you can place trades from anywhere around the world. Here's how each broker's users and customers rated their mobile trading apps, as of March 23, 2017.

Brokerage

Apple App Store

Google Play

OptionsHouse

1.6 stars

3.1 stars

TD Ameritrade

3.5 stars

4.0 stars

Data sources: relevant app stores.

IRA account fees and service charges

Fees on IRA accounts can run the gamut, but pay particular attention to on-going maintenance fees or inactivity charges for failing to meet your broker's activity requirements. OptionsHouse doesn't have either kind of fee. TradeKing customers who maintain a balance of less than $2,500 will have to pay a $50 annual fee if they don't make at least one trade per year. 

Better pick for IRAs: OptionsHouse or TradeKing

Given the very few differences in commission prices, minimum account balances, and service charges (for people who make at least one trade), it really all boils down to personal preference.

To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that's a good fit for you. Visit Fool.com's IRA Center to compare several leading discount brokers on one page. 

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