Published in: Buying Stocks | Dec. 4, 2018
Investors have it better than ever. Online discount brokerages like TD Ameritrade and Merrill Edge make investing in stocks, ETFs, and mutual funds easier and less expensive than ever before.
TD Ameritrade and Merrill Edge offer little or no trading commissions and free tools and research to help you make better investment decisions. Here's how these two brokers compare for investors who need an investment brokerage account to buy and sell stocks, ETFs, options, and funds.
Price isn't the differentiator it used to be, as most brokers, including these two, have scrapped commissions entirely for online stock and ETF trades. As you can see, trading stocks, options, and ETFs now cost the same at Merrill Edge or TD Ameritrade.
|Broker||Stocks and ETFs||Options||Mutual funds|
|Merrill Edge||$0 per trade||$0.65 per contract||$19.95 (more than 1,400 for free)|
|TD Ameritrade||$0 per trade||$0.65 per contract||$49.99 (more than 1,800 for free)|
Both Merrill Edge and TD Ameritrade offer compelling new customer bonuses (free cash!) in addition to thousands of mutual funds and exchange-traded funds you can buy or sell without paying a commission or transaction fee.
Virtually all brokers now offer investors the ability to buy and sell "no-transaction-fee" (NTF) mutual funds and ETFs. Investors who prefer investing in funds may prefer a specific broker for the fact that they can invest in their favorite funds without paying a fee on each transaction. Both TD Ameritrade and Merrill Edge offer thousands of mutual funds on a no-load, no-transaction-fee basis.
Find the best stock broker for you among these top picks. Whether you're looking for a special sign-up offer, outstanding customer support, $0 commissions, intuitive mobile apps, or more, you'll find a stock broker to fit your trading needs.
TD Ameritrade and Merrill Edge are easily accessible to ordinary investors, as neither brokerage has a minimum account requirement. These no-minimum brokers are both excellent choices for beginning investors for precisely this reason -- you can start small.
Practically speaking, there are certain minimums for some type of investments. Most mutual funds have minimums -- ranging from $1,000 to $3,000 or more. Furthermore, you'll need to be able to buy at least one share of a stock or ETF to make an investment. Importantly, though, neither broker has a requirement on how much money you need to simply open an account.
TD Ameritrade and Merrill Edge do not offer trading on foreign markets. However, investors can purchase American depositary receipts (ADRs), which are traded on U.S. markets and represent ownership of a foreign company in much the same way as direct stock ownership.
Note the important distinction between buying stocks on international stock markets and investing in foreign stocks through funds. Investors can buy U.S.-listed ETFs and mutual funds that hold foreign stocks through their TD Ameritrade or Merrill Edge brokerage account, just as they would buy any U.S. ETF or mutual fund.
In short, TD Ameritrade and Merrill Edge aren't a good choice if you want to trade stocks on the London Stock Exchange, for example, but they're just fine if you want to use funds or ADRs to own foreign stocks. For foreign stock trading, Fidelity or Charles Schwab would likely be a better choice, given they offer the ability to place trades overseas through an online account.
Understandably, those who trade most frequently are likely to place more emphasis on a broker's trading platform rather than on the small differences in commissions.
TD Ameritrade works well as a brokerage for traders and investors alike. It offers a robust mobile app with all the features typically found in browser or desktop platforms, including Level II quotes and conditional orders. Plus, the app is available on iOS, Android, and Windows, so it works on practically any device.
If you're just getting into the stock market, the first thing you'll need is a stock broker. Browse our pick list to find one that suits your needs -- as well as information on what you should be looking for.
Of course, active traders love TD Ameritrade's highly rated thinkorswim platform for its Level II quotes, complex options functionality, and hundreds of charting features for active traders. The big perk is that TD Ameritrade makes thinkorswim available, completely free, to customers of any activity level or account balance. For this reason, TD Ameritrade is by far a top pick for investors who want a high-quality trading platform without limitations.
Merrill Edge doesn't offer all the bells or whistles that TD Ameritrade does. Although it has its own mobile apps and web-based trading platform, its desktop platform, Merrill Edge MarketPro, doesn't offer as much functionality as thinkorswim. Sure, it offers a customizable dashboard and advanced charting, but it lacks many of the basic features, like one-click trading or complex options trades. Also, Merrill Edge Market Pro is available only to customers who place at least 15 trades per quarter or have at least a $50,000 balance in eligible accounts.
If the platform is what you care about most, then TD Ameritrade would almost certainly win you over. That said, those who place the infrequent trade and invest for the long haul will find that just about any broker will fit their needs.
Both TD Ameritrade and Merrill Edge offer stock and mutual fund screeners that allow you to sort stocks and funds with quantitative parameters like fees and historical returns. When it comes to research, there are slight differences between these two brokers.
TD Ameritrade offers a line-up of third-party research that includes reports from CFRA, Credit Suisse, Market Edge, and Ford Equity Research. In addition, it offers ETF ratings from CFRA and Morningstar, which is a big advantage for fund investors. Expect to find volumes of content to read and digest, as TD Ameritrade offers more than 45 daily market and portfolio reports from a host of different research groups.
Merrill Edge's ties to BofA/Merrill Lynch give it a leg up in the research department, as BofA/Merrill Lynch covers more than 1,300 individual stocks, giving its clients unique access to in-depth research. I like the company's "Stock Story" feature, which gives you a quick high-level view of most publicly-traded companies, how they make their money, and what analysts are expecting of the company going forward.
TD Ameritrade stands out as having a value proposition that favors traders and long-term investors alike, regardless of account size. With thousands of mutual funds, more than 300 commission-free ETFs, and a platform fit for every type of investor, there's a reason why it is one of the largest discount brokers. For investors and traders who put particular emphasis on trading platforms, TD Ameritrade is easily a top choice.
On the other hand, Merrill Edge is certainly a high-quality brokerage and could be especially attractive for current Bank of America customers. Neither broker has much of an edge on pricing, so it comes down to the features and convenience factors you care most about.
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