Published in: Buying Stocks | Dec. 4, 2018
Times are changing. Vanguard is no longer just a mutual fund manager, and Merrill Edge isn't an old-school stock brokerage anymore. When you're ready to take the first step toward investing by opening a brokerage account, these two companies might be high on your list of potential suitors.
With millions of accounts between them, Vanguard and Merrill Edge have become go-to brokers for traders and long-term investors alike.
It's become downright cheap to make a trade at most discount brokers, and Vanguard and Merrill Edge are no exception to this rule. Both have eliminated commissions on stock, option, and ETF trades (although you’ll still pay a small fee per option contract).
|Broker||Stocks and ETFs||Stock options||Mutual funds|
|Vanguard||$0 per trade||$0 plus $1.00 per contract||$20.00|
|Merrill Edge||$0 per trade||$0.65 per contract||$19.95|
If your portfolio has more funds than individual stocks, you might want to pay close attention to how you can score free trades through ETFs and mutual funds. Of course, since both Vanguard and Merrill Edge have eliminated commissions for online stock trades, all ETFs now trade commission-free on both platforms. And brokers increasingly advertise no-transaction-fee (NTF) mutual funds that their clients can trade without paying for every transaction. These two are no exception.
|Fund type||Vanguard||Merrill Edge|
|Total mutual funds||More than 3,800||More than 9,000|
|No-transaction-fee mutual funds||More than 1,400||More than 3,000|
We'll keep it simple here: Vanguard and Merrill Edge are both no-minimum deposit brokerages. You read that right -- you can open an account at either broker with the change you find between your couch cushions.
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.
For practical purposes, it would be advantageous to start out with a little more than mere pocket change. After all, to make an investment, you'll need enough capital to be able to afford a single share of a stock, ETF, or mutual fund. But if you're worried that these brokers may turn you away because you don't have a lot of money to invest, think again.
If you're looking for a high-powered trading platform, Vanguard and Merrill Edge may not be the best places to look. Vanguard simply isn't designed for frequent traders, given its roots as an investment company for long-term investors who are most concerned about cost.
Vanguard uses a simple browser-based interface that offers the ability to easily buy stocks, options, ETFs, or funds. That said, if you're looking for complex stock option trades or level II quotes, Vanguard isn't the brokerage you're looking for. Its mobile app, which is available on iOS, Android, Windows, and Kindle, is good enough to place the occasional buy or sell order, but it doesn't offer full platform functionality, either.
Merrill Edge offers more functionality with its browser-based solution, offering up streaming quotes through its watch list feature. Merrill Edge MarketPro, its desktop platform, is a more powerful solution, offering full customization, more charting options, and hundreds of options to show multiple data points on one screen (you can quickly see a stock's P/E ratio, or analyst estimates, for example).
The downside to Merrill Edge is that the MarketPro platform isn't made available to everyone. Customers who make 15 trades per quarter or have $50,000 in total assets qualify for access. If you want access to a high-quality trading platform with no trading or deposit minimums, then TD Ameritrade may be a better alternative.
Before you ask Siri how to say "limit order" in Spanish, know that you can trade American depositary receipts (ADRs) at Vanguard and Merrill Edge. If you want direct access to foreign stock markets, Vanguard can get you there, but it charges a $50 fee. Merrill Edge doesn't offer trading directly on international markets, however.
Truthfully, most large foreign companies have an ADR that trades in the United States, so buying shares of household name companies shouldn't be a problem regardless of the brokerage you choose. But if you want to buy shares of a Japanese small cap stock, you'll need a broker that can help you transact on a Japanese stock exchange, for example.
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.
Merrill Edge and Vanguard both offer a wealth of research to their brokerage clients. Both provide a number of screening tools for individual stocks and funds. As far as third-party research goes, Vanguard customers get access to Standard & Poor's, Thomson Reuters, and First Call, just to name a few providers.
Merrill Edge customers get one very big perk in the form of BofA Merrill Lynch Global Research Analysts' stock picks, but it also offers third-party research to its clients. In particular, the company also offers a "story" on many of the largest stocks on the market, helping you get a quick introduction to a given stock before you do your own due diligence.
If you want to trade directly on international stock markets and have a preference for Vanguard's funds, Vanguard might just win your heart. It easily earns a top spot as one of the best brokerages for long-term investors who want to simply manage a portfolio of a few index funds and ETFs.
Of course, if low options costs or highly rated apps and trading platforms are what you're seeking, then Merrill Edge may be a better fit.
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