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Charles Schwab vs. Merrill Edge

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It wasn't all that long ago that buying stock or funds could be done only by phone, and each buy and sell came at the cost of a very steep trading fee or commission. Today, the top online brokerages offer more bells and whistles -- research, international stocks, and more -- at a fraction of the past cost.

We wanted to compare two well-known and widely used investment firms, Charles Schwab vs. Merrill Edge. They both offer individual investors access to the markets through their computers or phones.

Below, we'll review Charles Schwab vs. Merrill Edge, both broker's features, and how they compare. 

Trading costs and commissions

As trading costs drop toward zero, the differences in trading commission fees at online discount brokers have shrunk. Let's look at Charles Schwab vs. Merrill Edge on costs.

Charles Schwab is definitely a trailblazer in making stock trading more affordable for the average individual investor. Charles Schwab is a leader in low fees and has helped drive down commissions across the industry. The company was the first mainstream online broker to eliminate commission fees for online stock trades. Most competitors have since followed suit -- including Merrill Edge.

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Broker Stocks and ETFs Options Mutual funds
Charles Schwab $0 per trade $0.65 per contract $49.95 (thousands for free)
Merrill Edge $0 per trade $0.65 per contract $19.95 (more than a thousand for free)

Note one big asterisk on Charles Schwab vs. Merrill Edge costs. Charles Schwab's mutual fund commissions appear much higher than Merrill Edge's at $49.95 per purchase. But this firm offers one of the largest selections of mutual funds that you can buy without paying a transaction fee.

No-transaction-fee mutual funds

Let's compare Charles Schwab vs. Merrill Edge on no-transaction-fee (NTF) mutual funds.

Does your portfolio include a lot of mutual funds? If so, you'll want to check out the availability of NTF mutual funds. These are funds that brokers let their clients buy and sell without paying a commission or fee. As you can see in the chart above, mutual fund commissions can be costly if the fund you're buying doesn't fall into this category.

Charles Schwab easily gets the win here for having a wider selection of NTF mutual funds. To be fair, Merrill Edge offers plenty of commission-free mutual funds as well.

Account minimum

Neither brokerage firm has a minimum initial deposit. You can open an account with whatever amount of money you'd like. 

Some brokers have an account minimum as high as $10,000. A brokerage account with no minimum requirement is a boon for a beginner investor with limited resources. It's also a nice benefit for a seasoned investor who doesn't want to make a big commitment to the account.

Of course, some mutual funds have their own minimum thresholds for investing. They can range from as low as $500 to as high as $10,000. Notably, Charles Schwab offers a number of mutual funds with special $100 initial minimums. Add-on investment minimums are just $1. These are compelling features for investors who want to start small. Charles Schwab also offers the ability to buy fractional shares of stock. You can buy your first stock with literally just a few dollars, regardless of its share price.

Trading platform

Looking at Charles Schwab vs. Merrill Edge, both have a trading platform their customers love. Merrill Edge uses a web browser platform as well as a mobile platform. Some customers get access to Merrill Edge MarketPro, the brokerage's more powerful browser-based platform. To be eligible, you must keep a combined balance of at least $50,000 in eligible accounts, make 15 trades per quarter, or qualify for free trades through the loyalty program.

Charles Schwab offers browser-based, desktop, and mobile app trading platforms. Its Trade Source web browser platform offers streaming quotes, news for your portfolio positions, and tab-based navigation. You can quickly move to and from different stocks or funds. Those who want a full desktop trading platform experience may prefer its StreetSmart Edge product. It boasts more advanced charting, access to research, and a fully customizable layout. Best of all, there are no activity or trading volume restrictions for using its desktop platforms.

International stocks and ADRs

Both Charles Schwab and Merrill Edge let investors buy American depositary receipts (ADRs). ADRs represent ownership of foreign companies, but trade domestically. Most major foreign companies (think Adidas, for example) have ADRs that let U.S. investors invest in them without transacting on international markets.

If you'd like to trade overseas, a Schwab Global Account will give you access to electronic trading in 12 markets. The Schwab Global Services desk makes more than 30 markets available to its clients. An additional trading fee or commission may apply. Prices vary by the security and exchange.

Comparing Charles Schwab vs. Merrill Edge, Schwab wins on international trading. Merrill Edge doesn't currently offer trading directly on international markets.

Research quality and trading tools

Although a discount broker generally provides fewer services than a full-service broker, the industry has bridged the service gap over time. Discount brokers once offered little more than a way to place a trade. Now they offer full libraries of research on individual stocks and funds directly from their trading platforms.

Both Charles Schwab and Merrill Edge offer a full range of services that benefit the beginner investor and the experienced investor alike.

Merrill Edge customers get access to research and investment tips from Morningstar, S&P Capital IQ, and its own BofA Merrill Lynch stock analysts. Those are just a handful of the benefits clients can expect.

Charles Schwab provides research and updates from Credit Suisse, Schwab proprietary ratings and research, and news and reports from S&P, Reuters, and others. It also offers free Morningstar research reports for individual stocks. That's a major selling point for those who prefer to pick individual stocks.

The top online brokerage: Charles Schwab vs. Merrill Edge

The final decision between Charles Schwab vs. Merrill Edge may depend on your personal preference. Both have their pros and cons. Merrill Edge is a likely winner for anyone who has an existing deposit or investment relationship with Bank of America, as connecting accounts can add a lot of convenience.

On the other hand, Charles Schwab offers a lengthy list of mutual funds you can buy without paying a transaction fee on the trade. Lowered minimum investments on many popular mutual funds through its OneSource™ platform also make it a top pick for new investors. And the ability to buy fractional shares and invest in non-U.S. stock markets can be major perks for many people.

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