E*TRADE Review: All-In-One Shop for Your Money

by: Matt Frankel, CFP | Jan. 21, 2021

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This E*TRADE review will show how the online stock broker simultaneously caters to active stock and options traders with multiple trading platforms and $0 commissions, while also appealing to long-term investors with thousands of mutual funds and ETFs that can be traded completely free. We'll tell you everything you need to know about the online broker, from how to get free trades every month to outlining what kind of investor E*TRADE is really the right fit for.

Ratings Methodology

E*TRADE

Our Rating:

Rating image, 4.5 out of 5 stars.

4.5 stars

Bottom Line

E*TRADE manages to cater to active traders with multiple trading platforms, while also appealing to long-term investors with thousands of mutual funds and ETFs that can be traded for free.

Fees:

$0 per trade

Account Minimum:

Full E*TRADE review

This stock broker is a good fit for: Both long-term investors and stocks and options traders. E*TRADE is a full-featured broker that consistently delivers for the majority of investing needs (and more).

Pros

$0 stock and ETF commissions
Trading platform
No minimum deposit
Branch network

Cons

Margin rates
No foreign market trading

Top perks

Commission-free trading

U.S. listed stock, ETF, and options trades are commission free. A standard fee of up to $0.65/contract is charged for options trades.

ETF and mutual fund access

E*TRADE's ETF research, screening, and prebuilt portfolios simplify investing for passive investors, which are necessities for brokers for beginners.

Managed portfolios

Customers can choose from four categories of managed portfolios that are professionally managed and constructed for whatever stage an investor may be in their investing journey. E*TRADE's robo-advisor, E*TRADE Core Portfolios, is particularly interesting with a minimum investment of just $500.

IRA investing

E*TRADE offers the standard traditional IRA and Roth IRA, plus other IRA accounts, such as Rollover IRAs, Beneficiary IRAs, and IRAs for minors.

Trading platform

Though we're long-term investors who don't necessarily care about flashy charts, it's hard to deny that E*TRADE has built a large following who love its browser and desktop-based platforms. Its free Power E*TRADE platform has a particularly large fan base among options traders.

Branch offices

People who live near an E*TRADE branch get an additional avenue for customer support through one of its brick-and-mortar branches. Given its branch network isn't as robust as TD Ameritrade, Fidelity, or Schwab, you may want to see if there's an E*TRADE nearby before opening an account. (Frankly, 24/7 phone and online chat support is good enough for most investors, anyway.)

No minimum deposit

E*TRADE has no minimum deposit requirement for standard brokerage accounts or IRAs. Of course, mutual funds offered through E*TRADE can have their own minimum investment requirements that are higher or lower than the minimum to open an account.

Banking accounts

While its savings and checking accounts don't offer the highest rates, customers will benefit from the simplicity of managing many of their money needs in one place.

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What could be improved

Margin rates

It's worth noting that E*TRADE has some of the highest margin interest rates among the best stock brokers. While we don't view this as a major negative (it helps discourage what could be irresponsible trading behavior), it's worth noting if you regularly use margin when you invest.

Foreign market access

E*TRADE used to allow its customers to invest directly on many foreign stock exchanges, but it no longer offers this feature. If you want the ability to buy and sell stocks that list only on non-U.S. exchanges, you may want to look elsewhere.

Alternatives to consider

If you want to invest in just stocks, options, and ETFs via a mobile app: Robinhood packs in one of the leading mobile investing experiences around. Importantly, it also includes $0 commissions for stocks, ETFs, and options, whereas E*TRADE does charge a fee per options contract.

Read Robinhood Review

If you want lower margin rates: Interactive Brokers offers the lowest margin rates we've come across, and the competition isn't even close -- the broker's margin rates are more than half the competition. But Interactive Brokers' trading tools and overall pricing structure and experience are more complex, which may push investors seeking a simpler overall experience to E*TRADE.

Read Interactive Brokers Review

Commissions

The discount brokerage industry has changed for the better. As prices have only gone down over time, the difference between the costliest brokers and the cheapest brokers now amounts to just a couple dollars per trade.

Stocks and ETFs	Options	Mutual funds
$0	$0 + up to $0.65 per contract	$0-$19.99

E*TRADE is now in line with most of the industry by offering $0 commissions. Customers who make at least 30 options trades per quarter see a discounted rate of $0.50 per contract. E*TRADE's option fees have fallen from one of the highest among discount brokers to one of the lowest for active traders who qualify for lower pricing.

E*TRADE’s commissions are flat, too, so those who use E*TRADE to trade low-priced stocks (penny stocks) won’t endure higher commissions for buying thousands of shares in one transaction. Likewise, E*TRADE’s dividend reinvestment feature allows for reinvesting dividends on certain stocks without paying a commission, and it also allow dividends to be reinvested into partial shares of stock. These combined cost-cutting perks are common areas we think make for the best online stock brokers for beginners.

Buying mutual funds

Fund investors will find plenty to like about E*TRADE. That's because it offers a wide selection of mutual funds, and many mutual funds can be purchased without paying a commission or transaction fee.

Total mutual funds	More than 9,000
No-load, no-transaction-fee mutual funds	More than 4,400

With more than 4,400 no-load, no-transaction-fee mutual funds, E*TRADE offers far more truly free funds than most other brokers. Though many may think of E*TRADE for day trading, it's just as much a brokerage for long-term mutual fund investing, too.

Fees

The costs of having and using a brokerage account or IRA go beyond what it costs to make a trade. Discount brokers also charge certain fees for activity, and it's worth reading a broker's fee disclosures in full before opening an account. That said, we took a look at E*TRADE's fee list, and thought there was one fee in particular that necessitated some discussion.

Early redemption fee for no-load, no-transaction-fee funds: Though discount brokers offer mutual funds you can buy and sell for free, they won't let you trade them for free. If you redeem your investment in a no-load, no-transaction-fee fund after holding it for less than 90 days, you'll incur a $49.99 redemption fee.

Other than the early redemption fee, there aren't any fees that stick out as being particularly notable. E*TRADE doesn't charge an inactivity fee, so investors don't have to worry about seeing their balance getting drained if they don't log in to make a trade every few months.

Trading platform

Active traders love E*TRADE's basic web platform, as well as its advanced platform for active traders who qualify for access.

Starting first with the basic web platform, it contains many of the features active traders and investors like to see -- free streaming market data, market commentary, analyst research, and a lengthy list of screeners to sort the market to find good investments. Making a trade is as easy as making a few clicks, simple enough for investors of all experience levels.

Alternatively, E*TRADE has a powerful web-based platform thanks to its acquisition of OptionsHouse, a competing brokerage it acquired in 2017. The Power E*TRADE platform offers impressive charting capabilities, and options trading features that have made a favorite among option traders. In particular, the platform produces graphics to show the maximum profit or loss and breakeven point for a given options trade, which makes it easy to see the potential risks and rewards of complex (multi-leg) options positions. With features that include Level II quotes, advanced charting tools, and even a live Bloomberg TV feed, it's built with active traders in mind.

E*TRADE Mobile and the Power E*TRADE app are available on iOS, Android, and Windows devices, giving customers a powerful platform on which they can place trades on just about any device at any time.

E*TRADE Margin rates

E*TRADE margin rates are on the higher end of brokers we've reviewed. Here's a rundown of the broker's margin rates by margin balance:

Less than $10,000 margin balance: 8.95%
$10,000 to $24,999 margin balance: 8.70%
$25,000 to $49,999 margin balance: 8.45%
$50,000 to $99,999 margin balance: 7.95%
$100,000 to $249,999 margin balance: 7.45%
$250,000 to $499,999 margin balance: 6.95%
$500,000 to $999,999 margin balance: 6.45%
$1,000,000 or more margin balance: 5.45%

For investors who use a lot of margin, the cost of carrying a balance at a high rate may quickly overshadow the benefits of lower commission prices or a fancy trading platform, since carrying a balance as small as $5,000 on average would cost nearly than $450 over the course of a year.

Of course, few long-term investors use margin anyway, choosing instead to simply use a cash account in which they buy or sell investments with cash they have in their account. If you use a cash account rather than an E*TRADE margin account, the cost of margin is irrelevant.

Research offerings

Discount brokers aren't known for having large in-house research arms, which helps them keep costs low, but they don't leave investors in the dark, either. E*TRADE offers a number of research reports and tools, some of which are detailed in the list below.

Independent research reports: E*TRADE customers enjoy access to reports from independent research providers, such as Thomson Reuters and Credit Suisse.
TipRanks: E*TRADE pulls consensus price targets from analysts who are ranked on TipRanks, an online service which tracks the accuracy of sell-side analysts, columnists, and other market followers.
Screeners: Stock, ETF, and mutual fund screeners are numerous, but one area where E*TRADE really shines is in options, owed to its Power E*TRADE platform. StrategySEEK enables an investor to search for options trades based on their view of where a stock may trade in the future, to maximize the profit or loss, or minimize the cost of making the trade, for example.

Realistically, we've only scratched the surface here. To be sure, any of the household name discount brokers have an incredible amount of research and screening tools. If you wanted to read up on stocks or tinker with screeners all day every day, you would find plenty to keep you busy -- we have no doubt about that.

This brokerage is right for you if:

Keeping it simple, we think an E*TRADE account may be worthy of additional investigation if one or both of the following statements apply to you.

You're looking for a one-stop shop. Only a few select competitors can match E*TRADE's array of account and investment offerings.
You want more NTF mutual funds. E*TRADE offers more than 4,400 no-load, no-transaction-fee mutual funds, which is a major selling point for fund investors. Buy-and-hold investors could easily create a diversified portfolio using its free funds alone.
You care about the trading platform. The Power E*TRADE platform as well as E*TRADE's mobile platform both have a lot of bells and whistles compared with many rivals.
You are a U.S. resident. E*TRADE services are available just to U.S. residents.

About the Author

Matt Frankel, CFP

Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.

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