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What brokerage is best for novices and investors that rarely trade?

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September 23, 2011 – Comments (13)

My dad is one of those, and he is looking for a brokerage account. Apparently IB charges an inactivity fee for traders who don't trade, and I was wondering if someone out there is in the same position as my dad and has some advice, e.g. a good broker that works for them.

13 Comments – Post Your Own

#1) On September 23, 2011 at 6:57 PM, TMFCrocoStimpy (95.68) wrote:

I have used Fidelity for over a decade, and trade very infrequently with this account.  Trades are $8 and there are no fees such as inactivity that I know of.

-Xander

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#2) On September 23, 2011 at 7:17 PM, mhy729 (32.22) wrote:

I've been quite happy with Scottrade.  If you sign up using any of the referral codes you can easily Google for (or get one from a friend), you get three commission-free trades that last six months, which works out to a [$7/trade X 3 trades] = $21 value.  There are occasionally special promotions where even more free trades are offered (one time last year there was one for 10 free trades), but I'm not aware of any that are available right now (only 3 free trades that is).

No inactivity fees (in fact I opened my account and made my first [free] trades back in 2008, and had no further activity until a good whole year later), and the minimum opening balance should be $500.  Funding the account through electronic transfer is very conveniently set up, but there is something of a hassle for withdrawals/transfers out.  So far Scottrade hasn't put in an electronic transfer out option, and the option to write checks on the cash balance of your account needs to be activated with an application (you might want to check on this one because there might be a minimum balance for checkwriting privileges).  However, even without the checkwriting privilege, you can always withdraw the cash from your account by requesting a check written out by Scottrade, but obviously that takes some time. 

The large majority of complaints I've read re: Scottrade were from active/day-trader types, and those who want unfettered access to "penny stocks".  There have also been reports that website access was down during frenzied market opens, but I haven't experienced that (I did post a comment earlier this week re: inability to access the Scottrade website, but that turns out to have been a problem on my end).

Oh yeah, and get your dad to read some of the "basics" articles here on TMF!  :D 

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#3) On September 23, 2011 at 7:33 PM, anchak (99.83) wrote:

Flea :

Fidelity and Scottrade would suit your father the best.

 

However - if you really want a good broker - and don't mind paying them $10 for inactivity - and have a decent sized account - IB is the way to go - when you need to make the trades - and if they are a little tricky - IB will pay for you in the long run.

 

They have the lowest fees and best execution

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#4) On September 23, 2011 at 7:34 PM, anchak (99.83) wrote:

TOS by TD is a great option also - but i don't know much about their fee structure

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#5) On September 23, 2011 at 7:34 PM, anchak (99.83) wrote:

The IB thing is important not for stocks but other investment vehicles like Bonds etc

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#6) On September 23, 2011 at 7:38 PM, rd80 (98.26) wrote:

I've been happy with Wells Fargo's WellsTrade for several years now.  If you have $25k of business with Wells - I think that still includes mortgage business - the account has 100 free trades per year.  There's no inactivity fee as far as I know.

Not a lot of bells and whistles, but the free trades thing is tough to beat for us cheapskates.  

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#7) On September 23, 2011 at 8:06 PM, TheDumbMoney (37.72) wrote:

Zecco is $4.95/share, with no inactivity fees.  Firstrade is $6.95/share, with no inactivity fees.  And I think that they only have $2,000 funding minimums. 

Not as famous as these others uppity Fidelity accounts, etc., but these are the value winners the last time I checked.  They offer everything basic that E-Trade, Scottrade, etc., offer.  I have used both in the past. 

If he trades more often, go with IB, but you appear to have noted that above.

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#8) On September 23, 2011 at 8:08 PM, TheDumbMoney (37.72) wrote:

I'm sorry, NOT $4.95/share and $6.96/share.  That's the per-transaction, no matter how many shares.

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#9) On September 24, 2011 at 12:34 AM, familyfund1 (< 20) wrote:

Zecco crashes on busy days. If you're not trading that may not matter.

SharePlanner lets you do partial shares, i think, and div re-investment, and that's kinda cool. You can get into expensive shares you might not be able to afford otherwise.

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#10) On September 24, 2011 at 1:06 AM, traderbach (< 20) wrote:

I've used OptionsHouse.com for more than 2 yrs now without the slightest trouble.  They are $3.95 a trade for regular equity positions so that is great for learners (as well as old-timers) because you can make a lot of small experimental trades without being eaten by fees.

Thoroughly recommend it!

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#11) On September 24, 2011 at 9:28 PM, FleaBagger (29.21) wrote:

Xander - I think Fidelity actually does charge an annual fee or something like that.

He signed up with Choicetrade, a broker he found through a Google search that has no annual fee or inactivity fee, and has a $5 flat rate for stocks, and $0.55 per contract for options (He doesn't yet know that that's important, but I assured him that it is). 

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#12) On September 29, 2011 at 5:27 PM, FleaBagger (29.21) wrote:

Thanks everybody for your feedback!

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#13) On September 29, 2011 at 10:12 PM, ultrapaz (30.08) wrote:

I'm very happy with Scottrade. The only thing I don't like is 1.25 per option contract. It adds up but, they do a great job of filling markety orders above the bid price.

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