How Much Does It Cost To Open An Online Brokerage Account?


I recently received this email from a reader named Jeff:

Ron, how much does it take to set up an account at one of the online brokerages you’ve written about? I don’t have much to get started but I’d like to open a Roth IRA and maybe even a regular taxable investment account. Thanks for your reply and I love your site. You have a TON of information and I’m trying to sort through it all. I have especially enjoyed your recent series on Exchange Traded Funds (ETFs).

Thanks Jeff. Investing in your future really doesn’t cost that much, though some brokerages do have minimum starting investment amounts, others allow you to set up your online brokerage account without funding it at all! That means you can get your brokerage account set up and ready to go when YOU’RE ready to invest (and remember: you have to be ready). Of course,  to earn a return you have to put up some money somewhere eventually.

And please, DO look at opening and funding an online brokerage account as an investment in your future. One of the best descriptions I’ve heard is that you’re sending money to your future self. That rang true for me and is one of the reasons I invest my money.

Here’s a table of the minimum starting investment required at several of the largest and most reputable online discount brokerages:

Broker (click to view) Minimum Starting Investment Stock Commission Notes
Scottrade $500 $7.00 per trade Well established, 30 year old company with local branches in dozens of cities, probably near you.
E*trade $500 $9.99 per trade Popular and well known for their “talking babies” ads and their long history in the business.
TradeKing None $4.95 per trade Highly rated broker that has won awards its trading tools and customer service over multiple years.
tradeMONSTER $2,000 $7.50 per trade Ranked by Barron’s as among the best of the best in online brokerage houses.
Zecco None $4.95 per trade A deep discount brokerage that allows you to trade from your Facebook account. Trading from Facebook?
Sharebuilder None $4.00 per trade
(on automatic plan)
No account minimum, no investment minimum, no inactivity fees and an easy automatic investing program.
optionsXpress
None $9.95 or $0.01/share for over 1000 shares One of the easiest online brokerages to set up. No paper forms or signatures required.
optionshouse
$1,000 $3.95 This is basically the least expensive online brokerage for most traders and investors.

 

Who do I use as an online discount broker?

I personally use Scottrade and I really love their Knowledge Center and how incredibly easy it is to use the site. I can read up on the latest relevant news, get investment education, and get tax tips, investment strategies and much more. For a finance junkie like me, it’s incredible.

That said, if I were starting out again today with an online brokerage, I think I’d probably go with either optionshouse or Sharebuilder. You just can’t beat their trading commissions and when you’re investing small amounts, trading commissions are an important consideration.

For example, if you’re investing $500 and have a trading commission of $10, you’re actually only investing $490. You’ve already given up 2 percent!

Another great “option” at optionXpress is their Virtual Trading Account with $25,000 in play money. You can experiment with your trading ideas with no risk.

What if I’m not comfortable making investment decisions alone!

Of course, if you’re not comfortable making your own investment decisions, there’s always WiserAdvisor, which matches you with professional financial planners in your area. You’re able to choose between different financial advisors similar to the way LendingTree or InsureMe.com matches you with mortgage companies or insurance agents.

Setting up a brokerage account is easy

Online brokers are eager to get your business and as a result, competition is fierce! How that benefits the beginning investor is that these brokers will do whatever it takes to make things easier to get you up and running.

Remember, no money needed to open an account at:

About the author

Ron has written 1085 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a partner in a national building materials company.

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