TD Ameritrade is one of the best brokers in the discount brokerage industry. This TD Ameritrade review will discuss the firm’s fees and commissions, powerful trading platform, investor research and educational tools, mutual fund offerings, customer service, and ease-of-use to help you determine whether their online stock trading is right for your investment needs. While not the cheapest online broker out there, TD Ameritrade does provide value for the cost.
TD Ameritrade Background
TD Ameritrade, also known to some as Ameritrade or TDA, began just over 40 years ago and is one of the pioneers in the discount broker space. Ameritrade has built their platform, offerings and reputation largely through acquiring other smaller online brokers over the years. Their most recent acquisition in 2009, Thinkorswim, is a well-known options trading platform created by former options market makers at the Chicago Mercantile Exchange.
While TD Ameritrade is best known as an excellent stock and options trading website for novice and professional investors, the fees and commission at TD Ameritrade are among the highest in the industry. Stock trades cost $9.99 per transaction and options trading cost an additional $.75 per contract. Looking at a TD Ameritrade vs. Etrade comparison, some investors might be better served opening an account with Etrade since they offer a tiered commission structure based on the number of trades you place.
Here is a complete list of recommended online stock brokers for your review.
TD Ameritrade Fees
High fees and commission aside, TD Ameritrade does offer value not found at other brokerages. Here are the details on TD Ameritrade’s pricing:
Stock Trades – $9.99 per stock trade. This is high, but still relatively competitive compared to other top discount brokers. TD also charges a steep $44.99 commission if you place a broker-assisted trade, so obviously we don’t recommend you do that.
Options Trades – $.75 per option trade, plus the standard $9.99 commission.
Mutual Funds – Over 2,000 no transaction-fee mutual funds, although Ameritrade does charge a steep $49.99 for other mutual funds. This is roughly the median mutual fund trade fee.
ETFs – TD Ameritrade does offer slightly over 100 commission-free ETFs. The list of ETFs include a diverse mix of equity, bond, international and commodity funds with many low-cost options.
It is important to note that, while TD Ameritrade’s fees and commissions are higher than other online brokerage firms, investors do have the ability to negotiate and reduce fees. TD Ameritrade customer service representatives do have the ability to provide discounted rates to clients with sizable portfolios. Even if you are new to investing and just started, you may be eligible if your parents have an account with TD.
TD Ameritrade Features
With the fee structure covered, let’s discuss some of the features of TD Ameritrade.
- Multiple robust platforms. TD Ameritrade has two platforms – their standard web-based platform called Trade Architect and one for Thinkorswim. Trade Architect is for your traditional investor and offers many advanced features, screening tools, and streaming news. Thinkorswim primarily caters to active stock and options traders who want to test strategies, analyze risk/reward scenarios, and perform high-level analyses. Unlike some other brokerage houses, TD Ameritrade offers all clients access to all trading platforms when you open an account with TD Ameritrade.
- Free streaming quotes. You also get access to free streaming quotes, although these days, this feature is just a given.
- Futures/Forex trading. Like TradeKing, TD Ameritrade provides both futures and forex trading. Trading futures will cost you $2.25 per trade and forex is free because TD is compensated on the spread.
- Branch Network. TD Ameritrade boasts a reputable branch network of about 125 locations. You can meet with investment consultants and advisors, make check deposits, withdraw funds and open accounts at branches.
- Promotions. TD usually offers a number of different promotions. The standard TD Ameritrade promotion gives free trades for 60 days when you deposit $3,000 and a tiered cash back offer.
TD Ameritrade Advantages
TD Ameritrade is one of the best discount brokers in the niche. TD offers a wide array of tools for virtually any kind of investor. Here are some of the top advantages of investing through Ameritrade:
- Powerful platform. This is really thanks to the Thinkorswim acquisition. The tool is quite robust for those who like to trade actively. The standard TD platform is good in its own right with plenty of research possibilities.
- No initial minimum. This is great for someone who wants to invest with little money. Not every broker has zero balance requirements to open an account, so this is a great way to help anyone start investing early.
- 24/7 Customer Service. This should be expected, but isn’t always the case. TD provides live phone support 24 hours per day as well as live chat support.
- Extensive research. Again, thanks to the Thinkorswim acquisition, TD offers stellar investment research – one of the best in the industry. Investools offers live training and online education on virtually any investing or trading topic along with online support.
- Managed accounts. If you have at least $25,000 in account value, you have access to managed accounts through TD’s Amerivest program. Ameritrade packages different investment vehicles for those who want their portfolio managed. The fees can be on the high side – up to 1.25% of the assets under management. Similarly, if you have at least $250,000 in account value, you have the option to be paired with an independent financial advisor outside their firm, which is known as the Advisor Direct program.
- Low fees. Outside of a standard $2 paper statement fee, TD Ameritrade is low on administrative fees. There are no hidden fees.
- Diverse account types. TD Ameritrade offers a broad range of account types, from standard brokerage and retirement accounts to corporate and trust accounts.
- Commission-free ETFs. TD pioneered the commission-free ETF. They offer just over 100 funds you can trade for free. There is one catch though – if you hold the ETF for less than 30 days, you’re hit with a $19.95 fee.
TD Ameritrade Disadvantages
No online broker is perfect. Here are some of the drawbacks to investing with TD Ameritrade:
- Fees and Commissions. TD Ameritrade’s fees and commissions are one of the highest in the industry. In an industry full of competitors, there is no reason to pay $10 per trade. However, TD Ameritrade will negotiate lower commissions if you trade actively enough or have a large enough balance in your investment account. If you take a look at TD Ameritrade vs. Scottrade, Scottrade offers lower fees, more commission-free mutual funds and more branch locations.
- High margin rates. TD Ameritrade charges one of the highest margin rates in the industry, with rates of 6.25% to 9%. With other brokers offering rates several percentage points lower, trading on margin at Ameritrade can be costly.
TD Ameritrade Review – The Final Analysis
For the right individual, TD Ameritrade is the best online discount broker. Yes, their fees and commissions are higher than other trading websites, but for the average long-term investor, this isn’t a deal breaker. Given the strength of their trading platforms, investing tools, research reports, online education programs, and customer service, TD Ameritrade is a great brokerage for beginners, long-term investors, active traders, or anyone looking for a reliable name in the industry.
On the other hand, if the higher fees are a concern, you might want to consider TradeKing or Scottrade for active trader platforms and lower investing costs. A robo-advisor like Betterment or Wealthfront may also be a suitable alternative for someone simply wanting portfolio management at a bargain.
If you want a powerful and versatile platform with access to solid investment research, TD Ameritrade is worth considering. Just beware that their fees and commissions are higher than the industry average and their advisors can be aggressive!