Ameritrade or Scottrade?

Choosing the online broker best suited to your needs is not an easy task. There are plenty to choose from and the best thing is to take your time and pick the best. The questions you should keep in mind are-how much help you need; whether you know exactly what you want or whether you want advice from the basics onwards, whether you need access to pink sheet stocks, how much you are willing to pay for a stock trade and the minimum you can invest.

In order to open an Ameritrade account, you need to invest at least $5,000. The company charges $5 per internet trade. It currently offers trades free of commission for 45 days if you fund your account with $2000. Further, if you fund your account with $25,000, you get $100 free. The stockquest provided by Ameritrade is excellent for evaluating or screening stocks. Through Ameritrade, you can isolate your own investment intentions correctly.

A downside is that they pay only about 2.75% on idle funds. Also the $5 fee can add up to a lot if you do a lot of trading. Also there are certain things which you can't buy with your Ameritrade account like bonds, currencies, commodities etc.

Scottrade also offers something called ‘trailing stops' which is a service that helps you minimize risk. Scottrade helps you to create your own stock environment. It will suit better investors who buy equities or mutual funds only occasionally, who tend to use a buy and hold strategy. It also offers a $7 flat fee for real time equity trading including stocks and ETFs. The charges for limit orders are $12 but at the same time, there are no hidden charges whatsoever. An account can be opened with as less as $500. ScottradeELITE, the Windows based trading platform can make trading really easy. The Free Gainskeeper is something which can keep track of both realized as well as unrealized gains or losses. Contacting the bank is hassle-free as there are quite a few local branch offices. The website of the company has also been improved recently; it now has more functions and is easier to navigate. The company does not charge inactivity or account maintenance fees either.

The downsides of the company are that the $7 commission per trade might not actually be so low compared to many others. The popular mutual funds are actually not free. The fund transfer is also slow. Again, there is no dividend reinvestment for stocks or ETFs. Further you can't buy fractional shares here. Scottrade's website is also not free of complaints.

Asha Prakash

Hi-Tech Editorial Division