In todays day and age very few people, especially millennials, use a traditional stock broker to manager their investments. Thanks to the internet, trading stocks can all be done from your couch. There are tons of different online stock trading platforms and each one offers its own unique advantages. In this post I will discuss 3 popular trading platforms that I think will appeal to the average millennial or novice investor.
Related: Introduction To Stock Investing
Scottrade is a well known brokerage that has been in business since 1980. If you watch CNBC you have likely seen one of their commercials.
Supported Devices: Scottrade is available on both desktop and mobile devices.
Trading Fees: Always look at the trading fees when choosing a brokerage. After all, trading fees take away from your return. Scottrade charges $7 per trade, but there are extra fees for stocks below $1 per share, options, and mutual funds. Do keep an eye on Scottrade’s promotions as they tend to offer special promotions from time to time in which you can receive a limited number of free trades or extra cash for trading.
Opening An Account: To open an account, Scottrade requires a minimum balance of $2,500. If you choose to open an account with Scottrade the process is very easy and can be done in less than 10 minutes.
Customer Service: This is where Scottrade shines. They have more than 500 branch locations you can stop by if you wish. In addition, they offer live chat assistance during business hours to address any problems you encounter. By doing a quick review online you will find that Scottrade receives rave reviews for their customer service.
Research Data And Tools: Another advantage of Scottrade is they offer a wide range of analytical tools, research data, and reports you can utilize to research and evaluate an investment. You can do a large majority of your stock research and analysis without ever leaving the platform.
Related: Make Your Money Work For You
OptionsHouse doesn’t have the longevity that Scottrade has, so unless you have researched brokerages in the past you may not have heard of it. OptionsHouse was established in 2005, but became a part of E*TRADE in 2016. As you may have guessed by the name, OptionsHouse was originally marketed towards investors interested in trading options at a low cost.
Supported Devices: OptionsHouse is available on both desktop and mobile devices.
Trading Fees: OptionsHouse charges $4.95 per trade, which may save you a lot of money in fees compared to Scottrade. As with Scottrade, there are extra fees for trading options and mutual funds.
Opening An Account: A major perk for new investors is that there is no minimum account balance to open an account with OptionsHouse, but they do offer $1,000 in free trades when you deposit $5,000 or more. If you decide to open an account with OptionsHouse the signup process can be done in a matter of minutes.
Customer Service: OptionsHouse doesn’t receive as much recognition for customer service as Scottrade, but they still offer reliable customer service in the form of live chat, email, or phone. Unlike Scottrade, OptionsHouse doesn’t offer physical locations. The lack of physical locations is really the only thing keeping OptionsHouse from being just as good as Scottrade in respect to customer service.
Research Data And Tools: Similar to Scottrade, OptionsHouse offers a wide range of analytical tools, research data, and reports to assist you in making wise investments.
Robinhood is a new player in the stock trading industry catered specifically towards millennials. The brokerage was founded in 2013 in Palo Alto, California by two recent Stanford graduates, who are millennials themselves.
Supported Devices: In order to keep their operating costs down, Robinhood is currently only available on iPhone, Apple Watch, and Android as an app. If you want to trade via desktop this may not be the right brokerage for you.
Trading Fees: Robinhood prides itself in being the only brokerage that offers completely free trades. Unlike Scottrade and OptionsHouse, Robinhood only allows you to trade stocks and ETF’s.
Opening An Account: Like OptionsHouse, Robinhood does not require a minimum opening balance. You can literally deposit $1 into your account if you want. Opening an account with Robinhood takes less than 5 minutes.
Customer Service: One of the biggest downfalls of Robinhood is customer service. They lack both live chat and physical locations, but do offer a phone number to call during business hours as well as an email address you can contact for support. That being said, Robinhood generally receives poor reviews for their customer service. If customer service is important to you in an online brokerage, Robinhood may not be the best option.
Research Data And Tools: Another way Robinhood keeps their operating costs down is by minimizing analytical tools, research data, and reports. They do have a news feed that pulls up articles related to each stock, but these alone are not enough information to thoroughly research an investment. Robinhood recently made earnings calls and earnings history available, but to really analyze the earnings you will still need to leave the platform and do your own online research.
From my personal experience, I have found that some of the data Robinhood does provide, such as the P/E ratio and volume, tends to be a bit off. For this reason, I suggest using Robinhood solely for the purpose of making trades and doing all of your research and analysis elsewhere.
Which Is The Best Platform For You?
Each platform mentioned above offers its own unique set of advantages. Choosing the best platform to trade on really comes down to personal preferences and what you value in an online brokerage.
Opt for Scottrade if you want superior customer service, analytical tools, and are able to meet the minimum balance requirement of $2,500. The major drawback of Scottrade is the $7 trading fee. If you plan to make frequent trades, you can rack up a lot of trading fees and ultimately lower your return. For the frequent trader, Scottrade is not the best option.
If physical branch locations are not important to you I would consider OptionsHouse to be a better choice than Scottrade. With OptionsHouse you still get all of the great features of Scottrade, but there is no minimum balance and the trading fee is only $4.95. For the low budget investor, having no minimum balance and a lower trading fee is very attractive in my opinion.
For the new and low budget investor I think Robinhood is the best choice assuming you have an iPhone, Apple Watch, or Android. The reason I say this is because there is no minimum balance and the trading fee is $0. The main disadvantage with Robinhood is their poor customer service, but from my 2 years of experience using Robinhood I have not had a single reason to contact customer service. Robinhood also lacks the research data, reports, and analytical tools you have with Scottrade and OptionsHouse, but I have found most of these tools can be accessed for free online. Sure, it may be more convenient to have all of the tools on your trading platform, but ultimately you are paying for those tools via trading fees. I think it’s best to avoid the trading fees and spend a little more time doing research and analysis online.
Related: Invest Now For Big Returns Later