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E-Trade Review 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

E-Trade is a giant in the investing industry, and has plenty of products to offer. Whether you’re new to the investing world or make trades often, E-Trade offers a comprehensive lineup of trading platforms and user-friendly apps, plus a wide selection of educational resources.

However, there are still fees for specific types of accounts and features. You also won’t get much of a bonus for moving your money to E-Trade — unless you have tens of thousands of dollars.

E-Trade
Visit E-TradeSecuredon E-Trade’s secure site
The Bottom Line: E-Trade is a good choice for both active traders and beginning investors.

  • Choose between three customizable, feature-rich trading platforms.
  • Offers strong customer support via chat, email, phone, or more than 30 local branches
  • There is a minimum balance to open non-retirement accounts.

Who should consider E-Trade

E-Trade has solid offerings for both beginning and advanced investors. If you’re a frequent trader who needs both mobile and online platforms, E-Trade is a good choice.

Beginning investors will like E-Trade’s streamlined trading platform, many zero commission trading options, and its broad selection of commission-free mutual funds, which make diversification cheaper and simpler. And, for those who want a little more help, E-Trade provides pre-built portfolios for mutual funds and ETFs (minimum $500 and $2,500, respectively).

For advanced investors, E-Trade offers customizable trading tools and ample charting options. A full range of investment choices including stocks, options and futures allows advanced traders to take diversification to the next level.

E-Trade fees and features

Current promotions

New accounts with a deposit of at least $5,000, may be eligible for a cash bonus, which can range from $100 to $2,500 depending on the amount deposited.

Stock trading fees
  • $0.00 per trade
Amount minimum to open account
  • $500
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures/Commodities
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $75 full account transfer fee
  • $25 partial account transfer fee
  • $0 yearly inactivity fee
Commission-free ETFs offered250
Mutual funds (no transaction fee) offered4400
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Coverdell Education Savings Account(ESA)
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • Custodial IRA
  • SEP IRA
  • Solo 401(k) (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
Ease of use
Mobile appiOS, Android
Customer supportPhone, 24/7 live support, Chat, Email, 30 branch locations
Research resources
  • SEC filings
  • Mutual fund reports
  • Earnings press releases

E-Trade trading platforms and tools

E-Trade offers three trading platforms: E-Trade Web, Power E-Trade and E-Trade Pro. There are also two mobile apps: The E-Trade Mobile app and the Power E-Trade app.

The standard E-Trade Web platform is for investors who are just starting out and new to investing basics but still want to manage their own portfolio. You can make trades, handle money transfers, check real-time quotes and commentary and get independent research from top news organizations.

The standard platform also gives you access to investment screeners, analyzers, backtesters and optimizers. If you’re new to investing or just need a refresher, there’s a library of articles and videos to help you educate yourself on the investing journey. There’s also access to market trends and active trader analysis.

Power E-Trade gives advanced investors risk/reward analysis and technical pattern recognition, helping users explore possible scenarios before they buy. A practice account option lets you trade stocks, options and other securities without rising real money.

E-Trade Pro is a full-featured trading platform geared toward experienced investors. Unlike the other platforms, users are charged $99.95 a month for E-Trade Pro. While E-Trade Pro is geared more toward advanced traders, its feature set is very similar to Power E-Trade, so before paying for E-Trade Pro, users should try out Power E-Trade.

E-Trade investment options

E-Trade lets you invest in a wide variety of asset classes, including:

  • Stocks (including non-U.S. stocks and penny stocks)
  • Bonds
  • CDs
  • ETFs
  • Fixed income
  • Mutual funds
  • Commodities
  • Gold, silver, other precious metals
  • Bitcoin and cryptocurrency
  • Futures

E-Trade charges no commissions on buying or selling U.S. stocks, ETFs, U.S. Treasuries and new-issue bonds. There are fees trade the following asset classes, including:

  • Bonds and CDs: There is a $10 minimum/$250 maximum commission per bond trade (except U.S. Treasuries and new-issue bonds) and for brokered CDs.
  • Futures: $1.50 per contract on futures and options on futures (except Bitcoin futures).
  • Options: $0.50 per contract on equity and index options when you place more than 30 stock, ETF, or option trades per quarter. Otherwise, it’s $0.65 per contract. It’s also $1.50 per contract for future options.

Fees for things like paper statements ($2), account transfers ($25-$75) and insufficient funds ($25), also apply.

E-Trade Core Portfolios

E-Trade Core Portfolios is the company’s robo-advisor platform. When you start with Core Portfolios, you’ll answer a short form with nine questions to verify what type of investor you are, what sort of risk tolerance you have, and your timeline until retirement. Core Portfolios then recommends two investment portfolios, comprising ETFs selected by the firm’s experts.

E-Trade doesn’t disclose the specific funds that make up each portfolio, although it does outline the portfolio’s asset allocation, plus a look at the 15-year historical returns for average, best-case and worst-case scenarios. The two options you’re presented with include a recommended portfolio and an alternative portfolio. All portfolios maintain a 4% cash allocation.

Because it’s an E-Trade product, you have the option to talk to an advisor at any of the company’s 30 branches. Some other robo-advisors don’t offer personalized human interaction, so this is an additional perk for hands-off investors.

Keep in mind that you need $500 to get started, with a 0.30% annual advisory fee. Other robo-advisors, like Betterment, don’t have account minimums and charge slightly lower annual advisory fees.

Strengths of E-Trade

  • Robust mobile and online apps: E-Trade offers two mobile apps and three online trading platforms. These apps and programs offer customizable account management, real-time quotes and access to news on demand. E-Trade’s purchase of OptionsHouse in 2016 also means skilled traders can easily access technical studies, charting tools and simple trade tickets to make high-volume trading easy.
  • Branch network: If you prefer in-person customer service and support, you’ll like the fact that E-Trade has more than 30 branches nationwide.
  • No required minimum to start: For taxable brokerage accounts, there are no minimum funding requirements.
  • Deep research. Before you even get started with E-Trade, you’ll have access to finding out which accounts work for you. Once you’re set up, read through research, market news, screeners and how your investments align with trends.

Drawbacks of E-Trade

  • Robo-advisor costs are higher. While a $500 starting investment isn’t much to get started with Core Portfolios, robo-advisor competitor Betterment doesn’t have a minimum to get started. Along with that, E-Trade charges a 0.30% annual advisory fee. That’s higher than the 0.25% charged by some competitors.
  • High minimum deposit required for account opening bonus: E-Trade touts its bonus incentives for depositing and transferring funds to its platform. However, you need to transfer very large balances to E-Trade to get the highest bonuses, so be sure to read the fine print first. For instance, to get the $600 bonus, you’ll need to deposit or transfer at least $250,000.
  • Some funds not offered. You’ll find plenty of offerings through E-Trade, as well as many different types of accounts to choose from. But you won’t find forex offerings from this company.

Is E-Trade safe?

If you’re looking for a safe platform to invest money, you have no worries with E-Trade. E-Trade bank accounts are FDIC-insured and they are compliant with all registration and license requirements. E-Trade is also a SIPC member, which means your account is protected for up to $500,000 in cash and securities.

Of course, while your accounts are protected in the event that E-Trade faces financial troubles, this doesn’t mean you can’t lose money in investment accounts. Stocks, bonds and other securities can decline in value and there’s always a risk associated with investing. That’s why it’s so important to understand any investments before you buy them.

Final thoughts

E-Trade offers options for novice investors and more experienced traders, including three different trading platforms and two mobile apps. Despite the account minimums and some fees that are higher than competitors, E-Trade is still a solid choice for most investors. If you don’t have the minimum amount to get started on any of the accounts that require it, you may want to look elsewhere. Otherwise, you have plenty of great options with E-Trade.

Fees mentioned in the article are accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dori Zinn
Dori Zinn |

Dori Zinn is a writer at MagnifyMoney. You can email Dori here

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Investing

401(k) Alternatives to Consider

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Investing in a work-sponsored 401(k) account is one of the easiest ways to save for retirement. But if your work doesn’t offer one or it isn’t that great, there are 401(k) alternatives you can turn to for your investment needs.

Why you should consider 401(k) alternatives

Having a 401(k) through your job is a simple step to investing in your retirement without much work, but there are some downsides of having one.

Employer-sponsored plans handle a lot of the labor for you, which is one major benefit to having one. However, you may still be responsible for any fees associated with having a retirement plan through your work. It’s possible you’ll never notice these fees either, as it’s not a line-item on your paycheck and is taken directly from your investment funds.

A TD Ameritrade survey found that about one in four Americans know how much they’re paying in 401(k) fees compared to 96% of Americans that know how much their streaming services cost (such as Netflix and Hulu). 401(k) fees can cost upwards of 5%, while Robo-advisors — like Betterment — only charge an annual fee of 0.25%.

Depending on your employer and specific plan, you may run into some other issues such as limited investment options and restricted flexibility compared to a retirement plan you handle on your own.

401(k) alternatives

While you should take advantage of an employer-sponsored 401(k) plan if it’s available, it doesn’t need to be the only plan you have. Here are some other options worth considering:

Roth IRA

A Roth IRA is an individual retirement account that allows you to contribute up to $6,000 a year. Withdrawals are tax-deductible and you can make taxable contributions for as long as you’d like with no age limitations.

For Roth IRAs, there is an income requirement to meet. For 2020, you’ll need to make less than $139,000 as a single filer or less than $206,000 if filing jointly to participate.

Traditional IRA

A Traditional IRA is also an individual retirement account that allows you can contribute up to $6,000 each year. Taxes work opposite of a Roth, and instead of tax-deductible withdrawals, your contributions are taxed. This means all the money you put into a Traditional IRA is tax-free.

Traditional IRAs have a deadline that prevents you from making contributions — and requires minimum distributions — by 70 and a half years old. Your contributions are taxed once you start taking money out.

SEP IRA

A SEP IRA, or Simplified Employee Pension, is an individual retirement account for sole proprietors or business owners with one or more employees. This plan allowed you to save up to 25% of your gross annual salary if you’re self-employed.

SEP IRAs are like traditional 401(k) plans — your contributions aren’t taxed but your withdrawals are. Like a traditional IRA, you’re required to make withdrawals starting at 70 and a half years of age.

Solo 401(k)

A Solo 401(k) is a lot like a SEP IRA in that it’s made for self-employed workers who don’t otherwise have a 401(k) option through their workplace.

For a Solo 401(k), a portion of your income is deferred so it can grow tax-free until retirement. Like a traditional 401(k) plan, you can contribute up to $19,500 of your earned income (plus an extra $6,500 if you’re 50 years of age or older).

Health Savings Account

A Health Savings Account (HSA) is like a personal savings account that can only be used for healthcare-related expenses. You must have a High-Deductible Health Plan (HDHP) to qualify for an HSA.

A major draw of HSAs is its tax-free triple threat. You can contribute and withdraw without tax obligations while your earnings grow tax-free. For 2020, you can contribute up to $3,550 for yourself or $7,100 for your family.

Even with an HSA and lower monthly premiums, you may not be able to afford the high deductible on your health plan. If you have an emergency or an unexpected cost and not enough in your HSA to cover the balance, you’ll need to pay for those expenses out of pocket.

Taking money out of your HSA for non-healthcare costs is expensive, too. Your withdrawals will be taxed and you’ll have to pay a 20% penalty. If you’re over 65 years of age, only your withdrawals will be taxed, but you won’t face a penalty.

Annuities

Annuities, sold by insurance companies, is a form of investment that will pay-out to the investor through a series of recurring payments. The investor pays a lump sum of money to the insurer who then invests your money.

For immediate annuities, also known as income annuities, you’ll start receiving money right away. This may be appropriate for those that are close to retirement as there isn’t a lot of time to build your investment. Deferred annuities start payouts later, which gives your money more time to grow. There are no contribution limits to deferred annuities.

Long-term care annuities are a form of deferred annuities, but with a little extra security. This may be a good option for those with pre-existing conditions or other health issues. Those in good health may want to look at alternatives, such as life insurance with a long-term rider. Be mindful that you’ll need to pay a large sum of money to open an annuity regardless of the type of annuity you choose.

Taxable investment account

While IRAs focus on tax-free contributions and withdrawals, taxable investment accounts tax on money earned in a given year.

Unlike IRAs, you can withdraw money from a taxable investment account at any time instead of hitting a certain age (usually 59 and a half). You also aren’t required to take RMDs when you reach the age of 70 and a half, either.

You can open taxable investment accounts through robo-advisors or traditional brokerages. Robo-advisors allow you to be more hands-off with your investments and do most of the leg-work work for you. Online brokers allow you to have more control over your investments.

If you don’t have a lot of cash to start investing, you can look into micro-investing. While some robo-advisors and online brokers have account minimums, micro-investing gives you the chance to invest your spare change.

Another low-cost alternative to a 401(k) is investing in index funds. These are like mutual funds and are “passive” income earners. That means they’re not “actively” managed by a human, which is how most robo-advisors work to keep fees and costs low.

Bottom line

There are a lot of options available for an alternative 401(k) solution. How you decide to invest your money is entirely dependent on how much money you have to invest, the type of investor you are and the options available through your current employer — if you have one.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dori Zinn
Dori Zinn |

Dori Zinn is a writer at MagnifyMoney. You can email Dori here

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Investing

What You Need to Know About Traditional IRAs in 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Whether you have a Traditional IRA by itself or alongside your employer-sponsored 401(k), changes are coming in 2020 that you need to be aware of.

Before you learn about the new rules, make sure you understand what a Traditional IRA is and how these changes can impact your retirement savings.

What is a Traditional IRA?

An IRA is an investment account that you can set up to save money for retirement.

When you invest your money into an Individual Retirement Account (IRA), you have your choice between a few different account types. The most popular ones are Traditional and Roth IRAs.

The most significant differences between these two IRA types are the tax implications. Roth IRAs are taxed when you make contributions, while Traditional IRA contributions go in tax-deferred. There is no wrong choice for an IRA, but you should pick what works best for your financial situation.

Traditional IRA basics

Here’s how a Traditional IRA works:

  • Your contributions to a Traditional IRA are tax-deductible the year you make contributions if you fall under the income limits for the deduction. It’s not until you withdraw money from a Traditional IRA that you are taxed. These withdrawals are then taxed as ordinary income.
  • You can make contributions until you’re 70 and a half years old, but you must also start taking minimum distributions at that age.
  • Traditional IRAs don’t have income restrictions for contributions like Roth IRAs do.

Traditional IRA contribution rules

  • The maximum amount you can contribute in 2020 is $6,000.
  • If you’re 50 or older, you can contribute an extra $1,000 making your max contribution $7,000. This is considered a “catch-up” contribution, allowing you to save as much as possible before you reach retirement age.
  • If you’re contributing to a retirement plan through your job, like a 401(k), you can also contribute to a Traditional IRA.
  • If you make rollover contributions to an IRA, those contributions are exempt from the contribution limit rules.

You can contribute to both a Traditional and a Roth IRA in the same year, but your contributions can’t exceed these limits across the accounts.

Traditional IRA tax deduction rules

The 2020 deduction rules are based on your filing status and adjusted gross income (AGI). How much you earn impacts directly how much of your Traditional IRA contributions you can deduct from your federal and state income taxes.

If you have an employer-sponsored retirement plan:

To qualify for a full deduction up to the amount of your contribution limit, you need to earn $65,000 or less if you’re filing independently. If you’re married or filing jointly, you’ll need to earn $104,000 or less.

You can qualify for a partial deduction if you make between $65,000 and $75,000 as a single filer or between $104,000 and $124,000 if you’re filing jointly.

If you don’t have an employer-sponsored retirement plan:

You can qualify for a full deduction of the amount of your contribution limit no matter what your salary is whether you’re filing jointly or independently. Keep in mind that if you file jointly, your partner can’t have a plan that’s covered by work.

If you don’t have a plan covered by work but your spouse does, your AGI will need to be below $196,000 to qualify for a full deduction.

Traditional IRA withdrawal rules

When it comes to taking money out of your Traditional IRA, age matters.

If you’re younger than 59 and a half: You can withdraw but your withdrawals are subject to a 10% tax penalty. Depending on your situation, though, you might be able to get an exemption.

Exemptions to the age rule include:

  • First-time home purchase
  • Qualified educational expenses
  • Death
  • Disability
  • Unreimbursed medical expenses
  • Health insurance if you are unemployed
  • Qualified military reservists called to active duty

If you’re 59 and a half or older: You can start taking money out of your Traditional IRA without getting hit with a penalty.

If you’re 70 and a half: With Traditional IRAs, you must start taking money out at this age. It’s also known as a required minimum distribution (RMD).

Deciding if a Traditional IRA is right for you

If you’re unsure if you should open a Traditional IRA, make sure you compare your options to other retirement plans.

  • Roth IRAs. Like Traditional IRAs but contributions are taxed instead of withdrawals.
  • SEP IRAs. These are IRAs for self-employed people or small business owners.
  • 401(k)s. These are retirement plans offered by your employer. Some jobs offer a company match.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dori Zinn
Dori Zinn |

Dori Zinn is a writer at MagnifyMoney. You can email Dori here