Charles Schwab has been known as a discount broker for decades, and its online brokerage outfit maintains that reputation. But don’t think just because you’re not paying a lot that you don’t get a lot. For a competitive trading fee, you’ll receive great customer service, solid execution, an easy-to-navigate website with a sophisticated trading platform and a wealth of research and educational tools. It’s really hard to go wrong with this venerable broker.
Who should consider Charles Schwab
Schwab is going to do right by any level of investor. Beginners should love its extensive educational resources and its responsive customer service, while advanced investors should love its sophisticated trading platform. All investors will love its competitive pricing, with the benefits of a full-service broker.
Cost-conscious investors should love Schwab not just for its trading fees but also for its research and plethora of commission-free ETFs and no-load Mutual funds. Anyone looking for a complete experience at a bargain price will feel right at home here.
Charles Schwab fees and features
500 free trades with a qualifying net deposit of $100,000
|Stock trading fees|
|Amount minimum to open account|
|Account fees (annual, transfer, inactivity)|
|Commission-free ETFs offered|
|Mutual funds (no transaction fee) offered|
|Offers automated portfolio/robo-advisor|
|Ease of use|
|Mobile app||iOS, Android|
|Customer support||Phone, 24/7 live support, Chat, Email, 346 branch locations|
Strengths of Charles Schwab
- Competitive trading fees and no minimum: Schwab makes it easy for those with little coin to get started in the investing game. Schwab’s pricing at $4.95 per stock trade (and $4.95 plus $0.65 per contract for Options) puts it right at the standard for low-cost full-service brokers. Plus, its $0 account minimum means you can get rolling with even less. That’s a solid deal for all the other extras Schwab provides, including research and a professional trading platform. Compare that pricing to Fidelity at $4.95 per trade, while TD Ameritrade, E-Trade and Merrill Edge sit higher at $6.95.
- Extensive research and educational tools: Speaking of research, Schwab offers a lot of it. From market commentary to stock screeners, advanced charting to Schwab stock lists, the broker offers many resources that allow you to ferret out interesting stock ideas. All of that is aided by stock pages with news, press releases and SEC filings to help you with your primary research. You’ll also receive free research from Morningstar, Ned Davis, Credit Suisse, CFRA and others. It’s a wide range of well-regarded reports. Meanwhile, those just getting started will benefit from online courses and modules that get you up to speed on how to invest.
- Customer service: Need someone on the phone at 3 a.m.? Schwab can handle that. The company offers phone service 24 hours a day, seven days a week. But if you don’t need that level of service, Schwab also offers web chat and email. Plus, while Charles Schwab is known for its discount online service, the company also has more than 340 branches around the U.S.so you can stop by for a full consultation. You really can interact in any way that works for you.
- Low-cost funds: Schwab has done a lot over the years to make investing low-cost, and its current selection of exchange-traded funds (ETFs) and mutual funds follows that tradition. The broker offers more than 250 no-commission ETFs, and these funds have no early redemption fees. You won’t have to guess which funds are covered, either, as the broker provides an easily searchable list that helps you sort for the kind of fund you’re looking for and provides details on the expense ratio and performance.Schwab doesn’t stop there, offering around 7,300 no-load Mutual funds . These funds are sold without a sales charge (otherwise known as 12b-1 fees). But Schwab makes Mutual funds even more investor-friendly by offering more than 4,000 with no transaction fee. So these are all savings that can be rolled into your investments.
- Sophisticated trading platform: Schwab’s basic trading platform is completely serviceable — offering smooth, no-frills order entry that works if you’re entering a one-off order or not trading frequently. But for advanced traders who need efficiency, Schwab also offers a more robust platform, StreetSmart Edge. StreetSmart Edge is available on the web or as a downloadable app, and it includes free streaming data, a customizable trading layout and tools. It also provides the ability to expand the platform to multiple monitors. The app provides a stream of CNBC, and an all-in-one trade ticket allows traders to enter multiple order types and securities in just one window. Real-time news and screeners allow you to hunt for profitable ideas, while real-time trading alerts let you move on an idea immediately.
Drawbacks of Charles Schwab
- Difficulty qualifying for new account bonus: While many brokers offer a nice bonus for any new trader, with Schwab you’ll have to deposit $100,000 to get it. But then Schwab rolls out the red carpet, with 500 free stock or Options trades that are good for up to two years. Still, for that kind of deposit, you can sign up for 100 free stock trades every month from Merrill Edge, though without Options trades. However, there is a more modest bonus available: If you can get a friend to refer you to Schwab and you open a new account, you can pocket a $100 bonus.
- Pricey foreign stock trades: Pricey stock trades might not be a deal breaker, but if this is a must-have for you, then you’ll be better off somewhere else. Schwab charges at least $100 or 0.75% of the principal, with no limit, on stock trades placed directly on foreign exchanges, and you won’t be able to place an online or automated phone order. It’s important to note that this pricing does not include foreign stocks traded on American exchanges. However, if you’re looking to buy a foreign stock on the over-the-counter market, you’ll need to cough up an additional $50 foreign transaction fee, though you can place these trades online or via automated phone order.
Is Charles Schwab safe?
Charles Schwab has been around since 1971 and numbers 11.5 million active client accounts. Plenty of investors trust Schwab because it’s done right by them, and they’ve entrusted the company with about $3.4 trillion in assets under management. The brokerage is a member of the Securities Investor Protection Corporation (SIPC), which protects investors’ assets up to $500,000 per account (including up to $250,000 in cash only) if the brokerage is unable to return the assets. Investors still can lose money in the market, of course, because those investments are subject to risk.
For a very reasonable trading fee, investors receive the full gamut of research, customer service, trading platforms, low-cost funds and a well-organized web interface. While many brokers are trying, it’s difficult to beat the total package that Schwab offers investors, and it’s simply hard to go wrong.
Schwab ranks among the best of the full-service brokers, and its most comparable peers include Fidelity Investments, Merrill Edge and TD Ameritrade , though the latter two charge higher trading fees.