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Investing Basics: How to Save for Retirement

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.

A successful retirement plan is like the moon — always present and requiring lots of thought to reach. Unfortunately, many Americans today appear woefully unprepared to save enough money to enjoy any sort of retirement worthy of the name, with a recent Fed report finding 25% of non-retirees lack any sort of savings at all.

We can’t promise to lay out a detailed blueprint for how to reach your retirement (or the moon), but we can tell you how to get past the toughest part — knowing how to get started.

Let’s address these points one by one so you have a good idea of where to start your retirement journey.

Figure out how much you need to save

How much will you spend every year in retirement?

Unless you’re writing an episode of “Lost,” you need to start at the beginning, and in the case of saving for retirement, that means knowing how much you need to save. This number will serve as the finish line for your race to retirement, but keep in mind that it will be a rough estimate.

In the simplest terms, you’re trying to figure out how much money you need to live a comfortable lifestyle — which is up to you to define — until you die. Your first step should be to estimate how much income you’ll need for every year in retirement. There’s plenty of online worksheets and calculators that prompt you with questions to start thinking about your future expenses. Some basics include:

  • Health care costs, including medication and insurance
  • Housing
  • Food and entertainment
  • Transportation

This may sound overwhelming, but one shortcut you can take is to calculate all of your annual expenses now and make an educated guess on how those numbers will change when you reach 65 years old. Keep in mind, you may spend less on certain things, like transportation and entertainment, but more on others, like health care.

Calculating your ultimate nest egg goal

Now that you have a decent estimate of how much income you’ll need each year to sustain your laid-back retirement lifestyle, you can use that number to calculate your final savings goal. There are several theories on how to think about this, but one of the most popular is:

The 25x rule: The idea here is that you need to have 25 times your annual retirement expenses saved away in investments accounts before you can tell your boss what you really think of him. Each year, you withdraw roughly 4% from your savings — accounting for inflation from that first year you withdraw. According to a study by a team of professors from Trinity University, a nest egg built on this basis should last you at least 30 years.

As an example, assume you calculate your yearly expenses in retirement at $70,000. That means you’ll need to have saved $1.75 million in your accounts before you can make that first 4% withdrawal. Even a more modest income of $50,000 —which is close to the average expenditures of households headed by those 65 years or older, according to the latest data from the U.S. Bureau Statistics — requires amassing $1.25 million.

How much should you save every year?

Given the considerable size of the nest egg you’ll have to build up, the importance of sticking to a savings plan cannot be overstated. Again, the key here is not to feel overwhelmed and surrender to paralysis.

“Set your goal and write it down,” said Leon C. LaBrecque, CFP based in Michigan. LaBrecque recommends it’s a specific and achievable goal, such as 18% of your year’s gross income, and advises that you shouldn’t worry if you need to build up to that goal over time.

Putting away 18% of your gross annual income may sound like an unbearable and unsustainable sacrifice, especially if you have student loan debts, a mortgage and other pressing expenses. The beauty of calculating how much money you need to save overall is that you can pace the rate of your savings — within reason. Unless you expect a seven-figure windfall on your 60th birthday, you don’t want to put off aggressively saving for too long.

Fortunately, you have plenty of tools available to help you reach your savings goals, which we’ll look at below.

Max-out your retirement accounts

A recent Stanford study found approximately half of all workers in the United States qualify for some sort of employer-sponsored retirement savings account. The most well-known and prevalent of these plans is the 401(k), which allows employees to put a portion of their paycheck in a tax-deferred account. That means the money in your 401(k) is placed there before taxes and remains safe from the IRS until you start withdrawing funds from the account in retirement.

Many employers pledge to match whatever contribution you make to your 401(k) as part of their benefits package. The exact method and amount depends on the individual employer. You want to take advantage of the employer match and push it to the policy’s limits, otherwise you’re just leaving money on the table. “At least maximize the match, but more is always better,” said Kenneth B. Waltzer a CFP based in Los Angeles.

Waltzer also suggested younger savers look into choosing a Roth 401(k) if the employer provides that option. The main difference between a traditional 401(k) and a Roth 401(k) is that with the Roth option, the money you contribute is taxed before it goes into the account, instead of when you take your withdrawals.

What’s the difference for younger savers? Chances are your income places you in a lower tax bracket as a 20 year old than when you’re 50, reducing your total tax payments.

Open up your own IRA

Regardless of whether your job offers you a 401(k) account or not, you should also set up your own tax-advantaged retirement account. Individual Retirement Accounts (IRAs) come in all different shapes and sizes, meaning no matter what your employment or economic situation, you’ll likely find one to suit your needs. The two most common IRAs are:

  • Traditional IRA: The vanilla ice cream of retirement accounts, this IRA works a lot like a traditional 401(k). The money you place in a Traditional IRA remains sheltered from taxes until you begin withdrawing your money. You can begin withdrawals without paying a penalty at age 59 ½ . There’s an annual cap to how much you can contribute to any IRA, with Traditional IRAs maxing out at $6,000 (or $7,000 if you are 50 or older).
  • Roth IRA: As you may have guessed from reading about 401(k)s, money placed into a Roth IRA is taxed at your current income bracket. However, when you make your withdrawals, the money is tax-free. Younger people who believe they’ll pay more taxes in the future should choose this type of IRA over the traditional version. The contribution limit is $6,000 a year ($7,000 if you’re 50 or older).

Contribution rules unique to Roth IRAs

Unlike a Traditional IRA that allows you to contribute up to the limit without any restrictions, Roth IRA contributions are governed by your modified adjusted gross income (MAGI). The more you earn, the less the government allows you to contribute to your Roth IRA, eventually barring you from contributing anything. This begins to kick in when your MAGI is around $122,000 (if you file as single) or $193,000 (if you file as married jointly).

Prioritize the right investments for your age

Your 401(k) and IRA accounts don’t just magically grow your money for you. They serve as a tax-advantaged shelter for the earnings from your investments, and what you choose to invest in can make or break your retirement savings plan.

“In the beginning, what you save means the most, so focus on saving as much as you can and don’t worry about markets or research,” said LaBrecque. “As you approach retirement, preservation [of your savings] become critical.”

In other words, allocate your investment portfolio so it’s heavily weighted toward high-earning but more risky stocks when you are younger and can make up the financial hits you may take from the market.

“If you are age 30, you should have a good portion invested in equities, not all in bonds or cash,” said Joyce Streithorst, a CFP based in New York.

When you start injuring yourself in your sleep, that’s when you need to think about shifting your money into lower risk products since you don’t have an additional 40 years to save. Examples of these include:

Stick with the plan

This final piece of advice comes with a caveat, which is you need to remain flexible while still working toward your retirement goal. Events will crop up in your life that both help and hinder your plan, and you can’t let yourself either grow discouraged or overconfident. The most important action you can take is to keep plugging away at your savings, even if things look grim.

“Forget market timing. Forget hot stock tips,” said LaBrecque. “The key is to stay in the market. Missing the best 10 days in the S&P 500 over the last 20 years [would] cut your return in half. I’ve been doing this for 40 years and have always had some assets in the markets.”

You’ll also have to balance saving money for retirement with living your life. While some adherents of the FIRE movement may disagree, making yourself miserable for the sake of your retirement savings just makes you a slave to the future.

You are the most important part of the plan

The most crucial part of your retirement savings plan will be, well, you. Determining how much income you’ll need every year, how you can cut back on today’s expenses in order to save enough, how to invest and more depend on your lifestyle and current means. However, the above steps should provide you with a guide to getting started and bring you that much closer to reaching your work-free nirvana.

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.

James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here

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Investing

Personal Capital Review 2019

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.

Personal Capital is a hybrid of a traditional brokerage and a robo-advisor. It offers portfolio design via algorithm—like many competing robo-advisors—and also lets you buy individual stocks, design portfolios and access human financial advisors. In fact, the company dislikes the term robo-advisor, and prefers to call itself a “digital wealth manager.”

Be advised that the minimum balance requirement is $100,000, meaning that Personal Capital is only a viable choice for investors who have already accumulated a sizable nest egg. It’s not a product for beginners, although it is a great choice for people who have sufficient funds.

Founded in 2009 by a former CEO of PayPal and Intuit, the company claims that it offers “full financial planning at no additional cost.” It charges an asset management fee of 0.89%, which is on the low side for personal financial planning, but it’s on the high side for robo-advisors, most of whom charge less than 0.50% per year. The fee drops as low as 0.49% for high-balance investors, but need a balance of more than $10 million to qualify for the lower rate.

Personal Capital
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The Bottom Line: Personal Capital offers automated and active investing features, as well as in-depth financial planning advice, all of which should appeal to users who can swing the minimum balance requirement of $100,000.

  • Access to financial advisors at all asset levels
  • Individual stock investing and customized portfolios
  • Useful financial dashboard tools

Who should consider Personal Capital

Personal Capital is best suited to high-balance investors looking for a less expensive and more hands-off strategy than working with a full-service investment firm. The initial phone consultation with an advisor can help users evaluate their financial position and what they need to do to hit their goals.

The minimum balance required to begin investing with Personal Capital is $100,000, and you need at least $200,000 in investable assets to unlock the ability to customize a portfolio with individual stocks. This level also earns you recommendations and support from two dedicated financial advisors.

Note that anyone can take advantage of the site’s free account aggregation and monitoring tools, which let you test retirement and savings assumptions and make sure your plan will help you achieve your goals.

If you are a socially conscious investor, Personal Capital offers an investment strategy that restricts certain businesses or industries based on their ESG rankings.

Personal Capital fees and features

Amount minimum to open account
  • $100,000
Management fees
  • 0.89% for accounts of $100k - $1M
  • 0.79% for accounts of $1M - $3M
  • 0.69% for accounts between $3M and $5M; lower fees for accounts over $5M
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
Portfolio
  • Personal Capital offers 6 high-level asset classes.
Automatic rebalancing
Tax loss harvesting
Tax loss harvesting detailPersonal Capital's tax optimization process focuses on three key areas: tax allocation, tax loss harvesting and tax efficiency.
Offers fractional shares
Ease of use
Mobile appiOS, Android
Customer supportPhone, 24/7 live support, Email, 5 branch locations

Fee tiers and wealth management options

Personal Capital charges variable annual management fees depending on your total account balance:

  • Up to $1 million: 0.89%
  • First $3 million: 0.79%
  • Next $2 million: 0.69%
  • Next $5 million: 0.59%
  • Over $10 million: 0.49%

It offers three levels of wealth management services, depending on your total account balance:

  • Investment Service: Balances of $100,000 to $200,000 get access to a team of financial advisors and an actively managed portfolio of ETFs.
  • Wealth Management: Account balances of $200,000 to $1 million unlock access to two dedicated financial advisors, specialists in real estate and stock options and a customized portfolio with regular reviews, as well as enhanced tax optimization.
  • Private Client: When your account balance includes more than $1 million, you get two dedicated financial advisors; priority access to specialists and the firm’s investment committee; in-depth support for retirement, wealth and estate planning; and private equity investment options.

If your balance is below $200,000, you can invest in ETFs but you cannot customize your portfolio. Personal Capital will recommend a target allocation that’s based on the profile questions you answered during the sign-up process, plus other financial information you’ve provided. While you can choose from among different target allocations, you won’t be able to create a custom allocation.

That said, Personal Capital does offer an ESG-optimized portfolio for users interested in socially responsible investing. In addition to limiting exposure to fossil fuels, the company’s ESG basket filters out companies with material exposure to things like adult entertainment, gambling, tobacco, military contracting and guns.

Tax optimization is available at all portfolio levels. Personal Capital “tax optimizes” by making sure people put the right investments in the right accounts (i.e. taxable accounts versus retirement accounts) and by tax loss harvesting, which means realizing losses to offset gains. All levels of service also offer portfolio rebalancing. Accounts are reviewed daily for tax-efficient rebalancing opportunities.

All accounts above $200,000 can invest in individual stocks and customize portfolios. Certain accounts with assets over $1 million may be able to invest in individual bonds. With assets over $5 million invested with Personal Capital, users may gain access to private equity investments.

Personal Capital Cash

Personal Capital recently launched a cash management account, Personal Capital Cash. The account earns 1.55% APY for people without a Personal Capital advisory account, and 1.60% APY for customers with an advisory account. Personal Capital Cash pays slightly less than other similar high-yield savings accounts, but there’s also no minimum balance and there are no fees associated with it.

Personal Capital partners with UMB Bank, which holds Personal Capital Cash deposits in a network of different banks. The account offers up to $1,500,000 in FDIC insurance coverage, well above the standard limit of $250,000 per deposit account. That’s because Personal Capital works with UMB bank to distribute your money among accounts at different partner banks. When one account reaches the FDIC limit, another account with a different bank will be opened for you. This is done up to six times, providing a FDIC deposit insurance total of up to $1,500,000.

Financial dashboard tools

One of Personal Capital’s strengths is that it offers financial tools to help you understand and track your entire financial life. These tools are free and available to anyone who downloads the app. You may register and link all your financial accounts to Personal Capital, such as bank accounts, brokerage accounts, loans and credit cards. Once they are linked to the app, your personalized financial dashboard gives you a view of your:

  • Net worth: You can see your current net worth for the past 30 days, including the change in this measure over the last 30 days and today’s change.
  • Cash flow: The dashboard offers a graphic representation of your cash inflows and outflows for the past 30 days, arranged by category (paychecks and deposits on the inflow side, mortgage and other expenses on the outflow side). Click on any category to dive into the detailed transactions there, or click the whole category to compare this month’s spending to last month’s spending and see transactions by category.
  • Portfolio balances: You’ll see the value of your investment accounts for the past 30 days, along with change values over the past month and today’s value.
  • Portfolio allocation: This is a top-down view of your investments across all asset classes—although only if your assets are invested with Personal Capital. If you’ve linked outside investment accounts, their value will be included in your portfolio balance, but the site doesn’t include those assets among your allocation.
  • Gainers and losers: If you’ve got individual stocks in your portfolio — which would make you a higher-level investor—you’ll see how they’re performing versus the S&P 500.
  • Retirement savings: The dashboard recommends how much you should be saving toward retirement each year and how much you’ve saved to date this year. It can also predict whether your retirement portfolio will support your retirement spending.
  • Emergency fund: You’ll see how much cash you’ve got stashed away. If the dashboard feels you could be investing part of that for greater return, it will recommend moving some money around.

Strengths of Personal Capital

  • Access to financial advisors. At all levels of investing, users have access to financial planners who can answer questions and offer advice on saving and investing. In fact, the company requires you to schedule a (free) chat with a financial advisor in order to set up your financial dashboard.
  • Big picture planning. Because Personal Capital advisors will professionally review your whole financial picture, you’ll receive recommendations based not only on your answers to questions about risk and goals, or what you have invested at Personal Capital, but also what you have in your 401(k) and other retirement accounts. They’ll also offer advice on college savings plans and estate planning strategies, although estate planning is only available with investable assets of $1 million or more.
  • Free financial tools. Even if you don’t invest with Personal Capital, you can still access a wealth of free financial tools that will analyze your net worth, cash flow, retirement and savings situation and make recommendations. You also get one free phone call with a Personal Capital advisor.

Drawbacks of Personal Capital

  • High minimum balance. To open an account with Personal Capital, you’ll need at least $100,000 in invested assets, which is the highest of most robo-advisors on the market. Compare this to Vanguard Personal Advisor Services, which requires a $50,000 account minimum, and to Charles Schwab Intelligent Portfolios Premium, which requires a $25,000 buy-in. And some robo-advisors, such as Wealthfront, require as little as $500.
  • High management fees. Personal Capital charges an asset management fee of 0.89% for portfolios between $100,000 and $1 million, which is also among the highest fees charged by robo-advisors. By comparison, Vanguard charges just 0.30% and Wealthfront charges 0.25%. When you top $1 million in assets, the management fee goes down, but just to 0.79% for $1 million to $3 million, and 0.69% for $3 million to $5 million, and so on. Once you get over $10 million, you’ll pay 0.49% in asset management fees, which is still higher than most competitors.
  • Non-customizable portfolios for beginners. Until you reach an asset level of $200,000 and up, you can’t alter your investment mix, and you’re limited to ETF investing only.

Is Personal Capital safe?

Most fintech users are comfortable linking their financial accounts to an investment platform, and Personal Capital’s safeguards are in line with standards. They partner with financial tech industry veteran Yodlee to facilitate account aggregation, and user bank and brokerage credentials are only stored at Yodlee.

The site uses two-factor authentication when you sign in and encrypts your credentials and personal data with military-grade encryption algorithms. The company protects its data centers with various systems designed to prevent hacking and monitor for suspicious activity, and the data centers follow stringent financial and international security standards protocol.

Personal Capital also helps you keep an eye on things by sending an (optional) daily email with every transaction that occurred during the previous 24 hours in all your linked accounts, including your bank, broker and credit cards. Keep an eye on the activity and make sure you recognize all the transactions.

As far as insurance, all investment securities are held by an SIPC member broker custodian, protecting your securities up to $500,000, and Personal Capital Cash is FDIC insured up to $1,500,000.

Final thoughts on Personal Capital

Personal Capital is worth considering if you have $100,000 or more to invest on this platform. Though lower-level users can’t customize their portfolios, asset allocation models seem to outperform comparative benchmarks much of the time.

Investors should carefully consider whether they’d like more control over their investments or whether they’re willing to pay higher-than-average fees for the services Personal Capital offers. In the meantime, the financial planning tools and initial consultation will give the average investor some insight into how they’re doing and where they’d like to go.

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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.

Kate Ashford
Kate Ashford |

Kate Ashford is a writer at MagnifyMoney. You can email Kate here

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Investing

Zacks Trade Review 2019

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.

Zacks Trade is an online broker oriented to self-directed investors who want to trade U.S. and foreign stocks, bonds and funds. The platform provides robust trading tools and a bundle of no-fee (and paid) research. However, unlike many competing brokers, you still pay per-trade commission fees.

The main selling points of Zacks Trade are that it offers sophisticated, feature-rich trading software; broker-assisted trades for no additional fee; and easy trading of foreign assets. Clients in more than 200 countries can trade on this platform, and traders can buy and sell assets on more than 90 international exchanges. Zacks Trade allows investors to open individual or joint taxable accounts, as well as retirement accounts.

The downside to Zacks Trade is the $3-per-trade minimum commission fee ($1 during the first year). If you want expert help developing a portfolio or no-fee trades, Zacks Trade isn’t the best fit for you.

Zacks Trade
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The Bottom Line: Zacks Trade provides access to dozens of international exchanges and fee-free broker-assisted trades—all on a feature-rich platform—but it still charges trading fees when many competitors don’t.

  • Trade fees are per share and cost clients one penny per share for stocks and ETFs, with a $3 minimum fee.
  • There’s a $2,500 minimum balance requirement, which earns you a $1-per-trade promotion, but there are no inactivity fees, and margin rates started at just 5.06% as of November 2019.
  • Investors get a choice of three trading platforms and can trade on the web and on mobile devices.

Who should consider Zacks Trade ?

If you want a choice of full-featured trading platforms, you’re interested in trading on international exchanges or you prefer broker-assisted trades, Zacks Trade might be the right fit.

Zacks Trade’s per-share pricing is low, but it isn’t $0, as it is with competitors. Plus, after the first promotional year, trades go back up to a $3 minimum from the $1 introductory fee. That said, the margin rates are lower than are competitors’ rates, and foreign trading is easy and relatively affordable. Commissions when trading foreign stocks are steeper at Charles Schwab and Fidelity.

Zacks Trade clients also benefit from a massive amount of market insight: Clients have access to more than 20 subscription services for free. But if you’re hands off and won’t use the research and tools available—or you seek more guidance, as with a robo-advisor, or zero-commission stock trading—Zacks Trade probably isn’t what you want.

Zacks Trade fees and features

Current promotions

New clients can trade stocks, options, and ETFs for as low as $1 per order for their first year after depositing at least $2,500 within 60 days of account opening.

Stock trading fees
  • $0.01 per share ($3 minimum) for stocks over $1 per share
  • 1% of trade value ($3 minimum) for stocks under $1 per share
Amount minimum to open account
  • $2,500
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • Custodial IRA
  • SEP IRA
  • Trust
Ease of use
Mobile appiOS, Android
Customer supportPhone, Chat, Email
Research resources
  • A variety of free and paid research subscriptions

Zacks Trade commissions and fees

Most of Zacks Trade’s fees are related to trades. Zacks Trade has no inactivity fee, no fee for automated customer account transfer and no fee for order cancellations. Clients also get one free withdrawal per month. (All withdrawals after the first one cost $1 for an ACH, $4 for a check and $10 for a wire.)

The fees for trading are low—a penny per share for stocks and exchange traded funds (ETFs) worth $1 or more per share and 1% of trade value for those worth less than a dollar, with a $3 minimum. Also, Zacks Trade will allow new clients to trade for $1 for the first year, with a minimum balance of $2,500. These aren’t the lowest fees, however. Charles Schwab and E*TRADE have $0 trades.

Zacks Trade also has steep charges for mutual fund trades: $12.55 per trade for those valued at $1 or more per share. You can trade certain mutual funds for $0 at E*TRADE and Fidelity.

It’s notable that Zacks Trade provides broker-assisted trades for no extra charge, including for foreign stocks. Compare that with E*TRADE, which charges an additional $25 for broker-assisted trades, as does Charles Schwab. If you believe that you’ll require a broker’s assistance on a regular basis, Zacks Trade would be a good place for you.

Margin trading also is a good deal at Zacks Trade, with margin rates starting at 5.06% as of November 2019. The site even has a Margin Rate calculator, so clients can see how much they’ll save compared with other firms. Charles Schwab charges 9.325% for debit balances under $25,000, although Interactive Brokers charges just 3.06% for loans under $25,000. (Nevertheless, Interactive Brokers also charges a $10 monthly fee if you don’t pay at least $10 in commissions each month or if your account falls under $100,000. So you’ll pay at least $10 a month there in fees regardless.)

Real-time quotes cost money. Regular clients of Zacks Trade see data on their platforms on a 15-minute delay. If you want live, streaming data, you’ll have to pay at least $9.95 per month plus $3 per month to cover all exchange fees for Zacks Real Time Quotes Gold. Schwab provides real-time data for free.

Foreign Stock Commissions:

  • Broker-assisted trades: no extra charge
  • Canada ($1 or more CAD per share): $0.02 CAD per share ($4.50 CAD minimum)
  • Canada (less than $1 CAD per share): 1% of trade value CAD ($4.50 CAD minimum)
  • Mexico: 0.3% of trade value MXN (180 MXN minimum)
  • Austria, Belgium, France, Germany, Italy, Netherlands, Portugal and Spain: 0.3% of trade value EUR (12 EUR minimum)
  • Norway: 0.1% of trade value NOK (150 NOK minimum)
  • Sweden: 1% of trade value SEK (100 SEK minimum)
  • United Kingdom: 0.3% of trade value GPB (12 GPB minimum)
  • Currency conversion from USD: $2 to $2.50 estimate

Commissions for Asian and Australian transactions are here.

Trading platforms and tools

At Zacks Trade, clients can trade stocks (including penny stocks and OTC stocks), options, bonds, ETFs and mutual funds. The platform doesn’t support futures, commodities or Forex for purposes besides currency exchange.

Zacks Trade has three trading platforms, plus their mobile platform:

  • Zacks Trade Pro: This is the company’s flagship trading platform and meant for active, high-volume traders. The layout is customizable, and clients can trade stocks, options, bonds and funds in 19 countries. Charting and technical analysis is available, and useful tools include SpreadTrader to handle complex option orders or Basket Trader to import baskets of stock orders and execute them quickly. This platform must be downloaded and installed on your computer.
  • Client Portal: This is a console meant for placing and managing simple trades, reviewing your statements and adjusting account settings.
  • Zacks Trader: This operates like a light version of Zacks Trade Pro, providing a simpler interface along with trading features and tools. If you work behind a firewall, you still can access this platform, which provides order execution, market data, charts and customization.
  • Handy Trader: This mobile app, available for iOS and Android, allows users to trade stocks, options, bonds and mutual funds from their devices. You can route orders using the company’s SmartRouting technology, and you can access trade reports, and portfolio and account information.

When routing orders on any Zacks Trade platform, you can use either SmartRouting, which searches for the best price and dynamically routes and reroutes all or part of your order for maximum benefit, or you can choose the exchange you want your order to be sent to.

Trading options is easiest on Zacks Trade Pro, where you can click on the bid, or ask of an option chain. You can use Zacks Trade’s Strategy Builder feature to create spread orders or option orders that have multiple legs. Options tools, including Options Trader, Rollover Options and SpreadTrader, help you analyze and manage options orders.

Research is one area in which Zacks Trade shines. The company gives users free access to more than 20 sources, including 24/7 Wall Street, StreetInsider.com and The Motley Fool. For an additional cost, dozens of other research subscription products are available, including international ones, such as the Euronext All Indices Real-Time Data (EUR $17 per month).

Strengths of Zacks Trade

  • Broker-assisted trades: One of the things that sets Zacks Trade apart is that it provides broker-assisted trades at no additional cost. If you have to have help with your trading, such as when you don’t have access to the internet or you’re trying to execute a specialty trade, this should be useful for you.
  • Powerful research tools. You have access to more than 20 no-fee research providers, and other sources are available for an additional cost. For example, $1 per month gets you the Dow Jones Global Indices, and $5.50 per month gets you the Cboe BZX Depth of Book. A variety of international research publications are available.
  • Sophisticated, feature-rich trading platforms: Zacks Trade provides a choice of trading platforms for the desktop, web or mobile. You can choose a simpler interface or one that has lots of widgets and advanced features for more-active investors. You can trade from your tablet or phone, fully customize your layout and create multiple watchlists for different types of securities. You also can set up real-time alerts and place, modify or cancel orders right from your orders screen.

Drawbacks of Zacks Trade

  • Charges trading commissions for stocks and ETFs. Although Zacks Trade commissions are low at just a penny per share, some competitors have moved to a $0-per-trade model for stocks and ETFs. Mutual fund trades still cost $12.55 per trade, while competitors have lots of no-fee mutual fund options.
  • Zacks Trade requires a $2,500 account minimum. This minimum is well above what other brokers require, and if you fund an account for less, you’ll pay at least $3 for each trade. TradeStation requires just $500 to fund an account, and Fidelity has no account minimum for its brokerage accounts.
  • No free real-time data. Clients must pay at least $9.95 per month for real-time stock data. (A $19.95-per-month option also is available.) Fidelity and Schwab provide this information for free.

Is Zacks Trade safe?

Zacks Trade requires clients to log in using two-factor authentication—the username and password on the account plus a unique code that’s generated to a free device that clients receive or to their Handy Trader app. The site also uses industry-standard 128-bit SSL encryption and has a dedicated security team monitoring for suspicious activity. Zacks Trade Pro customers also can restrict account access to specific IP addresses.

In terms of insurance, Zacks Trade is a division of LBMZ Securities, which is a member of the Securities Investment Protection Corporation (SIPC) and carries insurance on investments up to $500,000. Under Zacks Trade’s clearing firm’s excess SIPC policy, investments are insured up to an additional $30 million (with a cash sublimit of $900,000).

Final thoughts about Zacks Trade

Zacks Trade is something to consider for investors who have at least $2,500, want to trade foreign stocks and believe that they might require access to broker-assisted trades. The available research and choice of trading platforms give you flexibility and a wide pool of investments to choose from. Zacks Trade’s margin rates also are extremely competitive.

However, Zacks Trade doesn’t provide any guidance (this isn’t a robo-advisor), and you can execute nonbroker-assisted trades for $0 at other companies. Also, if you want to invest in mutual funds, other companies allow investments in no-load funds for much less.

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

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Kate Ashford
Kate Ashford |

Kate Ashford is a writer at MagnifyMoney. You can email Kate here