Once you've mastered the basics of personal finance by balancing your budget and building up some savings, investing for the future is the next logical step. But to invest, you'll need to open a brokerage account. Two popular choices, Fidelity and TradeKing, make it possible to invest in thousands of different stocks and funds. Here's how they compare on key criteria.
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Trading costs and commissions
As discount brokerages, Fidelity and TradeKing are able to offer their customers the ability to buy stocks, options, ETFs, and mutual funds at low prices. Here are the standard commission prices for their customers.
Data source: company websites.
For most trades, Fidelity and TradeKing are just a few dollars apart on commissions. And while the difference in mutual fund commissions may seem sizable, Fidelity offers a number of commission-free funds that you can buy or sell fee-free.
Commission-free ETFs and NTF Funds
If fund investing is your thing, be sure to check out a broker's no-transaction-fee (NTF) funds. These are funds that the brokerage firm does not charge a transaction fee to buy or sell.
Data source: company websites.
Fidelity is a clear winner in the availability of commission-free ETFs and NTF mutual funds. But if your favorite funds aren't available in an NTF variety, TradeKing's lower commissions on ETFs and mutual funds may be a better deal for you.
Online discount brokers have greatly reduced the barriers to becoming a do-it-yourself investor by allowing you to open an account with a low initial deposit. Fidelity requires an initial deposit of $2,500, whereas TradeKing has no minimum deposit requirements.
Realistically, investors need to deposit enough money to buy at least one share of a stock, ETF, or mutual fund (and pay the commission!) to make their first investment.
Heat maps and candlestick charts look pretty cool, but we're not ones to get excited about a trading platform. As long-term buy-and-hold investors, The Motley Fool prefers to buy stocks to own them for years. Thus, we don't do much trading, and we don't have a strong view on the "quality" of a trading platform.
Fidelity and TradeKing make placing trades as simple as typing in a ticker and making a few clicks. Therefore, long-term investors will find that either platform will fit their basic needs just fine. In any case, we tend to think preference for a trading platform ultimately comes down to personal opinion, so we'll let you be the judge here.
Trading is hard. We prefer taking the long view with our investments. Image source: Getty Images.
International stocks and ADRs
Want to take your portfolio overseas? If so, you might want to pay particularly close attention. TradeKing's customers can trade American depositary receipts (ADRs) that are listed on American markets, but the company doesn't allow for trading on international exchanges.
On the other hand, Fidelity's clients can trade on markets in 25 countries and buy and sell ADRs listed in the United States. Do take into consideration that placing trades on foreign markets comes at a higher-priced commission, which varies based on the exchange.
Research quality and tools
We believe that access to more information is generally advantageous to individual investors. Fidelity supports its clients with access to analyst upgrades and downgrades from over 100 companies, in addition to research on individual stocks from several third-party research services. TradeKing provides S&P stock reports, and a "Breakfast Bell" market report that goes out every morning, just to name a couple of its research capabilities.
In truth, long-term investors can find plenty of helpful research tools and reports at either broker.
Mobile trading apps make it possible to trade from just about anywhere. Here's how each brokers' users and clients rated their mobile capabilities on iOS and Android (as of Dec. 5, 2016).
Data source: relevant app stores.
Which is best for you?
Depending on your needs, either brokerage may be the perfect fit. With Fidelity, you have access to more commission-free funds and foreign markets, but its standard commissions are slightly higher. TradeKing has cut-rate commission prices, but it doesn't allow for trading on international exchanges, and fund investors will pay a transaction fee on every trade.
Ultimately, the choice comes down to what you want in a brokerage, and how you plan to trade. To be clear, The Motley Fool doesn't endorse any particular brokerage. Investors should visit Fool.com's Broker Center to compare several leading brokerages on important criteria including commissions, minimum account requirements, and perks for opening an account.
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