Discount Brokers for Long-Term Investors: TD Ameritrade vs. Merrill Edge

Long-term investors have it better than ever. Online discount brokerages like TDAmeritrade and Merrill Edge make investing in stocks, ETFs, and mutual funds easier and less expensive than ever before.

TD Ameritrade and Merrill Edge offer low trading commissions and free tools and research to help you make better investment decisions. Here's how these two brokers compare for buy-and-hold investors who want to open a brokerage account.

Trading costs

Trades are becoming so inexpensive that price isn't necessarily the most important factor anymore.Here are the standard trading commissions for clients of TD Ameritrade and Merrill Edge.




Mutual funds

TD Ameritrade

$9.99 per trade + $0.75 per options contract

$9.99 per trade

$49.95 per purchase

Merrill Edge

$6.95 per trade + $0.75 per options contract

$6.95 per trade

$19.95 per purchase

Source: Company websites.

Note that standard trading commissions are not necessarily representative of the actual trading costs you will pay, which can be much lower than the standard rate.

In fact, you may receive discounts for trading more frequently or for keeping a certain balance in your brokerage account. Both brokers have some commission-free funds and ETFs, as well as brokerage special offers and IRA account offers that can further reduce your actual trading costs.

Commission-free funds and trades

Virtually all brokers now offer investors the ability to buy and sell so-called "no-transaction-fee" (NTF) mutual funds and ETFs. Investors who prefer investing in funds may prefer a specific broker for the fact that they can invest in their favorite funds without paying a fee on each transaction.

TD Ameritrade offers 101 commission-free ETFs from iShares, Vanguard, VanEck, as well as 3,984 NTF mutual funds. Merrill Edge offers free ETF and stock trades to all investors who maintain a minimum balance. It also has thousands of NTF mutual funds to choose from. See their current special offers in our online brokerage center.

Of course, NTF funds are not completely free. All funds have recurring management fees, for example. But if you want to invest in funds, it may be worthwhile to pick a broker that has your favorite funds on its NTF fund list.

Account minimums

TD Ameritrade and Merrill Edge are easily accessible to ordinary investors, as neither brokerage has a minimum account requirement.

Practically speaking, there are certain minimums for some type of investments. Most mutual funds have minimums -- ranging from $1 to $3,000 or more. Furthermore, you'll need to be able to buy at least one share of a stock or ETF to make an investment. Importantly, though, neither broker has a requirement on how much money you need to simply open an account.

Image source: Getty Images.

International stocks

TD Ameritrade and Merrill Edge do not offer trading on foreign markets. However, investors can purchase American Depositary Receipts (ADRs), which are traded on U.S. markets and represent ownership of a foreign company in much the same way as direct stock ownership.

Note the important distinction between buying stocks on international stock markets and investing in foreign stocks through funds. Investors can buy U.S.-listed ETFs and mutual funds that hold foreign stocks through their TD Ameritrade or Merrill Edge brokerage account, just as they would buy any U.S. ETF or mutual fund.

Trading platform

We at The Motley Fool believe in long-term investing, and we try to spend more time finding great businesses that we can buy and hold, rather than actively trading in and out of stocks for small gains. For this reason, we don't place much value on the look and feel of any trading platform. After all, for us, a trading platform is just a way to buy a stock for the long haul.

Ultimately, a preference for any platform is a personal matter. Merrill Edge and TD Ameritrade have trading platforms that are more than sufficient for long-term investors.

Research quality and tools

Both TD Ameritrade and Merrill Edge offer stock and mutual fund screeners that allow you to sort stocks and funds with quantitative parameters like fees and historical returns. In addition, you'll find third-party research from S&P Capital IQ and Morningstar at both brokerages.

Brokerages differentiate themselves from each other somewhat with proprietary tools and research. Merrill Edge offers access to stock picks from BofA Merrill Lynch Global Research, for example. TD Ameritrade offers access to its ResearchTeam Company Reports, which uses an algorithm to consolidate expert recommendations from third-party sources. Truthfully, you can find plenty to love at either broker.

Mobile app

Here's how each broker's users and clients rated their mobile apps' capabilities on iOS and Android.


Apple App Store

Android Store

TD Ameritrade



Merrill Edge



Source: Relevant app stores.Data as of Nov. 25, 2016.

Here's what it comes down to

Both TD Ameritrade and Merrill Edge have what long-term investors need in a discount brokerage: low-cost trades, plenty of NTF mutual funds and ETFs, and independent and proprietary research tools to help you make better investment decisions. To be clear, The Motley Fool does not endorse any particular broker. However, we created a brokerage center to help investors make informed decisions and get access to the best special offers.

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Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends TD Ameritrade. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.