E*TRADE vs. TradeKing: Brokerage Firms for Long-Term Investors

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Commissions, minimum deposits, and trading platforms -- oh my!

When you're ready to open a brokerage account, understanding the many differences between brokerage firms can be a real headache. A long-term investor can keep it simple by focusing on the big things: the differences that really make a difference to your portfolio. Below, we'll compare E*TRADE and TradeKing, two very popular brokerage firms, on several key factors that are important to the long-term investor.

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Trading costs and commissions

There's more to a brokerage firm than its cost structure, but you should have a good idea of what you'll pay before signing up. The table below shows the standard commission prices at E*TRADE and TradeKing by types of investments.

Realistically, both brokers make trading affordable, and many people find that they pay much less than the ordinary rate. In fact, E*TRADE offers discounted commissions to its most-active traders. Both brokerages also offer a select list of investments that can be bought fee free. And of course, many brokers also have special offers, which can greatly reduce the true average cost of each trade.

Commission-free ETFs and NTF Funds

Some brokers allow their investors to make certain trades without paying a fee. Keep on the lookout for commission-free ETFs and no-transaction-fee (NTF) mutual funds, which can be traded without paying a transaction fee to your brokerage.

E*TRADE has the advantage on the availability of free funds, but there's a caveat: Funds that aren't on its fee-free lists would be more expensive to trade at E*TRADE than TradeKing. Therefore, depending on the funds you invest in, E*TRADE or TradeKing may have a lower price.

Account minimums

Luckily, neither TradeKing nor E*TRADE require a large deposit to get started. In fact, TradeKing doesn't have a minimum initial deposit. E*TRADE requires that new accounts are funded with at least $500. In either case, minimums shouldn't exclude too many investors from opening an account.

Trading platform

As long-term investors, The Motley Fool doesn't put much weight on trading platforms. Given our buy-and-hold philosophy, we tend to think that any platform that allows us to make a trade here and there is good enough for our needs.

Of course, your perspective may vary -- personal opinions are personal, after all. If trading isn't your thing, you'll probably find that virtually every broker can give you a trading platform that is good enough for you. High-activity traders might want to take a platform for a test drive to see if it fits their specific needs.

International stocks and ADRs

Want to take your investments overseas? E*TRADE and TradeKing can help you do that, with some limitations.

Importantly, ADRs are most commonly available for larger foreign companies, so many foreign large caps should be available to you at either brokerage. Smaller companies may not have an ADR, however.

Research quality and tools

We generally think having more information can lead to better investment decisions, and that research provided by your brokerage can be a great way to supplement your own due diligence. Both brokers provide their clients with ample stock and fund screeners.

E*TRADE supplements these tools with research notes and information from Morningstar, S&P Capital IQ, and Thomson Reuters, just to name a few of its research extras. TradeKing customers can tap into S&P stock reports and a Breakfast Bell market report, which it sends out every day before market open.

Mobile app

Brokerage apps make it possible to trade from virtually anywhere you have internet access. Here's how each broker's users and clients rated their iOS and Android apps (as of 12/14/2016).

Better brokerage account: E*TRADE or TradeKing?

There's a brokerage firm for everyone, and either broker could be a good fit depending on how you invest. If you're all about funds, you might find E*TRADE's list of commission-free ETFs a major factor in choosing it as your next broker. If individual stocks or options are your strong suit, and price is of the utmost importance, TradeKing's commissions are lower than E*TRADE's on many of the most-popular types of investments.

To be clear: The Motley Fool doesn't endorse any particular broker. Learn more about special offers you may qualify for by visiting Fool.com's Broker Center. Alternatively, the IRA Center is designed with retirement investors in mind, with IRA-specific information about various brokerage accounts.

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