Vanguard is perhaps better known for index funds, and TradeStation is known as a broker for high-volume traders, but both companies enable investors to invest in stocks, options, funds and more by opening an IRA account
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Commission prices per trade
As the years go by, brokers' commission prices have dropped to the point where prices differ by only a few dollars. The following table shows that only a couple of dollars separate these two brokers on commissions for stock and ETFs trades, with larger differences for options and mutual fund investments.
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Stocks and ETFs
$8.99 per trade (or $0.01 per share, $1 minimum)
$8.99 + $0.70 per contract (or flat rate of $1.00 per contract)
Not only have fees come down over time, but many brokers now also offer fee-free mutual funds and commission-free ETFs that you can buy or sell for free. Here's how TradeStation and Vanguard compare on fund selection and pricing.
Total Mutual Funds
No-Load, No-Transaction-Fee Funds (NTF)
More than 12,100
More than 7,500
More than 1,300
70 (Vanguard ETFs)
Data sources:Barron's, company websites and representatives.
Notably, the number of funds isn't the only variable that matters when it comes to fund selection. Although Vanguard has more no-fee mutual funds and commission-free ETFs, funds that don't make the cutoff are more expensive to invest in ($35.00 per purchase) than they would be at TradeStation ($14.95).
Minimum deposit requirement for IRA accounts
Investors who are just getting started may naturally prefer a broker with a lower minimum. Vanguard doesn't have a minimum for IRAs, and TradeStation requires a minimum initial deposit of $5,500. Of course, depositing more than a brokers' minimum may help you qualify for added brokerage perks when you open an account.
Brokerages vary from no minimum brokers to those that require you to max out the annual contribution limit to open an IRA account. Image source: Getty Images.
International stocks and ADRs
TradeStation and Vanguard both offer the ability to invest overseas, subject to a few restrictions.
Data source: company websites and representatives.
The biggest differentiator between most brokers is whether you can trade directly on international exchanges. Only Vanguard currently offers that service, enabling investors to trade on stock exchanges in foreign countries by placing trades through its brokerage block desk. That said, both brokers currently allow their clients to trade ADRs, which represent ownership in a foreign company but trade on a U.S. exchange.
If you invest overseas through ETFs, the broker you choose probably won't be that important to you at all, since they all offer access to exchange-traded funds listed on the United States, many of which hold foreign stocks and bonds.
Mobile app reviews
You can check your account and make trades from your mobile phone or tablet from anywhere around the world. Here's how each broker's users and customers rated their mobile trading apps, as of Feb. 11, 2017.
Apple App Store
Data source: relevant app stores.
Fees on IRA accounts
There are some common fees that should be on your radar as you think about where to open an IRA. One common type is a maintenance fee, which brokers charge their clients just for having an open account. Another type is an inactivity fee, which brokers charge to accounts that don't make a minimum number of trades.
TradeStation charges an annual IRA account fee of $35. In addition, it charges a monthly minimum activity fee of $99.95 if you don't maintain a balance of at least $100,000 or don't meet minimum trading requirements. Minimum monthly trading requirements include meeting one of the following: 10 round-turn futures and/or futures options contracts, 50 options contracts traded, or 5,000 shares traded.
Similarly, Vanguard has an avoidable maintenance fee of $20 per year. Known as the annual account service fee, you can avoid this charge by keeping at least $10,000 invested in Vanguard funds or ETFs, or by electing to receive statements and other documents electronically.
Best IRA Broker: TradeStation vs. Vanguard
Depending on how you invest, either could be a better choice for you. TradeStation may win over active accounts for the fact that its most-active customers can receive steep volume discounts. Likewise, Vanguard may be more attractive to fans of Vanguard's funds, since its commission discounts vary with the amount its clients invest with the company.
The truth is that every broker caters to a particular subset of the market, and for that reason, there isn't a perfect brokerage for every type of investor. It's all about how a broker's pricing and capabilities fit within the requirements of your portfolio. To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that is a good fit for you. VisitFool.com's IRA Center
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