Looking for a new online discount brokerage? With our review, find out more about TD Ameritrade – one of the most acclaimed investment firms.
TD Ameritrade Review
Since their founding in 1971, TD Ameritrade has built an empire for themselves. The online brokerage handles over $1 trillion in client assets across more than 11 million accounts, with 900,000+ trades processed on a daily basis.
And the company has certainly garnered a healthy number of accolades: #1 in the Kiplinger's Personal Finance Best Online Brokers; #1 for Long-Term Investing (six years in a row), Novices (7 years in a row), and Usability (three years in a row) in Barron's 2018 Best Online Broker Survey; 5-star rating and #1 place in no fewer than nine categories in the StockBrokers.com 2018 Online Broker Review; and Top Online Broker by Investor's Business Daily for two years running.
So how did TD Ameritrade do it? After all, their relatively high trade commission of $6.95 (compared to $4.95 with Ally Invest, Charles Schwab, and Fidelity) is something of a turn-off – at least at first glance.
However, as the saying goes, “you get what you pay for.” TD Ameritrade offers some truly outstanding features, such as freely available, extensive research and data resources. Additionally, customers also get guidance in portfolio building and diversification, four trading platforms with a wide array of tools to choose from, and a large selection of 300+ no-commission exchange-traded funds (ETFs).
They also have more than 350 branches in 53 U.S. states and territories, where prospective clients can get a free Investment Consultation with one of the company's expert representatives. As part of this complimentary consultation, your personal financial goals will be reviewed. You'll then receive a personalized recommendation of the TD Ameritrade products and services that are best suited to those goals.
If that doesn't sound like value for money, you may have to start reconsidering the way you think about investments.
“But” of course, there's always a “but.” While E*Trade1, one of TD Ameritrade's closest competitors, also charges $6.95 per stock trade, they also offer a volume discount for high-frequency traders. TD Ameritrade doesn't currently match this offer, and there are a few other pricing considerations to bear in mind.
So before you get excited at the prospect of trading through one of the most recognized online brokerages in America, take the next 15 minutes to read through our review. We'll help you make an informed decision.
- Trade commission: $6.95 per stock trade
- Account minimum: $0 (no minimum)
- Promotion: Enjoy 60 days of commission-free trading and up to $600 credit depending on your opening deposit amount (see how it works)
TD Ameritrade is Best For
- First-time and novice investors
- More experienced traders
- Expert investing research resources and personalized advice
As a technology-focused, customer-driven online discount brokerage, TD Ameritrade is a company with a lot to like. There are a number of areas where the firm either equals or out-performs their competition.
+No Account Minimum
Having a $0 account minimum for all accounts – including IRAs and taxable brokerage accounts – makes TD Ameritrade an accessible company for just about everyone with money to invest. And considering investing is almost always a better idea than merely putting the money into a savings account, that means everyone.
One online discount brokerage that TD Ameritrade is often compared to is E*Trade, who we also mentioned in our introduction. While E*Trade has the upper hand in terms of offering volume discounts on trade fees, TD Ameritrade evens the score with their no-minimum accounts. You don't have to be a math whizz to know that $0 is a huge advantage over a $500 minimum requirement.
Add to that the fact that a lot of other online brokerages require an account minimum of $2,500, and you can see why TD Ameritrade is such an attractive option.
Furthermore, many deep-discount competitors add discouraging caveats to their lack of account minimums. Some charge exorbitant inactivity fees, while others limit access to their library of tools and resources. TD Ameritrade does neither: there's no “but” attached.
As mentioned, TD Ameritrade offers four trading platforms: online and desktop, with corresponding mobile apps.
TDAmeritrade.com is, of course, their online platform. Here you can find just about everything you'd ever need as an investor. You'll be able to identify, research, screen, and trade stocks, bonds, certificates of deposit (CDs), ETFs, mutual funds, futures, and options. Furthermore, you'll also have access to:
- A fully customizable landing page
- Research from CRFA (formerly S&P Capital IQ), Market Edge, Morningstar, and TD Ameritrade's in-house financial professionals
- GainsKeeper, TD Ameritrade's tool for tracking capital gains and losses, which will come handy in tax season
Portfolio Planner is another tool that we're especially fond of. If you're saving for retirement, you'll certainly appreciate the resource as well, as it assists in creating target asset allocation plans for portfolio diversification. There are prebuilt portfolio models you can choose from, or you can customize one according to your goals.
When customizing a portfolio model with Portfolio Planner, the idea is to use the prebuilt models to analyze your existing portfolio. If you're a first-time investor (or even starting fresh with TD Ameritrade), you can similarly use the tool to create a new portfolio.
Portfolio Planner also assists customers with monitoring allocation drift. This helps you to rebalance your portfolio over time.
Thinkorswim is the second trading platform by TD Ameritrade. While their online platform is suitable for all traders, this downloadable desktop offering is best suited for serious traders who are highly active. In addition to the features available on the TDAmeritrade.com platform, Thinkorswim offers a robust lineup of charting, screener, backtesting, and technical analysis tools.
You'll also get access to market heat maps, quotes, real-time news, and studies – everything you need as a high-frequency stock, options, ETF, futures, forex, and/or options trader.
For either of the computer-based trading platforms, there's a corresponding mobile app by TD Ameritrade.
TD Ameritrade Mobile is available for iOS and Android and acts as a companion app to the online trading platform TDAmeritrade.com. One exclusive feature found only on the app (not on the web-based platform) is the Level II quote.
The TD Ameritrade Mobile Trader App, also available for iOS and Android, similarly acts as the companion to Thinkorswim. It too features the same basic features as its desktop counterpart, with the exclusive paperMoney virtual trading tool not found on any of the other three platforms.
A third app, TD Ameritrade Portfolios (iOS and Android), is geared exclusively toward clients with a managed portfolio. It allows these clients to monitor their investments while on the go, but will not be of any use to those with a different TD Ameritrade portfolio.
In 2019, TD Ameritrade plans on introducing cryptocurrency trading in conjunction with ErisX, an innovative company that TD Ameritrade has invested in. ErisX is developing a means for traders to gain access to cryptocurrency spot and futures contracts on a single exchange.
The launch date for this exciting new venture is yet to be announced, as it's still in the developmental stage. Interested parties are advised to email [email protected] to request updates.
Similar to E*Trade, TD Ameritrade outshines many competitors when it comes to their educational resources.
There are a host of articles, videos, webcasts, and in-person seminars to choose from, covering a wide range of investment topics. You can also subscribe to the TD Ameritrade Network, which is available for streaming on Amazon Fire TV. There's even a separate page specifically for new investors to learn all the basics.
TD Ameritrade also has a fully immersive curriculum. The company will guide you through the course – all you need to do is select your trading skill level: Rookie, Scholar, or Guru.
And the best part is: all these resources are available for free to clients and non-customers alike.
+Virtual Trading Simulator
This is a very exciting feature that's hard to find elsewhere – a mock trading account that lets you take TD Ameritrade for a test-ride.
As a desktop simulation of the Thinkorswim paperMoney platform, it's tailor-made to help investors (especially advanced and frequent traders) familiarize themselves with TD Ameritrade at no cost. You'll be credited with $100,000 in practice “currency” and a margin account.
What you do with that practice “money” is up to you – there's no real value, so no risk (or financial reward, for that matter). You can backtest trading strategies and access simulated futures and foreign exchanges.
The mock trading account is available through both platforms as well as the Mobile Trader App. However, if you're not yet a TD Ameritrade client, you can register for a free 60-day trial.
Of course, where there are pros, there are cons too. There isn't much to fault TD Ameritrade on, but there are some areas where they fall a little short of the mark set by their competitors.
-High Trade Commissions
As mentioned earlier, TD Ameritrade is relatively expensive in terms of trade commissions – $6.95 per stock and ETF trade, compared to $4.95 with most other online discount brokerages. Options contracts also cost an additional $0.75 each.
E*Trade has an identical cost structure, to be fair, but they also off-set this with their volumes discount ($4.95 per trade once you reach 30+ trades per quarter, and options contracts dropping to an additional $0.50 each). TD Ameritrade doesn't offer any comparative volume discounts.
This is certainly discouraging for frequent traders. However, if you are (or plan to be) a low-frequency trader, access to TD Ameritrade's superior wealth of premium-quality resources may make the extra cost worthwhile.
-Short-term Trading Fees for ETFs & Mutual Funds
While the wide selection of commission-free ETFs and mutual funds is certainly attractive, there's no such thing as a free lunch.
For commission-free ETFs, TD Ameritrade charges a short-term trading fee of $13.90 for every ETF you trade out within 30 days.
Mutual funds come at an even steeper cost. Commission-free mutual funds are a 90-day commitment with TD Ameritrade – otherwise, you'll have to pay $49.99 short-term redemption fee.
Of course, if you don't mind using ETFs and mutual funds as a long-term investment, this isn't going to be a deterrent.
Is TD Ameritrade Right For You?
Ultimately, you're the only person who can decide whether TD Ameritrade's high trade commissions and short-term trading fees are worth the wealth of resources. We certainly hold the online discount brokerage in high regard, but investment opportunities and platforms need to be in line with your personal financial goals and trading style.
What we do strongly recommend is spending some time going through their freely available resources. If you haven't already given their virtual trading mock-up a test-run, register for the 60-day trial too. This will give you a better idea as to whether TD Ameritrade is right for you.
You should also consider using their branch locator to find a location near you. That free Investment Consultation is a good opportunity to have any remaining questions and doubts answered.
TD Ameritrade has clearly given the industry a long, hard look and covered all their bases incredibly well. Considering they're one of the longest-lasting online brokerages on the market, that's hardly surprising.
They're not the cheapest, of course. But once again, you get what you pay for – and with TD Ameritrade, you certainly get a lot of value for your money.
Link to E*Trade Review when published ↩