Review: Scottrade Online Discount Brokerage
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For more than two years, I’ve been using Scottrade, an online discount brokerage. When I first decided to start investing, I managed to have only $500 to mess with. So surely
, I couldn’t afford the high commission fees from brokerages such as Charles Schwab, TD Ameritrade, and Fidelity. While Zecco was offering free trades, I didn’t have the $2,000 requirement to get them.
I ended up at Scottrade and they’ve been great so far. Currently, I have a regular brokerage account and a Roth IRA with them. Initially, I was trading stocks but my focus has been diverted towards mutual funds and ETFs.
What’s So Great
- No account maintenance or inactivity fees
- No minimum balance required
- $7 online trades
- Huge selection of mutual funds
- Local branches
What’s NOT So Great
- $7 online trades (other discount brokerages are getting cheaper)
- No automatic dividend reinvestment for stocks and ETFs
- A somewhat sub-par feel to the account interface (a personal opinion)
- Popular mutual funds like those from Vanguard and Dodge & Cox have transaction fee of $17
The Trading Experience
Scottrade offers Live Streaming Quotes that allows you to create your own trading station – you know – just to feel cool and sophisticated. It allows you to watch your favorite stocks go up and down along with the ability to observe charts and stock quotes – and you can purchase shares within seconds.
Every time that I’ve used Scottrade’s Streaming Quotes to buy stock, execution is instantaneous. The price, as always, will be fractions of a penny off the ask price. On one occasion though, a market order had to be completed in two batches because of trading volatility but I wasn’t charged double commission.
For the average investor, it is a great feature that probably won’t see much use because we all know that the stable long-term investor doesn’t watch the volatility of the stock market. Right?
The research tools available through Scottrade aren’t the worst among online discount brokerages but it isn’t as extensive as a comprehensive investor would like. Even though I rarely do much of my research through Scottrade’s website, it’s still nice to see that it is available.
Excellent Customer Service
Scottrade customer service is awesome to say the least. Professional and helpful. They even have customer support on Twitter @scottrade! No complaints about customer support from me (and I haven’t found much, if any, from others).
Note: Troublesome Safety Measures
I do have a bone to pick with Scottrade though. Well, after several failed attempts to log into my account, Scottrade automatically suspected my account of being compromised and went on to suspend access to it. Then, they sent me snail mail requiring that I verify the integrity of my account and confirm that I have antivirus software installed. Even though I could walk into a local branch office to get things cleared up, it is just a hassle to have to do this. All the while, I wasn’t be able to check on my account.Although it was nice to see that Scottrade cares about security, I’d much rather prefer a simple phone call to get my account back into action.
Perfect for the Average Investor
So far I’m quite satisfied with Scottrade and look forward to sticking with them. I recommend them for the average investor – long-term non-daytraders. For the more technical and frequent traders, there are probably cheaper and more comprehensive brokerages elsewhere. If you are going to be making your own investment decisions and buying stocks or mutual funds a few times a year, then Scottrade is great for you.
If you would like to sign up for Scottrade and get 3 free online trades ($21 value), click here.
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