Best of

Best Online Brokers for ETF Investing 2019

At cheatgame.info, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

Etrade

on Etrade's website

on Etrade's website

Fees

$6.95

per trade

Account Minimum

$500

Promotion

Up to $600

cash credit with a qualifying deposit

Pros

  • Easy-to-use tools.
  • Large investment selection.
  • Excellent customer support.
  • Access to extensive research.
  • Advanced mobile app.
  • Reduced commissions for frequent traders.

Cons

  • Higher commissions for low-volume traders.
  • Minimum balance requirement for active trading platform.
Read full review
TD Ameritrade

on TD Ameritrade's website

on TD Ameritrade's website

Fees

$6.95

per trade

Account Minimum

$0

Promotion

60

days of commission-free trades with qualifying deposit

Pros

  • Large investment selection.
  • Free research.
  • High-quality trading platforms.
  • No account minimum.
  • Good customer support.

Cons

  • Higher trade commission.
  • Costly broker-assisted trades.
  • High short-term ETF trading fee.
Read full review
Betterment

on Betterment's website

on Betterment's website

Fees

0.25%

management fee

Account Minimum

$0

Promotion

Up to 1 year

of free management with a qualifying deposit

Pros

  • No account minimum.
  • Fractional shares limit uninvested cash.
  • Robust goal-based tools.

Cons

  • No direct indexing.
Read full review

Summary of Best Online Brokers for ETF Investing 2019

BrokerCommissionsPromotionAccount MinimumLearn More
Etrade Logo

Etrade

on Etrade's website

$6.95

per trade

Up to $600

cash credit with a qualifying deposit

$500

on Etrade's website

TD Ameritrade Logo

TD Ameritrade

on TD Ameritrade's website

$6.95

per trade

60

days of commission-free trades with qualifying deposit

$0

on TD Ameritrade's website

Betterment Logo

Betterment

on Betterment's website

0.25%

management fee

Up to 1 year

of free management with a qualifying deposit

$0

on Betterment's website

Vanguard Brokerage Logo

Vanguard Brokerage

$7.00

per trade

None

no promotion available at this time

$0

Read review
Schwab Brokerage Logo

Schwab Brokerage

$4.95

per trade

$100

cash bonus with a qualifying deposit

$0

Read review
Wealthfront Logo

Wealthfront

on Wealthfront's website

0.25%

management fee

$5,000

amount of assets managed for free

$500

on Wealthfront's website

Interactive Brokers Logo

Interactive Brokers

on Interactive Brokers's website

$0.01

per share

None

No promotion available at this time

$0

on Interactive Brokers's website

Robinhood Logo

Robinhood

$0

per trade

None

no promotion available at this time

$0

Read review
Fidelity Brokerage Logo

Fidelity Brokerage

$4.95

per trade

300

commission-free trades with a qualifying deposit

$0

Read review
BrokerCommissionsPromotionAccount MinimumLearn More
Etrade Logo

Etrade

on Etrade's website

$6.95

per trade

Up to $600

cash credit with a qualifying deposit

$500

on Etrade's website

TD Ameritrade Logo

TD Ameritrade

on TD Ameritrade's website

$6.95

per trade

60

days of commission-free trades with qualifying deposit

$0

on TD Ameritrade's website

Betterment Logo

Betterment

on Betterment's website

0.25%

management fee

Up to 1 year

of free management with a qualifying deposit

$0

on Betterment's website

Vanguard Brokerage Logo

Vanguard Brokerage

$7.00

per trade

None

no promotion available at this time

$0

Read review
Schwab Brokerage Logo

Schwab Brokerage

$4.95

per trade

$100

cash bonus with a qualifying deposit

$0

Read review
Wealthfront Logo

Wealthfront

on Wealthfront's website

0.25%

management fee

$5,000

amount of assets managed for free

$500

on Wealthfront's website

Interactive Brokers Logo

Interactive Brokers

on Interactive Brokers's website

$0.01

per share

None

No promotion available at this time

$0

on Interactive Brokers's website

Robinhood Logo

Robinhood

$0

per trade

None

no promotion available at this time

$0

Read review
Fidelity Brokerage Logo

Fidelity Brokerage

$4.95

per trade

300

commission-free trades with a qualifying deposit

$0

Read review

ETF FAQs

How do ETFs work?

ETFs allow investors to invest in a diversified selection of stocks, bonds or other investments in a single transaction. Like mutual funds, ETFs pool investor money to purchase shares of a number of different investments.

Those investments generally mimic a benchmark, like the S&P 500. Unlike with mutual funds, ETF investors don’t own the underlying assets in the fund — the ETF provider maintains ownership. Instead, ETF shareholders own a portion of the ETF itself.

ETFs are traded on an exchange, much like an individual stock, which means they can be bought and sold throughout the day. You can read more about ETFs in this explainer: What is an ETF?

Are ETFs a safe investment?

All investments carry risk, and ETFs are no exception. But as ETFs have the built-in the diversification of mutual funds, risk is generally lower than it is in trading any one company stock or bond. Still, most ETFs mirror an underlying asset, which also can rise and fall in value depending on market conditions.

Other risks include the liquidity of the fund (that is, how easily you can buy or sell the ETF) and the potential for the fund closing down.

How much do ETFs cost?

Like any investment, that varies. But again, as with mutual funds, ETF costs come from a couple of different directions.

  • Commissions. Because ETFs trade on an exchange, they’re subject to broker stock commissions. But many brokers — including the ones above — now have a lengthy list of commission-free ETFs that can be traded at no cost. If you’re planning to buy and sell ETFs frequently, make sure the ones you’re interested in are on that list.
  • Expense ratios. As with any fund, ETFs charge an expense ratio to pass the cost of administering the fund on to investors. The expense ratio is an annual fee, expressed as a percentage of your investment: a 1% expense ratio costs $10 a year for every $1,000 you invest in the fund. In general, because ETFs passively track a benchmark, their expenses tend to be lower than what you’d pay for an actively managed mutual fund. Take a look at average fund expense ratios so you know where your ETF stands.

What are the advantages of ETFs?

ETFs combine the flexibility of stock trading with the instant diversification of mutual funds. As most ETFs are passively managed — tracking a benchmark index rather than trying to beat market returns — management fees are on average about one-third lower than that of actively traded mutual funds. Costs are transparent, and the value of the fund’s holdings are reported at the end of each day (as opposed to monthly or quarterly for mutual funds).

ETFs also typically draw lower capital gains taxes than mutual funds. Investors might pay only upon the sale of the ETF, whereas mutual fund investors can incur capital gain taxes throughout the life of the investment.

What are the disadvantages of ETFs?

Most ETFs are passively managed, meaning they try to track an underlying asset, like a basket of stocks like the S&P 500 or a commodity like gold, which may be turnoff for investors who prefer active management. Also, while costs are generally lower for ETFs they can vary from fund-to-fund (even ETFs tracking the same index). Like stocks, you pay a commission every time you trade an ETF as well; no-load mutual funds, on the other hand, are sold without a commission or sales charge. Nasdaq recommends “any investor buying less than $1,000 worth of ETFs at a time should consider buying a transaction-free ETF or mutual fund.”

What’s the difference between an ETF and stock?

Like stocks, ETFs are traded on exchanges like the New York Stock Exchange (hence the name, exchange-traded funds). But unlike a stock, which buys assets in one publicly traded company, an ETF tracks an index, a basket of securities, bonds or other assets.

What’s the difference between an ETF and a mutual fund?

The main difference is in how these funds invest, and how they’re bought and sold. As we noted above, ETFs can be traded throughout the day, leading to the kind of price fluctuations you might see with individual stocks. They also tend to be more tax-efficient. Mutual funds are typically purchased from fund companies rather than other investors, and are priced once a day after the market has closed.

Though ETFs can be actively managed, most are passive, tracking an index. Many mutual funds are actively managed and employ a professional to pick and choose investments, which can result in higher fees.

Here’s our full comparison of ETFs and mutual funds.

Do ETFs have minimum investments?

Because they are traded for a share price, you don’t run into the typical mutual fund minimums, which can be $1,000 or more. You can purchase an ETF share for as little as $10 or $20 in some cases. Robo-advisors that use ETFs in their portfolios may even allow you to buy fractional shares — portions of a fund smaller than a single share.

That said, some brokers have account minimums, though there are quite a few options above that do not.

How do you trade ETFs?

To trade ETFs, you’ll need an account with an online broker. If you don’t have one, you can open one with one of the companies listed above in about 15 minutes — the whole process can typically be done online. Here's the step-by-step of how to open a brokerage account.

Once the account is funded, you can purchase ETFs using their ticker symbol, very similar to the way you’d buy stocks. (Here’s how to narrow your options when investing in ETFs.) You’ll place an order on your broker’s website or online trading platform with the ETF’s ticker, the order type and the number of shares you’d like to purchase.

» Want more information? Read our step-by-step guide to buying an ETF.

Do ETFs pay dividends?

Yes — if the portfolio owned by the ETF includes equities such dividend-paying stocks (in fact, you can buy ETFs made up only of these kind of assets). These can be paid monthly or on some other time frame, depending on the ETF.

Can you reinvest ETF dividends?

Yes, you can use dividends to acquire more shares in the same ETF, but there may be commissions for reinvesting dividends. Check with your brokerage to learn more.

Last updated on April 9, 2019

Methodology

cheatgame.info's ratings for brokers and robo-advisors are weighted averages of several categories, including investment selection, customer support, account fees, account minimum, trading costs and more. Our survey of brokers and robo-advisors includes the largest U.S. providers by assets under management, notable and/or emerging players in the industry. Factors we consider, depending on the category, include advisory fees, branch access, user-facing technology, customer service and mobile features. The stars represent ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.

To recap our selections...

cheatgame.info's Best Online Brokers for ETF Investing 2019

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