In this age of digital advancement, it is not surprising that online stock brokerages exist. In fact, in this industry, there are a couple of popular names that are battling off being the best, thus we are making a comparison between E*TRADE vs TD Ameritrade vs Robinhood, three of the most well-known companies in the online brokerage industry today.
As mentioned, there are a lot of online brokerage companies today. Each of them does have some amazing things to offer. But, in particular, E*TRADE, TD Ameritrade and Robinhood are all known not just as online investment brokers, but also because these three give emphasis on self-directed investing.
Just so you know, self-directed investing, also known as Do-it-yourself (DIY) investing refers to the “method and strategy in which retail or individual investors choose to build and manage their own portfolios. Do-it-yourself investors commonly utilize discount brokerages and investment account platforms as opposed to full-service brokerages or professional money managers.” This is according to Investopedia.
Now, going back to online brokerage services…
In a study conducted by Advanced Analytical Consulting Group and Deloitte for the United States Department of Labor, it has found that in 2013, 17 million American households owned a brokerage account and that most of them owned an Individual Retirement Account (IRA). Meanwhile, other “actively traded through their brokerage account” and 65% “traded at most three times in the year before the survey interview.” However, if compared to 2001, that number seemed to have decreased by 3 million.
Furthermore, in a study, this time by Statista, it says that in 2018, majority of Americans who used online investing/stock trading service, which is 14.59% were within the 30-49 years old age bracket, 12.28% were 18-29 years old, while 10.86% were 50-64 years of age.
With what we have shared, there are two things that we wanted to point out. First is that many Americans own a brokerage account and that brokerage is something that is not extinct in our nation, and second, while the majority of the people who are into online brokerage services are old people, the young ones are coping up. Who knows, in a few years’ time, they may surpass the older people, right?
Anyway, having given all this essential information, let us now proceed to compare three of the most popular online brokerage service providers — E*TRADE vs TD Ameritrade vs Robinhood.
In particular, we are going to share with you the following:
- Quick Comparison
- Brief Backgrounder
- Notable features
- Minimum Initial Investment Required
- Trading and Annual Fees
- Our Verdict (Which is the best?)
E*TRADE VS TD AMERITRADE VS ROBINHOOD: QUICK COMPARISON
Later on, we are going to share with you a more detailed comparison, particularly on some of the most vital details that one should know if he or she is planning to use an online brokerage service provider.
Meanwhile, here’s a quick comparison between E*TRADE vs TD Ameritrade vs Robinhood for your reference:
|ITEM FOR COMPARISON||E*TRADE||AMERITRADE||ROBINHOOD|
|Option Trades||$0/trade + $0.65/contract ($0.50/contract for 30+ trades/quarter)||$0.65/contract||$0|
|Security||SIPC coverage$0 liability against unauthorized use of your accountComplete payment protectionInformation privacyOptional digital security IDSmart alerts by text or email||SIPC coverageAdvanced firewallsAnomaly detection and intrusion detection technology128-bit encryptionAsset Protection Guarantee||SIPC coverageEncryptionTransport Layer Security (TLS) ProtocolsUsage of TouchID, FaceID or custom pin codeTwo-factor authentication|
|Customer Service||24/7 via Live Chat; Phone Support available Monday through Friday from 8:30 a.m. to 8:30 p.m., Eastern Time; Mobile app with full capabilities||24/7 via phone, live chat, text, and email; Full-service mobile app; TD Ameritrade offices and TD Bank branches||via Email only|
E*TRADE VS TD AMERITRADE VS ROBINHOOD: BRIEF BACKGROUND
E*TRADE, TD Ameritrade, and Robinhood are all well-known companies in the online brokerage industry. All of them have their respective highs and lows, which you will surely find out as we go through this review.
For now, we are going to share with you a little backgrounder about all three companies. This will help you get to know E*TRADE, TD Ameritrade, and Robinhood better.
E*TRADE was founded in 1982. It was particularly launched as an online trading platform. Over the years, the company has catered to a lot of clients, which is why it is not surprising that today, the company has already had over $65 billion in assets under management.
Although not yet considered as one of the largest brokerage firms in the country, with how the company is performing, E*TRADE has grown into one of the most popular in the industry.
One of the reasons why the company has growing popularity is because E*TRADE has one of the best trading platforms in the online brokerage industry. In addition, the company does offer unlimited investment options, which allows investors to invest in mutual funds, exchange-traded funds (ETFs), individual stocks, as well as bonds, options, futures, and FOREX.
Apart from the afore-mentioned, the company also provides investors with four managed investment options. This includes E*TRADE’s Core Portfolios Robo advisor, as well as Blend Portfolios, Dedicated Portfolios, and Fixed Income Portfolios for hands-on wealth management. The three latter options include active management as well as the capability to work directly with a financial consultant.
Moreover, E*TRADE also has its own online banking unit, which enables you to bank where you had your money invested.
ABOUT TD AMERITRADE
The Omaha, Nebraska-based company, TD (Toronto Dominion) Ameritrade was launched in 1971. As stated in its name, the company is part of the Toronto Dominion Bank.
Obviously, TD Ameritrade is affiliated with TD Bank, which currently has over 1,300 branches in 15 East Coast states. In addition, it also has a branch in Washington, D.C. Currently, TS Bank boasts a $384 billion in total assets, which is why it is considered as the ninth-largest bank in the whole United States.
Meanwhile, TD Ameritrade does have approximately 360 branches nationwide. Needless to say, the company has one of the top investment platforms in the industry. On top of that, TB Ameritrade constantly ranks among the best brokerage firms available in the country.
TD Ameritrade offers full-service investment brokerage services. Since the company is affiliated with TD Bank, it is not surprising that as a TB Ameritrade member, you can also take advantage of banking through TD Bank. Just so you know, there are bank-based financial professionals available at their branches. They provide clients with a wider face-to-face capability regarding their investments.
Furthermore, TD Ameritrade also offers full-service investing for self-directed investors. Apart from that, the company also has Essential Portfolios Robo advisor as well as what they call as Select Portfolios actively managed portfolio, which is ideal for larger accounts. Meanwhile, they also have Personalized Portfolios, which provides wealth management for investment accounts with at least $250,000.
Robinhood is quite new in the investment scene as it has only been launched in 2013. While it is relatively new to the industry, it has grown rapidly since it was introduced to the market. It is not surprising though given the fact that it is a completely commission-free trading platform.
Robinhood is committed to empowering people from any background to get into the stock market. Precisely why they come up with the app. The company is very serious about its goal that it provides zero-fee accounts with no trading fees.
Unlike other online brokerage firms that charge for most buys and sell transactions, Robinhood offers its service for free. Yes, you read it right. It is a free platform as mentioned earlier. Apart from that, what makes Robinhood even more popular in the scene is the fact that it supports not just stocks, but also ETFs, options as well as for cryptocurrencies.
Although it offers a very limited menu as compared to the two previous companies, which really made people adore Robinhood is their Crypto. This particular trading service offered by the Robinhood allows you to buy and sell multiple popular currencies such as Bitcoin, Litecoin, and Ethereum. In addition, Robinhood also provides you access to all popular cryptocurrencies, regardless if you are active in buying or selling them, or not.
Another selling point of Robinhood is that it is just one of the very few micro-investing apps that have introduced fractional shares, which lets you invest in as little as $1.
Before we move on, here’s a quick comparison made by Stas Serfes between TD Ameritrade and Robinhood, which we find very informative for anyone deciding on which company is better. Just click the play button below to watch the whole video:
E*TRADE VS TD AMERITRADE VS ROBINHOOD: SIMILARITIES
E*TRADE, TD Ameritrade and Robinhood are popular in the online brokerage industry. All three of them have managed to earn their spots in the industry. They have provided certain kinds of services that made them where they are now.
Apart from the fact that all three of them are one of the well-known online brokerage companies, they also have some things in common (either all three of them or just two), which include the following:
- They all provide self-directed investment brokerage services.
- They all offer commission-free stock, option and ETF trades.
- They all have investor access online and via iOS and Android mobile apps.
- Both E*TRADE and TD Ameritrade provide managed portfolio options.
Remember, these are just the major common denominators that we have seen among the three. It’s good to take note of this so you can better gauge your options – if you are looking for an online brokerage firm to open an account with.
E*TRADE VS TD AMERITRADE VS ROBINHOOD: DIFFERENCES
While E*TRADE, TD Ameritrade and Robinhood have their similarities, all three of them are unique in their own ways. They do have, in fact, a lot of differences – whether it be major or minor differences.
Here are a few of the differences among E*TRADE, TD Ameritrade and Robinhood:
|Investor Profile||While all of the three companies are built for self-directed investors, E*TRADE and TD Ameritrade also gives investors an option for managed portfolio options like Robo advisors.|
|Investments Offered||On one hand, E*TRADE and TD Ameritrade offer all types of investments. On the other hand, Robinhood offers stocks, options, and ETFs only. It also offers cryptocurrencies, which the other two do not have.|
|Retirement Accounts||While E*TRADE and TD Ameritrade offer different types of IRAs, Robinhood is limited to taxable accounts only.|
|Local Branches||While E*TRADE has 30 local branches, TD Ameritrade has 360 along with over 1,300 TD Bank branches, Robinhood, meanwhile, does not have local branches at all.|
E*TRADE VS TD AMERITRADE VS ROBINHOOD: NOTABLE FEATURES
To make our comparison between E*TRADE, TD Ameritrade and Robinhood more valuable, here are some of the notable features you will find in each of them. Hopefully, this too will help you in choosing the best online brokerage firm.
- The company has a huge assortment of investment options, which includes more than 4,400 no-fee mutual funds.
- It specializes in options trading.
- The company offers a Robo advisor plus various wealth-management options.
- It provides access to E*TRADE Savings Bank, which offers a high-interest savings account, free checking, as well as a line of credit
- In relation to the line of credit, the company allows you to borrow up to 50% of your total account value. This is applicable for any purpose except for buying securities on margin. Furthermore, the interest rate is lower compared to margin interest rates. Needless to say, you can repay on your preferred schedule.
- The company offers Robo advisor and several wealth-management options, primarily for larger investors.
- It is a tie-in with TD Bank, which offers full-service banking such as commercial banking and has over 1,300 branches all over the East Coast.
- TD Ameritrade alone has more than 360 branches around the country.
- With its tie-up with TD Bank, investors can also take advantage of face-to-face contact, which is not commonly practiced in the investing industry.
- It is commission-free trading for stocks, options, and ETFs.
- It does not charge an annual fee to maintain your account or any other fees.
- Robinhood provides the ability to trade cryptocurrencies.
- The platform is designed to be a pure self-directed trading tool.
E*TRADE VS TD AMERITRADE VS ROBINHOOD: MINIMUM INITIAL INVESTMENT REQUIRED
All three of them — E*TRADE, TD Ameritrade and Robinhood — have their highs and lows. One more important aspect that we need to look into is the minimum initial investment required.
Let’s start with —
The company does not require a minimum to be able to open a brokerage account. However, it has a relatively high minimum with regard to their managed accounts. For your reference, here are the minimum investment required for the following managed accounts:
- Core Portfolios Robo advisor – $500
- Blend portfolio – $25,000
- Dedicated portfolio – $150,000
- Fixed Income portfolio – $250,000
Normally, in other online brokerage companies, they require a minimum initial investment. However, just like E*TRADE, TD Ameritrade does not have a minimum initial investment required as well. As with their managed portfolio, below are the specific requirements:
- Essential Portfolios Robo advisor – $500
- Select Portfolios – $25,000
- Personalized Portfolios – $250,000
Like E*TRADE and TD Ameritrade, Robinhood does not require a minimum initial investment as well. While it requires you to fund your account so you can start trading, how much you will need will all depend on you.
Robinhood is ideal for those who are just starting and are quite not risk-takers when it comes to investing. It’s a good opportunity to learn and play around without fearing about how huge the money you invested in.
E*TRADE VS TD AMERITRADE VS ROBINHOOD: TRADING AND ANNUAL FEES
Let’s face it, in almost everything, we always care about the money we spend, right? As much as possible, we want to get good value.
Like anything else, fees matter when it comes to investing via online brokerage firms like E*TRADE, TD Ameritrade, and Robinhood.
The good thing is — all of these three online brokerage platforms do not charge for an annual fee to maintain their brokerage accounts. But, if you use advisory services particularly E*TRADE or TD Ameritrade, you will have to prepare for the following fees:
– An annual advisory fee of 0.30% on its Core Portfolios Robo advisor
– An annual advisory fee that ranges from 0.35% to as high as 1.125% on its other managed portfolio options
– A yearly fee that ranges from 0.30% to 1.25% for managed portfolios.
E*TRADE VS TD AMERITRADE VS ROBINHOOD: THE VERDICT
To be perfectly honest, it’s hard to pinpoint just one among the three. We do think that all three have their respective highs and lows, strengths and weaknesses.
Having said that, allow us to judge based on the following criteria:
- For the total service level, we have to give it to TD Ameritrade.
- For lower-cost frequent trading, it has to be E*TRADE.
- For less-frequent traders, the best option is TD Ameritrade.
- For commission-free trading, it is obviously Robinhood.
- For a frequent, self-directed trader with all needed investment resources from outside sources, it has to be Robinhood as well.
- For cryptocurrency, again, it’s obviously Robinhood.
To put it simply, you have to look into what your needs and preferences are to be able to decide which among the three is not the best, but the most ideal for you.
FINAL THOUGHTS ON E*TRADE VS TD AMERITRADE VS ROBINHOOD
Have you decided the most ideal online brokerage platform for you yet?