E*Trade Online Brokerage Review 2021
Star rating: 4.5 stars
E*Trade, which recently merged with Morgan Stanley, is a well-known name in online trading. It's one of several online brokers that charge no commission fees to trade U.S. stocks and exchange-traded funds online. In addition to brokerage accounts, E*Trade offers retirement accounts as well as managed portfolios for investors who prefer a hands-off approach. The platform's goal is to make building a portfolio online as simple and stress-free as possible. This E*Trade review takes a closer look at how the trading platform compares to other online brokerage accounts.
E*Trade online brokerage may be right for:
- Newer investors who are just getting started with building a portfolio online.
- People interested in opening brokerage accounts and retirement accounts in the same place.
- Investors who want to trade stocks and ETFs with no trade fee.
- Active traders who are also interested in options trading.
- Individuals who want access to a robust range of educational tools and resource.
Types of Accounts E*Trade Offers
E*Trade allows you to choose from several different account types, including:
- Individual brokerage accounts.
- Joint brokerage accounts.
- Custodial accounts.
- Traditional IRAs.
- Roth IRAs.
- Rollover IRAs.
- Inherited IRAs.
- IRAs for minors.
- Individual traditional and Roth 401(k) accounts.
- SEP and SIMPLE IRAs for small business.
- Coverdell Education Savings Accounts.
- Managed portfolios.
- Checking accounts and savings accounts.
- Line of credit accounts.
As you can see, E*Trade is quite diverse in the types of accounts you can open. In that respect, it's on par with other large trading platforms like Charles Schwab.
E*Trade's managed portfolios option also shares some similarities with the types of accounts you'll find with other robo advisors. With managed portfolios, you can choose a fully managed account or an automated investment portfolio. Core portfolios, which offer automated investing, have a low annual advisory fee and require just a $500 minimum to start investing.
Key Pros of E*Trade Online Brokerage Accounts
There are several advantages to choosing E*Trade. Some of the key benefits include:
- Being able to trade stocks and ETFs with no trade fee in real time.
- Having the option to open multiple account types, including investment, retirement, and bank accounts, in one place.
- Being able to choose between DIY investing, managed portfolios, or automated investing, depending on your goals and needs.
- Having access to responsive customer service when you have questions or need help.
- Being able to manage your investments through an easy-to-use mobile app.
- Enjoying a library of research and educational tools to help guide your investment decision-making.
Cons of E*Trade Online Brokerage Accounts
In terms of overall user experience, E*Trade has one of the better mobile apps on the market. Compared to other trading apps, it's relatively simple to navigate. The main website, however, can be a little trickier to get around as E*Trade provides numerous pages detailing the specifics of its various products and services.
How E*Trade Works
If you want to start trading with E*Trade, the first step is choosing which type of account you want to open. Again, you can open online brokerage accounts, retirement accounts, bank accounts or education savings accounts.
Each type of account has a different minimum deposit requirement. Here's a quick glance at how much you'll need to open different account options with E*Trade:
- Individual or joint brokerage account: $0.
- Traditional and Roth IRAs: $0.
- Core Portfolios: $500.
- Premium Savings Account: $0.
- E*Trade Checking: $0.
You can open most accounts with no minimum requirement. Core portfolios, which offer automated investing, are one exception since you'll need at least $500 to take advantage of those. The minimums for other managed portfolio options are higher.
If you're interested in opening a traditional IRA or how to start a Roth IRA, then E*Trade could be a good fit. But what is a Roth IRA and how does a Roth IRA work?
In a nutshell, it's a tax-advantaged way to save money for retirement. Roth IRA contribution limits for 2021 allow you to invest up to $6,000 or $7,000 if you're age 50 or older. Your money can grow over time and qualified withdrawals are 100% tax-free.
If you're interested in how to open a Roth IRA or any other IRA with E*Trade, you can do it easily online. E*Trade offers an IRA selector tool to help you determine which type of IRA you qualify for. You'd then just need to provide your personal and financial information to open an account and start investing.
But how many Roth IRAs can you have? And can you have multiple Roth IRAs?
Yes, technically, you can. But the total amount you invest in these accounts each year can't exceed the annual Roth IRA contribution limits. So if you have three Roth IRAs, for example, you'd only be able to contribute a total of $6,000 to all of those accounts for 2021.
In terms of fees, E*Trade will charge no commission when you trade U.S. stocks or ETFs online. Options trading is also commission-free. But there may be fees for trading other types of securities, as well as underlying fees associated with individual investments offered by the platform. When comparing mutual funds or ETFs, be sure to pay attention to the fund's expense ratio. This reflects the cost of owning the fund annually, expressed as a percentage of fund assets.
What to Look for When Shopping for Brokerage Accounts
If you're ready to choose an online trading platform, you have numerous options for doing so, though they're not all alike.
Many traditional brokerages are now offering online trading as well as automated robo advisor services. Mobile trading apps like Robinhood or Webull that offer low-cost trades are also in competition with larger, traditional brokerages.
With so many online brokerage services to choose from, it's important to know how to compare them. Here are some of the key things to consider when researching your options:
Cost. Fees can take a big bite out of your investment returns. When comparing E*Trade to other online brokers, consider how much you'll need to start investing and what you'll pay.
Account types. Online brokerage accounts and IRAs can both be used to invest but for very different goals. The next thing to consider when shopping for brokerage services is the type of accounts offered and how those match up with what you need.
Investment selection. What you'll find at one trading platform may not be identical to what's available with the next. So consider what types of securities (i.e. stocks, ETFs, mutual funds, options, bonds, etc.) you'll be able to trade.
Added features/benefits. Some online brokerages offer features that others don't which may make them more attractive. For example, if you're interested in fractional share trading, automatic rebalancing, or tax-loss harvesting, it's important to know if those are offered.
Customer service and support. If you have an issue or question about your brokerage account, it's important to be able to connect with customer support when you need it. E*Trade has a solid reputation for providing outstanding customer service but not all online brokers can say the same.
Educational resources. Having research and analysis tools on hand can help make it easier to formulate an investing strategy. E*Trade makes a wide variety of investment tools available to help both beginning and experienced investors build their portfolios.
Online and mobile access. If you're investing online then you should be able to access your account when you need to and from anywhere. With E*Trade, you get access to Bloomberg TV through the mobile app as well as the Power E*Trade Platform, which is packed with research and analysis tools.
Bottom Line: How E*Trade Compares
E*Trade is one of the most popular online brokers, thanks to its combination of low trading costs, excellent customer service and user-friendly trading platforms. Its brokerage accounts could be an attractive option for a newer investor who's just getting started or a more advanced investor who's interested in fee-friendly active trading. The addition of managed portfolios and automated investing also set E*Trade apart from other robo advisors when working toward your savings goals.
How to Take the Next Steps
If you'd like to open an account with E*Trade, you can do so online. Again, this simply means choosing an account type, providing the necessary personal and financial information and making an initial deposit if one is required. The entire process can be completed in as little as 10 minutes.
Before you move ahead with opening an E*Trade account, however, take time to shop around. It's always worth looking at other online brokers like Charles Schwab, TD Ameritrade or Vanguard to see if one of those account options might be a better fit. Comparing other brokerages can help you find the best place to invest money when you're ready.