Note: We receive a commission for purchases made through the links on this site. Our sponsors, however, do not influence our editorial content in any way.
TD Ameritrade is one of the best investment websites that offers a wide range of investment options, including common and preferred stocks, mutual funds, futures, exchange traded funds (ETFs), options trades, margin lending, fixed income services, college savings plans and cash management solutions. TD Ameritrade is also the recipient of many industry awards, including Best In Class: Overall Broker from Stockbroker.com and No. 1 Online Broker from Barron’s 2016 Review.
This TD Ameritrade review will take a look at why the company is popular with all types of online investors, from consumers who are new to the market to those who are well-versed in stock trading. This review will also provide an overview of TD Ameritrade’s fees, margin rates and other special services.
TD Ameritrade is especially popular for its accessibility and user-friendly model, making it particularly attractive to first-time investors. With its one-on-one support system, which is monitored by licensed brokers, it’s also popular with consumers who are interested in investing money but would prefer to be guided by a professional with expertise in trading. To make it even more user-friendly, TD Ameritrade offers a wide variety of downloadable platforms where you can have access to live-streaming stock market action to help you follow your stocks and manage your portfolio.
At first glance, TD Ameritrade fees may seem higher because its online broker commissions are indeed slightly higher than those of its competitors. Current internet pricing, as of fall 2016, is $9.99 per stock trade. To compensate for this, however, TD Ameritrade does not charge fees on a variety of its services. It also is currently offering a deal of up to $600 free when you trade for 60 days.
Fee-free services include an extensive range of mutual fund transactions, streaming news, third-party research and invaluable mock charting and trading tools. In addition, TD Ameritrade’s free desktop trading application, Thinkorswim, provides real-time stock scanners and data streaming, as well as charting and research reports. TD Ameritrade also offers commission-free ETFs. Curated by Morningstar, an independent investment resource that specializes in fund investing, ETFs are similar to mutual funds in that they pool investor funds into a security package, thus enabling investors to diversify their investments without having to buy and manage different individual assets.
In addition, TD Ameritrade offers access to the Trade Architect platform, a sophisticated tool that, with one click, shows you a variety of different trades that correlate with your search. Access to Trade Architect is free, as opposed to other companies, such as Fidelity Investment and E*Trade, which charge for this service.
As with any investment firm, TD Ameritrade margin rates will vary according to factors such as the amount of the debit balance and the current base interest rate. The current base rate, as of Jan.1, 2016, is 8 percent. The current rates for investments are as follows:
On an FDIC-insured deposit cash sweep bank account, the current rates for investments from $0.01 to above $1 million incur a 0.00999 percent interest rate and an annual percentage yield of 0.01 percent. These numbers remain the same for TD Ameritrade PLUS IDA investors who have at least $1 million in assets.
If you’re concerned about being able to afford a TD Ameritrade minimum deposit, the good news is that you can open an account with any amount of money; there’s no minimum deposit. This means that, with as little as $50 or $100, you can start investing for your future. This is a drastic change from TD Ameritrade’s former policy, which required a minimum investment of $2,000. If you want to take advantage of TD Ameritrade’s margins and options privileges, however, you’re still required to deposit a minimum of $2,000.
Options can be an especially valuable tool for beginning investors, because they enable an investor to profit from the price changes on a security with just a small investment amount. It’s a way of potentially making more by investing less. Options trading does have its risks, however, so it’s a good idea to educate yourself first and talk to a professional before you decide to take advantage of margins and options privileges with any investment firm.
When comparing TD Ameritrade and Fidelity Investments, it’s important to get data points on a variety of factors. Comparing broker commission fees is just the tip of the iceberg; you’ll also want to compare the range of trading options available, as well as extra services offered — and whether there are fees charged for these optional services. You’ll also want to compare the number of mutual funds available to clients. Finally, it’s important to know which company offers conveniences such as virtual trading and compatibility with mobile devices. Here’s a comparative breakdown of these services:
Fees (as of Fall 2016)
TD Ameritrade: $9.99 per online stock trade
Fidelity: $7.95 per online stock trade
TD Ameritrade: 101
TD Ameritrade: No minimum deposit
(TD Ameritrade’s margin rates are listed above.)
TD Ameritrade: Stock trading, mutual funds, FOREX trading, options trading and futures trading
Fidelity: Stock trading, mutual funds and options trading
Mutual Funds Available
TD Ameritrade: 13,503
TD Ameritrade and Fidelity both offer Android, iPhone and iPad apps.
TD Ameritrade offers virtual trading to its clients.
Fidelity does not offer this option.
TD Ameritrade: Checking accounts, credit card accounts, debit card accounts and no-fee banking
Fidelity: Checking accounts, debit cards, savings accounts and credit cards
According to ratings by Stockbroker.com, in 2014 TD Ameritrade and Fidelity both received equal Best in Class awards for Mobile Trading, Research and Platforms and Tools.
TD Ameritrade periodically offers a variety of special free trade offers. As of October 2016, TD Ameritrade free trades include the following:
The TD Ameritrade 529 College Savings Plan was designed to help families put away money for their children’s college education. The plan operates by offering tax advantages and allowing families to exclude money from their estates so that it can be put into a separate college savings account. Here are some benefits of the TD Ameritrade 529 Plan:
Financial Benefits: The TD Ameritrade 529 College Savings Plan is configured for every type of budget. There is no minimum annual contribution, and individuals can contribute as much as $14,000 a year (per beneficiary) and not incur federal gift taxes. This way, up to $70,000 (over a four-year period) can be contributed to the account without incurring any federal gift taxes. Plus, married couples who file jointly can contribute a maximum of $140,000 (per beneficiary) over four years. Another benefit is that you can make these contributions to as many beneficiaries as you want without incurring a gift tax, as long as you stay within these monetary amounts. Overall, the TD Ameritrade 529 Plan has a per-beneficiary balance limit of $360,000.
Tax Benefits: Any growth within the 529 account is tax-deferred, and qualified withdrawals for higher education expenses are federal tax-free, as well as Nebraska State tax-free. Any money placed in the 529 plan can also be excluded from any taxable estate that you own.
Ease and Flexibility: The TD Ameritrade 529 Plan is designed to cover nearly all college expenses, including fees, tuition, reasonable room and board rates, computer equipment, books and supplies. Account withdrawals can be made at eligible schools across the nation.
With its wide variety of stock trading options, extensive customer support system, fee-free services, commission-free ETFs, and online and mobile compatibility, TD Ameritrade is perennially rated among the best online brokerage firms. In addition, TD Ameritrade offers extra services such as its 529 College Savings Plan, plus user-friendly live video streaming services and free access to the sophisticated Trade Architect platform.
For investors who are new to trading or who don’t want to spend a lot of time studying the market, TD Ameritrade is especially helpful with its easy-to-use Thinkorswim desktop app, which provides at-a-glance quotes and other real-time information for investors. With such a wide range of services, TD Ameritrade provides stock options, valuable tools and solutions for traders at every level, from newbies to seasoned veterans of the stock exchange.
Advertising Disclaimer: Simple. Thrifty. Living. does receive compensation for some of the services that we recommend, although we only recommend services that we truly believe are the best.