E*TRADE has remained an elite option for investors ever since it was founded nearly half a century ago. The online investment broker is used by a variety of individuals with varying investment experience. E*TRADE’s different products and services enable investors to, among other things, trade stocks, options, and even cryptocurrency.
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Who Is ETrade for?
E*TRADE’s tools can be used by many different investors, including:
- New, inexperienced investors looking for a platform that can grow with them.
- Grizzled veteran investors with large portfolios.
- Those who want to trade often at little to no expense.
- Anyone who wants to access their investments on an elite mobile app.
- Investors looking for research, information, and even retirement planning assistance.
E*TRADE has many, many different options that allow this well-established online broker to service a variety of different investors.
How ETrade Works
E*TRADE’s lengthy history has allowed it to develop a myriad of different offerings for those looking to invest some of their hard-earned cash.
The company survived the race to zero fees that took place across the investing landscape in October of 2019. In spite of the near elimination in commissions, it boasts a market cap of over $10 billion and has continued to find ways to both generate revenue and equip customers with cutting-edge investing tools.
Key E*TRADE features include:
- Their mobile apps: The E*TRADE apps (Power E*TRADE and E*TRADE Mobile) are renowned for their ease of use and consistently rank among the best — if not the best — investment apps in existence.
- Trading platforms: The company boasts three platforms including E*TRADE Web, E*TRADE Pro, and Power E*TRADE.
- Trading costs: It costs $0 to trade stocks, options, and ETFs using E*TRADE.
- Account minimums and fees: There are no account minimums nor are there inactivity or annual fees. There is a small fee for transfers.
- Customer support: E*TRADE offers customer support 24/7 via phone, email, or chat. They also have dozens of physical branch locations across the U.S.
E*TRADE manages to successfully balance its mission to provide powerful trading options for experienced investors with a “take you by the hand” simplicity for those that are just getting started.
ETrade Pros and Cons
While E*TRADE is a heavy hitter in the investment industry, that doesn’t mean it a perfect platform or ideal for every user. Below are some of the pros and cons that come with using the E*TRADE suite of products and services.
Here are some of the most important reasons that investors should consider using E*TRADE as their online broker of choice:
- The E*TRADE mobile apps: As previously mentioned, E*TRADE’s pair of mobile apps is superb and consistently ranks as a top-tier option for mobile investing.
- Excellent resources: E*TRADE prides itself on providing copious quantities of data. This consists of both simple tips and information for beginners as well as live streaming data for serious investors.
- Free trade platforms: All three of E*TRADE’s trading platforms are free for all customers and do not have trade activity requirements or balance minimums.
- Quality paper trading capabilities: The E*TRADE Pro desktop platform allows users to test and experiment with strategies without risking their funds.
- Free commissions: While E*TRADE’s trading commission once stood at nearly $7, as of October 2019 they dropped to $0 for stocks, options, and ETFs, with comparatively negligible charges for other services.
- A large investment selection: Investors can choose from retirement and active strategies, futures, advanced options strategies, and well over 4,000 mutual funds.
- Prebuilt portfolios: In an attempt to cater to new investors, E*TRADE has also created prebuilt portfolios that enable new investors to plug their funds into the market quickly and efficiently.
There’s no doubt that E*TRADE has developed a vast selection of powerful benefits over the decades of its existence.
While less voluminous than the pros, there are several distinct cons that should be kept in mind when you’re considering investing funds through E*TRADE.
- Lackluster website navigation: While E*TRADE’s apps are famous for ease of use, their website leaves a bit to be desired. It is overwhelming for new traders and can be cluttered and difficult to navigate.
- Hidden important information: Along with navigation challenges, important information on the E*TRADE website, such as how to close an account, can be difficult to find.
- Tiered commissions on options contracts: While most E*TRADE activity is free or held at a fixed cost (more on that further down), the fee for options contracts goes up with infrequent trading of fewer than 30 trades per quarter.
- Exclusively domestic trading: E*TRADE only allows access to domestic orders to be executed via domestic markets, while many of its competitors trade in markets around the world.
- Inability to calculate complete net worth: E*TRADE isn’t able to calculate your entire net worth by considering accounts you have outside of their system — a perk that many competitors offer.
While these are all legitimate reasons to pause, none of them particularly set E*TRADE back as a contender for the ideal investment app.
Is ETrade Worth It?
The final question that must be asked is whether E*TRADE is ultimately worth it for you, in particular, as an investor.
Before answering this question, it’s important to consider what you’re trying to accomplish. Are you trying to gain some basic learning experience? Are you looking for an individual 401(k) plan? (E*TRADE has both individual 401(k) and Roth 401(k) options.) Are you trying to scale your portfolio quickly with high-risk stocks?
As you consider your unique situation, and with so many pros and cons swirling in your mind, here are a couple of specific final considerations to help sway you one way or the other.
Is ETrade Safe?
When investing, it’s important to choose an online broker with a reputation that you can count on. While E*TRADE isn’t particularly known for its security, it does generally boast the same standards seen across the industry. For instance, the broker:
- Offers a “Complete Protection Guarantee” that guards against concerns such as fraud and identity theft
- Integrates face and fingerprint recognition when logging in to the mobile app.
- Has additional security through the Securities Investor Protection Corporation (SIPC).
- Has a polished safety record that doesn’t include any data breaches.
Choosing an online broker with a good reputation for safety is key, and E*TRADE generally can be trusted to cover their bases.
How Much Does It Cost to Use ETrade?
As mentioned, there are several fees that do creep into the picture from time to time, especially for more committed investors. For instance, while stocks, options, and ETFs can be traded at no cost, options contracts, futures contracts, and bonds do have associated fees that should be considered if you plan on trading often.
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