Is TD Ameritrade a Good Brokerage?

FT Contributor  | 

TD Ameritrade makes investing accessible for everyone. The brokerage doesn’t require clients to start with a minimum balance and does not charge for stock, option, or exchange-traded fund trades. In addition, clients have access to extensive research tools, investment portfolio advice, and access to physical branches in major metropolitan areas nationwide.

Charles Schwab recently completed an agreement to purchase TD Ameritrade for $26 billion. There are no changes expected to either brokerage until after the transaction is complete sometime in the second half of the year 2020. In the meantime, here’s what you can expect from TD Ameritrade.

Who Is TD Ameritrade for?

TD Ameritrade’s trading platforms are user-friendly for beginners yet comprehensive enough for advanced traders. If you’ve been thinking of getting started with investing or you’ve outgrown your current platform, TD Ameritrade has some of the best market tools for every type of investor. The brokerage is best for three main types of investors:

Day Traders

Day traders trade stocks frequently. Commissions and fees can wear away at their bottom dollar. They will particularly appreciate the brokerage’s no-fee structure — they’ll be able to make unlimited free ETF, stock, and options trades, although options trades come with a contract fee of $0.65 each.

Beginners

Although the robust platforms are geared for more advanced investors, beginners shouldn’t feel intimidated. The online platforms are intuitive and easy to get the hang of. In addition, TD Ameritrade provides plenty of learning resources to guide someone just starting out on how to build an investment portfolio.

Anyone who is convinced that learning about investing is boring should take a look at the brokerage’s resources — the multi-media advice includes quizzes, video tutorials, live webinars, and daily educational webcasts.

The number of tutorials available makes it hard to figure out where to start. TD Ameritrade takes investment learning further by providing a full course based on your skill level. Choose from rookie, scholar, or guru to follow the educational resources at your level of understanding.

Theoretical Investors

TD Ameritrade’s paperMoney virtual simulator is a free computer platform for advanced and frequent traders who like to test out their investment strategies before implementing them. The paperMoney simulator gives the individual $100,000 in theoretical money and 60-day access to a margin account. To get the most from their investments, they can test the brokerage’s platforms and their approaches before they put real money down.

TD Ameritrade Features

The brokerage isn’t lacking much. Some of the best features clients are likely to embrace most are:

  • Multimedia investor education;
  • Research tools;
  • Two trading platforms, each with a mobile investment app;
  • Virtual trading simulator.

TD Ameritrade Pros and Cons

Any brokerage has its drawbacks and benefits, depending on the type of investments you’re interested in making. Evaluate the following:

Pros

  • Low-to-no trading, forex and account fees;
  • No minimum deposits;
  • Mobile trading;
  • Phone and live chat customer support;
  • Physical branches;
  • Wide variety of account types — IRAs, college savings accounts, joint accounts, trusts, pensions, and business accounts;
  • Full-service and robo-advisor portfolio management available when you’re looking for safe investment strategies with high returns.

Cons

  • Only U.S. securities available to trade;
  • High mutual fund commission ($49.99);
  • Two-step authentication security not available;
  • No crypto trades.

What Are the Best Investments TD Ameritrade Provides?

TD Ameritrade gives clients access to nearly every asset class including equities, options, forex, and a large selection of mutual funds to invest in now. The brokerage provides more than 13,000 mutual funds to diversify your portfolio. Besides the standard brokerage accounts and portfolio, you can designate and manage accounts for all of life’s milestones, such as a 529 college savings plan, or IRAs and 401(k)s for retirement planning.

Is TD Ameritrade Safe?

Working with an online investment planner requires extra caution on the investor’s part. TD Ameritrade safeguards your assets and privacy in several ways. They include:

  • Free downloadable security software: TD Ameritrade provides two computer security products for Windows users: TrendMicro HouseCall and Symantec Security Check. Both protect your computer from viruses, spyware, and malware. HouseCall performs a one-time check of your computers and Security Check will maintain the safety of your hardware by performing weekly scans.
  • Firewalls and encryptions: TD Ameritrade safeguards accounts using firewalls that separate the brokerage’s web servers containing your personal data from public ones. All data transmission is encrypted. TD Ameritrade could improve security by offering two-factor authentication for client logins.
  • Asset protection: TD Ameritrade protects your deposits and investments from fraudulent use. The brokerage will reimburse you for money or securities you lost from your account because of unauthorized activity.

Although the brokerage works to protect your investments and data, you should take precautions to reduce the risk of compromising your account. Never provide personal identifying information, such as your Social Security number, password, or bank information as a response to an email, even if the email looks legitimate. The company would never request your information via email and warns clients to be wary of phishing scams.

In addition, make sure you use strong passwords to log in to your TD Ameritrade account and safeguard account pins and other personal information. Limit access to your online investment portfolio — the brokerage’s asset protection guarantee is voided if you’ve given access to others to your account and you experience a loss.

TD Ameritrade Fees

TD Ameritrade’s low fee structure is one of the reasons the brokerage is one of the most popular. Here’s a quick glance at the fees associated with an account:

  • Stock, options and exchange-traded fund online trade commissions: $0;
  • Stock, options and exchange-traded fund phone trade fee: $5;
  • Stock, options and exchange-traded fund broker-assisted trade fee: $25;
  • Options contract fees: $0.65 each;
  • No-load mutual fund fee: $49.99;
  • Futures and options: $2.25 per contract, plus regulatory and exchange fees;
  • Alternative investments transaction fee: $100;
  • U.S. ICE Futures monthly subscription fee: $110;
  • MarketEdge Daily monthly subscription fee: $9.99;
  • MarketEdge Daily Plus monthly subscription fee: $19.99;
  • Annual fee: $0;
  • Account inactivity fee: $0;
  • Outbound full account transfer fee: $75;
  • Outbound partial transfer fee: $0;
  • Wire transfer fee: $25.

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