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E*TRADE Review – Great Discount Broker For the Advanced Investor

By Mark Riddix

E*TRADE is probably the most well-known, major discount brokerage firm in the United States. I am sure that you are probably familiar with the Super Bowl commercial of the talking baby. Well, E*TRADE is more than just talking babies!

The company was started in 1991, and it is headquartered in New York City. The online broker has grown through acquisitions to become a major force in the financial services industry. E*TRADE Financial suffered a setback during the subprime crisis of 2007 and 2008. However, E*TRADE has rebounded nicely and been voted the top online broker by SmartMoney for the past three years.

Key Features

E*TRADE Complete Investment Account– The E*TRADE complete investment account is the basic investment account that lets users buy stocks, bonds, mutual funds, exchange traded funds, and options. You can even participate in IPOs with an E*TRADE complete account. You get free checks, a debit card, and free online bill pay. The minimum to open this account is only $500 and users get free access to the site.

E*TRADE Power Trading Account– The power trading account offers all of the benefits of an E*TRADE complete account plus discounted pricing and extra benefits for active traders. Users that make 30 or more trades in a quarter only pay $7.99 per trade. Power traders get live streaming access to CNBC, a sophisticated trading platform, and additional trading tools.

Retirement Investment Accounts– E*TRADE offers individual and business retirement plans including Traditional IRA accounts, Roth IRA’s, Rollover IRA’s, Simple IRA’s, and SEP IRA’s. These IRA’s can be funded with stocks, bonds, mutual funds, CD’s, and cash.

E*TRADE Mobile Pro – The E*TRADE Mobile application lets you make buy and sell transactions right from your cell phone. E*TRADE Mobile makes trading on-the-go a breeze.

Advantages of E*TRADE

Low Minimum Opening Deposit
It used to cost $2,000 to open an E*TRADE account but now E*TRADE has lowered the account opening minimum to just $500. This makes E*TRADE’s services much more affordable for the everyday investor. The low minimum opening deposit now rivals Scottrade.

Banking Features
One of the best features of E*TRADE is that any unused cash can be swept over into a savings account. At .40% APY, the E*TRADE savings account pays approximately four times the average commercial bank account. The account is FDIC insured and there are no account fees and no minimum balance requirements. E*TRADE also offers checking accounts and certificates of deposits.

Comprehensive Investment Products
E*TRADE has the most comprehensive list of financial products of any online broker. There are some brokers that may offer a larger selection of a particular financial product such as a mutual fund, but E*TRADE offers the greatest variety. You can fund you account with typical brokerage products (stocks, bonds, mutual funds) and banking products (certificates of deposits, savings). You can also participate in IPOs, which are normally not available to average investors. E*TRADE has more options than your typical broker.

Trading Tools & Research
The E*TRADE website is the most user-friendly platform of any broker. Buying and selling stocks is simple using the E*TRADE website. E*TRADE offers numerous analyst reports and ratings which are all available for free. Technical investors will enjoy the graphs and charts. The research and education center offers detailed information for goal planning and portfolio management.

Dividend Reinvestment Plan
E*TRADE has a great dividend reinvestment plan that makes it easy to add additional shares for a low cost. DRIP’s can help you accumulate wealth through the magic of compounding.

Disadvantages of E*TRADE

High Account Fees
Even though E*TRADE recently dropped its trading fees, they are still more expensive than Scottrade and TradeKing. E*TRADE still has account inactivity fees and high account transfer fees.

Delayed Quotes
E*TRADE offers free delayed quotes which are 15 minutes behind real time market prices. You have to be an active trader in order to qualify for free real time trades.

How E*TRADE Works

Opening an E*TRADE account is an easy process. You will need your name, address, social security number, date of birth, and employer’s name and address.

  1. Choose the type of account that you would like to open.
  2. Complete the account application.
  3. Fund your account via ACH, check, account transfer or wire transfer.

Final Thoughts

E*TRADE is a great site for the beginning, intermediate, and advanced investors. I have personally used E*TRADE for investing and have been pleased with the results. The site is easy to navigate and trades are executed swiftly. Customer service has been great. I have emailed customer service on numerous occasions and gotten prompt responses.

One of the best features of E*TRADE is the savings account. The cash sweep allows you to maximize the return on money that you are waiting to invest.

I would have to give E*TRADE high marks in just about every category. If you are looking for the lowest cost broker, then E*TRADE is not your best bet. But, if you are looking for a brokerage firm with great products, banking services, research tools, and customer service, then E*TRADE may be right for you.

Special Promotion
Sign up for an account with E*TRADE using the link here and get FREE trades for 60 days ($2,000 minimum deposit, 500 trades max) – Official Site

And now, for your viewing pleasure, here is E*TRADE’s talking baby commercial from SuperBowl 2010. If this doesn’t convince you, I don’t know what will. ;)

Mark Riddix
Mark Riddix is the founder and president of an independent investment advisory firm that provides personalized investing and asset management consulting. Mark has written financial columns for Baltimore and Washington, D.C. area newspapers and is the author of the book, Your Financial Playbook.

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  • Winston

    Thank you for your review. After reading your reviews on Scottrade and E-trade, I am more inclined towards Scottrade due to the lower trading cost. Other than that, I don’t see much of a difference in features in between these two companies that I use for trading as right now I am just an amateur. However, E-trade does have broader brand recognition due to the success of their talking babies commercials. And they are hilarious.

    • Mark Riddix

      You’re welcome!

  • http://madsaver.com Mac

    E-Trade appears to be the most robust online broker, but when it comes down to cost, they are still a bit too expensive at $9.95 a trade. Even so, their complete account is very enticing and being able to easily participate in IPO’s is a plus. And of course, I like the iPhone app integration.
    If they lower their trading price even further, this may be my new discount broker.

  • Sophie

    Hi Marc

    Thanks for this interesting review. We want to read about more online brokers :) Have you heard about OptionMonster ?
    Does E*trade allow international investing ?

    Sophie

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