With so many online brokers out there, finding the right one to meet all of your investing needs can feel like you’re looking for a needle in a haystack. The best way to find the right broker is by comparing their services and determining if they fit your financial goals. Today, I want to take a look at one of the leading online discount brokers in the country, Scottrade. Scottrade is one of the first discount brokers I used when I began my investing career and I’ve had a great experience with the product.
You have probably heard about Scottrade from a friend, family or relative but you may still be unsure about what Scottrade is all about. Scottrade was started in 1980 by Rodger Riney with two branch offices in Missouri and Arizona. Scottrade has grown to become one of the leading online discount brokerage houses in the United States. Scottrade is well-known for its $7 unlimited trades. Today, Scottrade has the largest branch office network of any online broker and has been rated by Fortune magazine as one of the top 100 companies to work for in the United States. Let’s take an in-depth look at Scottrade.
How Scottrade Works
It only takes 10 minutes to open a Scottrade account. You will need your name, address, social security number, date of birth, and employment information.
- Open your Scottrade account.
- Completely fill out the account application.
- Fund your account via ACH, check, account transfer or wire transfer.
- Build your account portfolio.
- Print, sign, and mail the account agreement.
Scottrade Trading Platforms: The Scottrade website is simple, straightforward, and very easy to use. Trades can be executed from your computer or phone for just $7. Scottrade also offers broker assisted trades where you can speak to a personal stock broker. You can ask questions and execute orders by phone. Broker assisted trades cost $27. Scottrade offers automated touch tone trading for $17.
ScottradeELITE: ScottradeELITE is for advanced traders that fund their account with a minimum of $25,000. ScottradeELITE offers a customizable advanced trading platform. You get more trading screens, trade ideas, charts, and trade tools.
Scottrade Streaming Quotes: Many brokers are charged a fee for real-time quotes. Real time quotes are free on Scottrade. Streaming quotes make it easy for you to keep up with stock performance and general market movement. The streaming quotes feature includes live news updates and customizable lists.
Scottrade OptionsFirst: Options traders can place contract orders for $7 per trade plus $1.25 for each option contract.
Advantages of Scottrade
Low Minimum Opening Deposit
The minimum opening deposit for a Scottrade account is just $500. This is the lowest opening deposit amount of any of the major brokers. TD Ameritrade requires $2,000 and E*TRADE requires $1,000 in order to open a new account.
This is one of Scottrade’s major selling points. Scottrade has some of the lowest fees of any major online broker. Scottrade charges just $7 per trade, which is cheaper than E*TRADE, TD Ameritrade, and Charles Schwab. This applies to both market and limit trades. Scottrade charges no account maintenance fees or inactivity fees. Whether you make 1 trade or 100, there are never any account fees. If you have ever closed an account at a brokerage firm, then you will appreciate Scottrade’s $0 account closing fees. Most firms charge $50 to $100 to close an account.
Scottrade has 455 branch offices nationwide designed to assist clients. Email and telephone response times are excellent. Scottrade is considered by many to offer the best customer service of the major brokers. In 2008, J.D. Power & Associates ranked Scottrade as #1 in investor satisfaction among online brokers. This is the eighth time that Scottrade has won this honor since 2000.
Lots of investment options
Scottrade offers a wide range of investment products including stocks, bonds, mutual funds, exchange traded funds, certificates of deposits, options, education savings accounts, and retirement accounts. Scottrade has over 2,800 mutual fund options. Fidelity offers 1,400 different mutual funds, TD Ameritrade 1,200, and E*TRADE just 1,000.
Trading Tools & Research
The Scottrade Knowledge Center has educational tools that explain the benefits of different asset classes. The Market Info & Market Research Section provides stock specific information and detailed analysis. Scottrade’s mobile platform makes trading on-the-go a snap. The average execution speed for a trade is 4/10 of a second.
Disadvantages of Scottrade
No dividend reinvestment plan
Scottrade’s biggest disadvantage is that the online broker offers no dividend reinvestment plan. A dividend reinvestment plan is a low-cost way of buying additional shares. If you want to reinvest your earnings at Scottrade, then you have to pay the $7 fee. That is $28 a year for those that reinvest each quarter.
Scottrade was one of the first discount brokers that I used when I started investing. I found the discounted trading fees very attractive. Too many brokers charge fees for not trading often enough or closing your account, but not Scottrade. The low-cost trading, local customer support, and the plethora of investing options are all positives in my book. The only negative thing about Scottrade is the lack of a dividend reinvestment plan. I’m a big fan of Scottrade, and I think it’s a great option for beginning and experienced investors alike.