Scottrade vs. Sharebuilder – Who is the Best Online Brokerage?

A lot of people have a hard time deciding which brokerage to use for their investing. Some of the ones you see on the television charge outrageous commissions. For the reasons below, I like both Scottrade and Sharebuilder, but each for something different.

 

The Pros and Cons of Scottrade

Scottrade is an online discount brokerage that allows you to trade just about any security. The reason I love Scottrade is because they charge a flat $7 commission for almost all trades. This is not the cheapest, but it is close and the platform they provide you to trade on is extremely reliable (which is not the case with some cheaper brokerages). I primarily use Scottrade for purchasing individual stocks that I plan to sell once it reaches a pre-determined gain. Also, Scottrade has a great stock screener that you can use to filter stocks that meet your criteria.

Scottrade is also good for trading options. Their tools for looking at options chains are some of the easiest to read that I’ve found.  I also am a big fan of the research options available at Scottrade.  They have a ton of data and a great stock screening tool, which you can see me using in my first YouTube video: How To Screen For Stocks.

The biggest drawback of Scottrade is their reporting.  I’ve found it difficult to monitor my positions, and they hide the cost basis details in their reporting, not on the main screen.  Also, they are not the easiest to use when it comes to actually placing options trades.  If you want any kind of complex spread or straddle, it takes a lot of manual work and platforms like thinkorswim do it a lot better.

 

The Pros and Cons of Sharebuilder

Sharebuilder, on the other hand, is great for automatic investing. I use this strategy for my balanced portfolio which consists primarily of ETFs. The reason Sharebuilder works well for this is because they have an automatic investing program, where the commission for each buy is only $4, or if you see my post about Savings and Costco, you could lower your trades to $3.  That is the cheapest commission I’ve found anywhere in the trading world.

They do charge a higher commission to sell your positions, but I think the savings on the front end do balance out, and it make Sharebuilder something worth checking out!

The biggest con of Sharebuilder is that the low cost commission is only for the automatic investing program, and not for everything.  Therefore, you will have higher fees if you want to do other things.  Also, their platform is geared much more towards investing in large cap stocks and ETFs, and they don’t have the most research, which makes it hard to go in-depth.  However, if you want a place to buy and hold, Sharebuilder is great.

 

Readers, what are your thoughts on Scottrade and Sharebuilder?  Any other online brokerages you prefer?