E*Trade Vs TD AMERITRADE?

Question

I'm trying to decide which one I should use

So please tell me the goods and bads if you've been a Customer

Answer 1

AMERITRADE is what I use

Answer 2

I have been a customer of both for several years, and I have now moved everything I can to E*Trade. I still have two specialty accounts at Ameritrade which cannot be moved easily (i.e. a qualified plan and an HSA).

Although I started with investments, I now also use E*Trade rather than a local bank as my primary bank.

E*Trade is a more extensive offering - with more financial products available, and a much more fully featured website. Highlights- ATM fee reimbursement, advanced ACH system for cash transfers, RSA SecureID, more mutual fund choices, better tool for options trading, etc.

Ameritrade is $2 cheaper per trade if you have a smaller account, that's the only significant advantage I can think of.

Answer 3

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Answer 4

Etrade has a high APY on their checking accounts (5%) provided you meet their requirements. Their money market account has a good APY if you have enough money in it too.

Answer 5

Need more details before I can give answer

Answer 6

My answer would depend upon whether you're talking about an IRA or a taxable account. For a taxable account, I would recommend Fidelity, especially if you have sufficient assets or trading activity to qualify for Fidelity's lowest rates ($8/trade and low option commissions compared to TDAmeritrade and E*Trade).

Are you a sophisticated investor who uses the specific identification method to lessen your tax liability?

If so, and if you've dealt with full service brokerage firms who IMO follow regulations more closely than some discount brokerage firms, you may desire to get versus purchase ("vsp") or versus sale ("vss;" used when unwinding multiple short positions including covered calls) instructions printed on trade confirmations in taxable accounts.

Based upon my conversations with E*Trade customer representatives and even after establishing a test account, my current understanding is that there is no way to get vsp instructions printed on a trade transaction confirmation at E*Trade. So, to the extent this is correct, I personally would never use E*Trade for a taxable brokerage account. You should check this out if it's an issue for you. If I'm wrong, please send me an e-mail because I otherwise liked the E*Trade service. The lack of vsp instructions on transaction confirms is a deal killer for me.

TDAmeritrade will print vsp instructions on trade confirmations, but you must call in the order if you desire specific identification trade instructions recorded on your confirmation. This procedure has proven time-consuming and error prone in my experience, and sometimes you have to argue to get the online brokerage rate, but it's better than nothing. I've arranged my activities at TDAmeritrade to minimize the need for specific identification transactions, partially by moving significant assets to Fidelity, and by engaging in a much greater number of trades at Fidelity than at TDAmeritrade.

Fidelity currently is the only online service of which I'm aware which does a superb job of handling specific identification trades online. As with E*Trade, Fidelity does an excellent job of accounting for tax lots online and both firms allow an online customer to select specific tax lots for sale. Unlike E*Trade, for some reason, Fidelity does record vsp instructions on the trade confirms (but not on the account history or statements (added steps that I would prefer)).

Using the specific identification method can save taxpayers significant amounts of money by allowing them to more easily take short-term losses when they have multiple lots purchased at different prices, or allowing them to take short-term gains if the taxpayer has unutilized short-term losses from other trades.

Now some discount broker representatives will tell you that you don't need instructions recorded on the trade confirm in order to use the specific identification method. If this is the case, why does Fidelity, TDAmeritrade, and full service brokerage firms make this option available?

I've never seen any written tax research with citations that state that you can write in specific identification instructions on confirms, as some reps have told me is permissible. Nor have I seen any research that states that you can merely arrange your trades at year-end to minimize your tax liability, as I've also been told is allowed. No brokerage rep should be giving tax advice unless they are willing to provide written documentation and accept the liability for the advice IMO, and a warning flag should go up whenever a customer is offered such undocumented advice.

It's pretty clear to me that the IRS wants timely written confirmations from brokers of a customer's specific identification trades (see Pub. 550 link below).

If you're investing in an IRA (where due to wash sales rules, specific identification trades also may be beneficial for significant investors), and you don't care about specific identification trades in the IRA, I would next ask if I was going to invest in mutual funds. Fidelity's mutual fund options are less advantageous IMO. Be warned, however, that the specific identification method also is available to mutual fund investors.

Also, consider what you will earn on idle cash. Fidelity is far superior in sweep options IMO, especially if you want tax-exempt options, especially for specific states. Fidelity also makes it easy to use more high-yielding money market and other income funds as a place to park cash by not charging for transactions that involve the many excellent Fidelity income fund options, resulting in one-day settlements. If you have a lot of cash on hand, Fidelity IMO will enable you to earn significantly more money on these balances with minimal effort.

Consider also whether you want a margin account or not. Many discount brokerage firms try to get customers into margin accounts IMO. If you want a cash account, they won't link it with a margin account as will most full service firms, which offer a single account with cash and margin sub-accounts which enables easy transfer of assets between the margin and cash accounts. Having margin sub-accounts allows the best of all worlds IMO. You don't have to use margin, worrying about losing qualified dividend status or voting rights as can happen in margin accounts when your shares are loaned out, but margin is quickly available if you want it. Fidelity will offer a single account with cash and margin sub-acounts if an investor qualifies for these accounts.

Don't establish a margin account unless you will use margin. You don't need a margin account to write covered calls, although I've been told by some customer reps that a margin account is required to write covered calls.

Also consider the recent hacking problems at TDAmeritrade. These sort of incidents do concern me, and the action at TDAmeritrade does have us searching for an alternative discount broker (without much luck so far given concerns about VSP trades). I don't like the idea that crooks know names, e-mail addresses, phone numbers, and possibly other even more critical information, due to security failures.

Finally, why not use several brokerage firms to meet your investment needs if this is economically feasible for you (e.g., use TDAmeritrade or E*Trade for mutual funds, although specific identification also is an option for mutual fund investors). I firmly believe it's not a good idea to have all of one's eggs in a single investment.

All of the above reflects my experience and opinion only. Please let me know if you think I'm wrong or if you have any suggestions.

Some persons may be more concerned about other features such as research (Fidelity offers very good research IMO). So my concerns may not reflect your priorities.

Answer 7

it depends...