Most people look at commissions and fees to select a low cost online brokerage. This can lead to making a poor choice. Some of the lowest costs brokerages make up for the low transaction fees and low minimums by paying below market rates on savings accounts. Also, some sites like Fidelity have excellent, free research reports that add extra value.
Top choices for online brokerages from: Fidelity, TD Ameritrade, e*Trade, Vanguard, Charles Schwab, OptionsXpress, Scottrade, TradeKing, Firstrade, Merrill Edge, Zecco, Just2Trade, Muriel Siebert, USAA and more.
Sept. 6, 2011 update: The 2010 Kiplinger's survey ranked Fidelity number one but in 2010 Fidelity shared the top spot with TD Ameritrade. We like Fidelity for the mix of low cost funds, reasonable fees, great website and tracking of cost basis but TD Ameritrade is now the leader in offering no-fee ETFs (exchange traded funds.)
We like Vanguard mostly for the exceptional variety of very low cost index funds but they also have a good brokerage business that ranked #3, ahead of 4th place Schwab, in the Kiplinger survey.
Charles Schwab customers may not have the lowest overall fees, but they currently pay 0.25% on a sweep checking account where you can keep your cash not in equities. They also offer several of their own low cost exchange traded funds that you can buy and sell with no transaction fees!
Muriel Siebert brokerage is tops on the list for international investors with access to international stock exchanges. Fidelity is no slouch wit access to 26 while Vanguard has access to only 4.
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