Best Online Brokers for ETFs

Best Online Brokers for ETFs

Although most online stock brokers offer exchange traded funds (ETFs) to customers, there are three online brokers that stand out for ETF investors:

TD Ameritrade. TD Ameritrade is one of the largest online brokerage companies in the United States. In addition to offering exchange traded funds, TD Ameritrade also offers its customers the ability to trade stocks, bonds, options, futures, and the Forex. With over 35 years of experience, the company is a favorite among both new and experienced investors and received 4.5 stars out of 5 from Barron’s, a leading authority in investing. ETFs can be traded for as low as $9.99 per trade, and $44.99 for broker assisted trades.

OptionsHouse. OptionsHouse is a top online brokerage firm, offering a focus on options and stocks as well as exchange traded funds. Although the company is less than five years old, it has already been rated by Barron’s as having one of the best options trading platforms. The pricing of OptionsHouse’s commissions is also extremely favorable to investors, having a flat rate on stocks, mutual funds, and exchange traded funds at $3.95 per trade.

SogoTrade. SogoTrade is another relative newcomer to the online brokerage arena. However, this company has quickly risen in the ranks and become well known for its simple yet powerful trading platform. This is especially appealing to those who are new to online trading. Exchange traded funds can be traded for as low as $3.00 per trade, and as low as $27.00 for a broker assisted. SogoTrade also offers extended hours trading for a slightly higher fee. This allows investors to place trades beyond just the open market time frame.

Questions to Ask Prior to Investing in ETFs 

Although most brokers can trade exchange traded funds for you, it is wise to go with one that has more experience in this area. There are some key facts that you should note prior to making your final decision as to which brokerage you will use for ETF investing.

You should inquire as to:

• How long the brokerage has been trading ETFs;
• How many of the brokerage’s clients are actively trading these types of funds; and
• How will the brokerage help you in tracking your ETF investments.

Once you are comfortable with the information you receive, you will be ready to begin buying and selling exchange traded funds. Your next step will be to open an account, fund it, and begin researching which ETFs will best fit with your specific financial goals.

Remember, too, that you will need to track your investments’ progress. Many investors in ETFs like to monitor their holdings on a biweekly basis, so be mindful of your timeframe as well as any large up or down movements in the market – especially in the industry or sector of the ETFs you are invested in.

About ETFs

Exchange traded funds (ETFs) are securities similar to mutual funds but track an index rather than individual stocks. Yet, unlike index mutual funds, there are no minimum investment requirements. Therefore, investors may purchase very small amounts of exchange traded funds – even as little as just one share.

Exchange traded funds have the ability to hold a variety of investments, including stocks, bonds, and commodities. One of the many attractive features of these funds is that they allow investors to easily diversify their exposure. They also feature expense ratios that are relatively low.

Like other securities, ETFs must be purchased through a registered broker – and there are a number of online brokerage companies that offer exchange traded funds. However, because these investments are relatively new in the overall investment arena, if you plan to purchase ETFs through an online brokerage, it is good to select one that is well versed in dealing with these types of securities.

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