Comprehensive Guide on the Popular Online Brokerage
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E*TRADE
Account Minimum
$0 ($500 Core Portfolios)
Fees
0% (0.30% Core Portfolios)
- No commissions on US-listed stocks, options, and exchange-traded funds
- Wide selection of investments available for most accounts
- Thousands of no-load, no-transaction-fee mutual funds available
- Competitive mobile and online offerings for digital investors and traders
- 24/7 support and live chat
- Need at least $500 for automated investment management
- Infrequent traders pay more for options contracts
Insider’s Take
E*TRADE is a great fit for frequent traders interested in low-cost stock, ETF, and options trading. The brokerage also offers a robust mobile app for Apple and Android devices, and it supports less active investors through its managed and automated portfolio offerings.
About E*TRADE
E*TRADE is an online brokerage, now part of Morgan Stanley, offering various account and investment options geared mainly for hands-on investors and small businesses. Passive investors can also benefit from E*TRADE’s automated Core portfolios, as it is one of the best robo-advisors for mobile.
The brokerage has no account minimum and provides commission-free trades on US-listed stocks, ETFs, and mutual funds. But you can also trade bonds, CDs, IPOs, and futures. If you’re new to investing, E*TRADE has a plethora of interactive charts, over 100+ technical studies, market trackers, and beginner-focused guides.
You’ll get access to commission-free trading on E*TRADE, as well as paper trading, a portfolio analyzer, and a rebalancing tool. E*TRADE also allows margin trading, which comes with its own array of margin calculators and analyzer tools. But it doesn’t offer tax-loss harvesting features.
Is E*TRADE Right for You?
E*TRADE for beginners and experienced traders provides online brokerage, retirement, and investing services for all kinds of investors. E*TRADE offers IRAs, individual brokerage accounts, small-business retirement accounts, managed investment accounts, and automated portfolios.
E*TRADE’s Core portfolios (aka the brokerage’s robo-advisor) are best for long-term, passive investors with a time horizon of at least one year. The brokerage is a great choice for mutual funds, offering more than 6,000 transaction fee-free funds.
But you’ll need at least $500 for robo-advice, and its 0.3% robo-advisory fee isn’t as competitive as similar platforms. Moreover, you can’t trade cryptocurrencies
E*TRADE: Overall Rating
E*TRADE Pros and Cons
You can’t invest in crypto directly with E*TRADE, but you can invest in crypto-linked stocks and ETFs.
Is E*TRADE Trustworthy?
We consider Better Business Bureau ratings when assigning “ethics” ratings, and the BBB has given E*TRADE an F in trustworthiness, the lowest possible score.
However, the bureau also says on its website that its ratings don’t guarantee a company’s performance or reliability.
On February 1, 2024, a lawsuit filed on behalf of Sergey Burmin and Kereneth W. Luke alleged that E*TRADE and parent company Morgan Stanley underpaid interest rates on cash holdings in users’ retirement accounts as much as 500 times under the federal funds rates. This could create a conflict of interest between account holders and the bank. This case is still pending, and E*TRADE and Morgan Stanley have not responded to these allegations.
The Financial Industry Regulatory Authority (FINRA) alleged that E*TRADE did not have adequate safeguards to prevent manipulative trading on stocks and futures from December 2016 to 2021. In 2022, E*TRADE agreed to pay FINRA $350,000 to settle the claims.
E*TRADE Core Portfolios
- Low minimum
- Low-cost socially responsible and smart beta ETFs
- Easy user interface
- Compatible with multiple brokerage and retirement accounts
- Relatively high management fee
- No option to work with human advisor unless you have at least $25,000 (Blend Portfolios)
- No tax-loss harvesting
Product Details
- Promotion: Get up to $3,500 when you open a new brokerage account by October 31, 2022.
Ways to Invest with E*TRADE
Self-Directed Brokerage Accounts
With an E*TRADE self-directed brokerage account, you can trade without any account minimums or commissions on stocks, ETFs, and options. E*TRADE provides three free trading platforms: Power E*TRADE, E*TRADE Web, and E*TRADE Pro.
You’ll also have access to a wide selection of mutual funds, futures, bonds, IPOs, and certificates of deposit (CDs). E*TRADE offers roughly 6,000 mutual funds.
E*TRADE also gives minors investing access through its custodial brokerage accounts. Parents or designated custodians can manage these accounts, and they come with $0 commissions, tax advantages, and investment education tools.
Core Portfolio Automated Accounts
If you’re a passive investor or fan of automated advice (aka using a robo-advisor), E*TRADE’s Core Portfolios could be right for you. Though more expensive than the standard brokerage accounts, these accounts provide personalized and automated portfolio management.
You’ll need at least $500 to set up the account and pay an asset-based annual fee of 0.30%. The Core Portfolios account draws from the combination of automated technology and oversight from E*TRADE experts.
The E*TRADE Core Portfolios account uses one type of investment: ETFs. The brokerage uses asset classes that strive to generate high returns over the long haul (usually a minimum of three years), and it gives you the option of socially responsible ETFs or smart beta ETFs (smart beta ETFs are funds that aim to outperform the stock market).
In addition, E*TRADE says it selects ETFs by analyzing things like historical performance, liquidity, tracking error, and expenses. For instance, E*TRADE automated investing offers specialized portfolios for goals such as wealth-building, retirement-saving, or buying a home.
As for account type eligibility, individual, joint, and custodial brokerage accounts qualify for Core Portfolios. Rollover, traditional, Roth, and SEP IRAs are also eligible. You can adjust your risk tolerance — and add or remove specific investing focuses — at any time.
Retirement Savings Accounts
E*TRADE also provides retirement savings accounts for its users. You can take advantage of several IRAs, or even roll over your 401(k) or employer-sponsored retirement plan. E*TRADE also offers the option to open retirement accounts online, by phone, or by mail.
Its retirement accounts include the following: rollover IRAs, Roth IRAs, traditional IRAs, beneficiary IRAs, E*TRADE Complete IRAs, and IRAs for Minors.
An E*TRADE Complete IRA is a retirement account for investors older than 59 1/2. You must have an existing E*TRADE IRA to open a Complete IRA. Plus, you can make penalty-free withdrawals at any time.
Coverdell ESA
The E*TRADE ESA allows you to set aside funds for your child for kindergarten through graduate school. You can make annual contributions of up to $2,000 with the account and use federal tax-free withdrawals on qualified education expenses. You can sign up for this account if your income is below $110,000 (for single filers) or $220,000 (for joint filers).
E*TRADE also gives minors investing access through its custodial brokerage accounts. Parents or designated custodians can manage these accounts, and they come with $0 commissions, tax advantages, plus additional E*TRADE investment options and tools.
E*TRADE Client Base
E*TRADE’s services are available to active and passive investors, registered investment advisors (RIAs), stock plan participants, and stock plan administrators.
When it comes to RIAs, E*TRADE serves these professionals two ways — through Liberty, its custodial platform, and the E*TRADE Advisor Network. The Liberty platform allows advisors to manage clients’ accounts, and the E*TRADE Advisor network uses referrals to connect independent advisors with prospective clients.
Investment Options
With E*TRADE, you can invest in US-listed stocks, bonds, mutual funds, ETFs, options, futures, IPOs, and CDs. There are commission-free trades on stocks, ETFs, and options. Also, a majority of mutual fund trades have no trading fees.
E*TRADE Fees
An E*TRADE self-directed brokerage account, including retirement account options, doesn’t require any account minimum to start investing. However, E*TRADE Core Portfolios require a $500 minimum to open an account.
Bond trades will cost you $1 per online secondary trade, and E*TRADE charges up to $0.65 per options contract ($0.50 if you make 30 trades per quarter). Futures contracts are $1.50 per contract.
Core Portfolios have a flat annual advisory fee of 0.30%.
Core Portfolios Account Setup and User Interface
The account setup process is pretty simple with Core Portfolios. E*TRADE asks you a series of questions about your goals and preferences, and its algorithm creates a personalized ETF portfolio that aligns with your risk tolerance.
The first question — which asks about your investing goals — gives you three options: simply build wealth, save for retirement, or target a specific goal (you can adjust your goals, investment timeline, or risk level at any time). Core Portfolios then asks how much you plan to invest initially.
To learn more about your risk level, E*TRADE provides a graph showing the hypothetical returns of a $100,000 investment.
E*TRADE
As indicated above, the best-case one-year returns for a $100,000 initial investment would be roughly $124,000.
E*TRADE — Frequently Asked Questions (FAQs)
E*TRADE is an online brokerage offering financial and investment services suitable for beginner and experienced investors. Trade multiple asset classes in retirement, custodial, and automated brokerage accounts equipped with advanced charting tools and expert-curated investment strategies.
E*TRADE sets itself apart from other online brokerages by offering unique investment funds and providing account holders with access to extensive market research, analysis tools, and competitive pricing, Not only does E*TRADE’s robust investment tools make it appealing to experienced traders, but its user-friendly interface makes it an attractive option for beginners.
A regular E*TRADE brokerage account has no minimum requirement and 0% trading fees, but Core Portfolios requires a $500 minimum deposit with a 0.30% annual management fee. There are no commission fees for online US-listed stocks, ETFs, mutual funds, and options. Additional fees are applied to options, bonds, and futures trades.
E*TRADE suits beginner investors because of its user-friendly interface, low fees, simplified trading strategies, and commission-free trading. Educational resources for investors at E*TRADE include access to helpful learning tools like guides, webinars, and videos on investing basics and market trends.
E*TRADE offers advanced trading tools for experienced investors, like charting and analysis tools to mitigate portfolio risk, customizable chain views, custom scanners, paper trading, and technical pattern recognition.
How E*TRADE Compares
E*TRADE vs. TD Ameritrade
Both E*TRADE and TD Ameritrade are suitable for all types of investors since each brokerage offers a wide selection of self-directed brokerage accounts, managed accounts, IRAs, and other wealth-building products.
However, TD Ameritrade no longer offers its managed accounts to new customers after it was acquired by Schwab. but E*TRADE still allows new clients to sign up for its Core Portfolios automated account. If you open a TD Ameritrade account, you’ll have to set up an automated account through Charles Schwab.
E*TRADE vs. Betterment
Betterment could be an even better (and less expensive) option if you’re solely set on automated advice. Not only does its digital plan have a $0 minimum requirement and 0.25% fee, but it also offers socially responsible portfolios, crypto portfolios, and multiple other options.
E*TRADE caters to more types of investors, though, since it gives you a wider range of account options and investment types. You’ll be limited to automated investing with Betterment.
Why You Should Trust Us: How We Reviewed E*TRADE
We examined E*TRADE investing app using Personal Finance Insider’s rating methodology for investing platforms to compare and examine account types, pricing, investment options, and overall customer experience when reviewing investing platforms. Platforms are given a rating between 0 and 5.
Investing platforms offer multiple assets, trading tools, fees, and other resources. Some investing platforms are better for more advanced or active investors, while others may better suit beginner and passive investors. E*TRADE was evaluated with a focus on how it performed in each category.
