E*TRADE Review 2023: Pros and Cons
- Experienced active investors
- Passive investors
- Learning about investing
E*TRADE is one of the most popular online brokers and even has a physical footprint in the U.S. There are 30 branch locations located throughout the U.S. Some branches are still temporarily closed due to the pandemic, but most are open by appointment only.
New investors can learn the ropes quite easily with E*TRADE’s wealth of educational content, but experienced investors also have a home with E*TRADE via the more advanced Power E*TRADE platform.
New investors can learn the ropes quite easily with E*TRADE’s wealth of educational content, but experienced investors also have a home with E*TRADE via the more advanced Power E*TRADE platform.
In addition to the core brokerage accounts, E*TRADE offers a Custodial Account, an Education Savings Account (ESA), traditional bank accounts (including two checking accounts), managed portfolios for passive investors and a full suite of personal and small business retirement accounts.
E*TRADE has been a staple of online trading for many decades. It was founded in 1982 and had its first online trade the year after. It currently employs more than 4,000 workers, has 30 branches across the United States and was acquired by Morgan Stanley in 2020.
In this E*TRADE review, we’ll explore all elements of the financial institution, but we will specifically look at the core E*TRADE trading platform and the more elegant Power E*TRADE platform for experienced investors.
E*TRADE Brokerage Account
- No commissions on stocks and ETFs
- A massive library of educational resources
- No account minimum
The core brokerage account from E*TRADE is notably strong thanks to its diverse offering of tradable securities and low (or no!) fees. The wealth of educational content about investing and personal finance is staggering, and the online platform and accompanying mobile app are easy to use. Unless you are a highly experienced investor, we recommend you stick with the basic platform for E*TRADE’s brokerage account.
However, if you are a veteran investor and are looking for an advanced investment tool, consider using the Power platform (with its own app). Though not a different brokerage account, this trading platform gives you much more at your disposal.
Power E*TRADE Platform
- No commissions on stocks and ETFs
- Specialized resources for strategic investors
- No account minimum
The Power E*TRADE platform is advantageous if you know what you’re doing — but it can be overwhelming if you don’t. If you are brave enough to unlock this platform’s features, here are some of the resources you can expect:
With this more advanced view of your investments, you can take additional actions you cannot within the basic platform, like place multiple stocks, ETFs (exchange-traded funds), options and futures on a single trade ticket; access interactive charts and 100+ studies to research potential trades; and play out options strategies with the customizable options chain.
If all that sounds way too complex for your knowledge level, it’s better to stick with the core E*TRADE trading platform. But the fact that E*TRADE offers these advanced features free of charge is a differentiator in the market.
E*TRADE Review: Key Features
In this section, we’ll break down the fees, tradable securities, offerings and key features of E*TRADE to make sure if it’s the right fit for you.
E*TRADE at a Glance
| Feature | Details | More Details | ||
|---|---|---|---|---|
Fees |
No commission |
On Stocks or ETFs |
||
Tradable Securities |
Stocks, mutual funds |
Options, bonds, futures |
||
Managed Portfolios |
Blend |
Fixed income; core |
||
Retirement Accounts |
Individual |
Small business |
||
Bank Accounts |
Savings and checking |
Line of credit |
||
Educational content |
Large digital library |
Investing tools |
||
Mobile Apps |
High ratings |
iOS and Android |
||
Sign-Up Process |
Under 10 minutes |
Funding slow |
||
Customer Support |
Phone; social media |
Branches closed for now |
E*Trade Fees
E*TRADE is a great platform to trade stocks and exchange-traded funds because there are absolutely no commission fees. You will, however, pay fees for trading mutual funds, options, bonds and futures.
Trading Fees at E*TRADE
| Security | Trading Fee | Additional Details |
|---|---|---|
Stocks |
$0 |
U.S.-listed stocks |
ETFs |
$0 |
U.S.-listed ETFs |
Mutual funds |
Prices vary |
4,400+ no-fee funds f |
Options |
50¢-60¢/contract |
50¢/30+ trades/a quarter |
Bonds |
$1 per bond |
$10 min., $250 max. |
Futures |
$1.50/contract, per side |
Plus fees |
Our Take: Commission-free trading for stocks and ETFs is a great reason to consider E*TRADE. Coupled with the massive library of educational resources (more on that below), free trades make E*TRADE a top contender for best online brokerage accounts. And though active traders will pay for things like mutual funds and options trades, the fees are relatively cheap compared to some competitors.
Tradable Securities
A strong point for using E*TRADE as your investment platform is the wide range of tradable securities. Some online brokers restrict you to just stocks and ETFs, especially market newcomers, but E*TRADE offers a wide range of investment options:
- Stock trading
- ETF trading
- Mutual funds trading
- Options trading
- Bond trading
- Futures trading
E*TRADE does fall short in two areas, however. There are no direct fractional shares, and there is no direct cryptocurrency trading. As of now, E*TRADE promises “exposure to popular cryptocurrencies via securities and futures” but nothing direct. However, in the future, E*TRADE’s website says that they do “expect to offer more investment options as the regulatory environment develops.”
Although you cannot purchase fractional shares directly, E*TRADE does offer fractional shares through their dividend reinvestment plan (DRIP), an automatic recurring investment program.
Note: You can trade penny stocks on E*TRADE, but in general, we do not recommend investing in penny stocks. It’s easy to lose money from penny stocks.
Custodial Account
Parents or guardians can open E*TRADE’s Custodial Account for minors. The account has no contribution or income limitations, and the first $1,050 of earnings are not subject to federal taxes. Even better, this account is eligible for the $15,000 annual gift tax exclusion.
Like E*TRADE’s core brokerage account, the Custodial Account offers stock trading and ETF trades free of commission. Options trades are also commission free.With a Custodial Account you can make withdrawals for any purpose with no penalties. An adult retains control of the account until the child turns 18 or 21, depending on the state.
An adult retains control of the account until the child turns 18 or 21, depending on the state.
Coverdell ESA
The Custodial Account isn’t the only option for parents. You can also open an Education Savings Account (ESA) for your child. The earnings are tax deferred, and any withdrawals for qualified educational expenses are tax-free. You can contribute up to $2,000 a year.
You are eligible to sign up for Coverdell ESA if your earned income does not exceed income limits which is under $110K for a single family home and $220K for joint filers.
With Coverdell ESA there are no annual fees and no account minimums.
Managed Portfolios
If the thought of managing your own investments terrifies you, that doesn’t mean E*TRADE is wrong for you. You just might better benefit from a managed portfolio, most likely a Core Portfolio.
For the Core Portfolios, E*TRADE provides a diversified portfolio that they will monitor and manage (including rebalancing) to meet your investment goals. It’s just a $500 minimum to get started, and E*TRADE charges an advisory fee of 0.30%.
And E*TRADE is offering a limited time deal this new year ‒ if you sign up for a Core Portfolio account by January 31, 2023 you will pay no advisory fee for three months.
Our Take: This is a good deal if you want to invest but have no interest in learning and keeping up with the news.
You can also consider the Blend Portfolios of mutual funds and ETFs ($25,000 minimum) or the Fixed Income Portfolios of bonds ($250,000 minimum).
With any of the managed portfolios—Core Portfolios, Blend Portfolios or Fixed Income Portfolios—you can access real human financial advisors for investment advice. You can also chat with the financial consultants about your own financial goals; this helps them design a portfolio custom-built for your financial situation.
Retirement Accounts
The breadth of retirement accounts offered by E*TRADE is impressive, and there are options for both individuals and small business owners.
As an individual, you can open the following retirement accounts with E*TRADE:
- Rollover IRA
- Roth IRA
- Traditional IRA
- Beneficiary IRA
- E*TRADE Complete IRA
- IRAs for Minors
As a small business owner looking to offer competitive benefits to employees or to build your own retirement plan funded by your business venture, you can open the following small business retirement accounts:
- Individual and Roth Individual 401(k)
- SIMPLE IRA
- SEP IRA
- Investment-Only Account
Bank Accounts
While we don’t advise anyone to open a bank account at E*TRADE if not also investing through the online broker, there is merit to each of the savings and checking options.
The Premium Savings Account has no monthly fees and is insured up to $1.25 million. This is a good option to hold funds that you’re planning to invest.
The Max-Rate Checking Account is not fee-free, but we do like that it offers unlimited ATM fee refunds nationwide and has an APY of 0.05%. But if you’re looking for a no-frills, no-fee checking account, go with E*TRADE Checking, which comes with a debit card.
You can also open a line of credit by borrowing against your investments. The variable APR on the loan varies depending on how much you borrow.
Educational Content
One of our favorite hallmarks of the E*TRADE brokerage account is the wealth of educational content, offered via two platforms: the traditional platform and the Power E*TRADE platform for advanced investors.
Everyone has access to independent analyst research (from TipRanks, Thomson Reuters and other industry resources), market news, real-time quotes, charts and studies. The platform also offers multiple investing tools, screeners, and learning resources. You can browse videos, articles, tutorials and more to learn the basics of investing and more refined strategies and even attend monthly webinars and live events.
Mobile Apps
E*TRADE’s online platform is easy to use, but for active traders on the go, the E*TRADE mobile app is essential. The basic E*TRADE mobile app offers all the same functionality as the website. It currently has a 4.6 star rating on the Apple App Store based on nearly 140,000 reviews; on Google Play, it’s got a 3.9 star rating based on over 40,000 reviews.
But advanced traders who like the expanded options and resources of Power E*TRADE can download a separate app called Power E*TRADE – Advanced Trading. This app is also highly rated (4.5 stars on the App Store and 3.9 stars on Google Play).
Sign-Up
Opening a new E*TRADE brokerage account takes only 10 minutes, but funding the account may slow you down. You can use the free Transfer Money service that takes up to three days, deposit a check (which takes even longer) or do a wire transfer (for a fee) for same-day access.
Other brokerage accounts make it easier to fund your account right away.
Customer Support
While many online brokers make customer support challenging by offering email-only support, E*TRADE is available 24/7 via phone. Just be aware that call volumes continue to be higher during the age of COVID, so expect a wait time.
To contact E*TRADE customer support, call 800-387-2331.
E*TRADE also operates 30 branches across the country. Here’s the full list of physical E*TRADE branches.
E*TRADE Pros and Cons
Weighing the pros and cons of E*TRADE before deciding to open a brokerage account? Good call. Below, we’ve spelled out what we love about E*TRADE — and what we don’t.
Pros
- Trading stocks and ETFs is commission free.
- E*TRADE is a true full-suite experience, with options for investing, banking, and retirement.
- E*TRADE offers multiple trading platforms — the basic web platform and the Power E*TRADE platform.
- Each of the trading platforms is free; the Power platform is just designed for those with a more refined understanding of a solid investment strategy.
- Beginners have access to a wealth of personal finance educational tools, as well as free market commentary from independent analysts, helpful tutorials and even monthly webinars.
- Customer support is great thanks to the 24/7 phone service. You can also find 30 physical branch locations across the U.S.
- The mobile app is highly rated, and expert investors using the Power platform can access a separate mobile app tailored to their more hands-on use cases.
- Novices who want to be hands-off can choose from the Core Portfolios, which utilize automated investment management technology to diversify and manage portfolios.
Cons
- Not everything is commission free. You’ll pay commissions for options trading, mutual funds trading, bond trading and futures trading.
- As of 2023, you cannot directly invest in cryptocurrency through E*TRADE.
- You cannot purchase fractional shares via E*TRADE.
- Funding the account after sign-up can take too much time. E*TRADE needs easier options for faster funding.
Frequently Asked Questions (FAQ) About E*TRADE
Still have questions about opening an account with E*TRADE? We’ve provided answers to the most common questions our readers are asking about E*TRADE.
E*TRADE is trustworthy as an online broker and a bank. Active traders with the brokerage account benefit from E*TRADE’s membership with SIPC (Securities Investor Protection Corporation), which protects each account up to $500,000 for securities and cash. Morgan Stanley, which acquired E*TRADE in 2020, carries additional insurance to protect customers.
E*TRADE’s bank accounts are insured by the FDIC (Federal Deposit Insurance Corporation).
E*TRADE offers commission-free trading for stocks and ETFs. However, if you want to trade mutual funds, bonds, options or futures, you will pay a fee. Options trades are commission free for the Custodial Account.
E*TRADE’s trading platforms are free, whether you use the core web platform or the more sophisticated Power platform for advanced investors.
E*TRADE allows you to invest in stocks, ETFs, options, mutual funds, bonds and futures. You cannot, however, directly trade cryptocurrency. Because of the low or no commissions and variety of tradable securities, E*TRADE caters to active traders who are interested in hands-on investing.
But E*TRADE is far more than mutual funds and futures. In addition to the brokerage account, you can use E*TRADE for retirement planning and everyday banking.
Yes, financial advisors are available at E*TRADE via phone, free of charge. Just call 1-866-484-3658.
You cannot directly invest in cryptocurrency through E*TRADE at this time. Through various securities and futures, E*TRADE says you can get “exposure” to various cryptocurrencies, and its website seems to hint that this investment option may be available at a later date.
Active traders who are interested in trading outside of active stock market hours are able to do this via the E*TRADE platform. However, this is a risky tactic, and the E*TRADE platform ensures you review the implications of trading during extended hours before you move forward.
The main brokerage account through E*TRADE requires hands-on investing. However, you can choose a Core Portfolio, which is a managed account that runs on automated investment management with auto rebalancing. This is a great option for beginning investors.
Timothy Moore covers bank and investment accounts for The Penny Hoarder from his home base in Cincinnati. He has worked in editing and graphic design for a marketing agency, a global research firm and a major print publication. He covers a variety of other topics, including insurance, taxes, retirement and budgeting and has worked in the field since 2012.
