Charles Schwab: Better or Worse for Your Money?

For a lot of individuals, diving into the investment pool can be an intimidating task.

Everyone wants to build their wealth, but most of them are lost about how to start and whom to trust.

In most cases, people turn to brokerage firms and online investing.

It can be a tedious task to balance all variables like commission charges, ease-of-access to information, guided navigation, user-friendliness of the trading platform, and more when it comes to selecting the right broker for your investment needs.

This article will take a thorough look at one of the leading online brokerage firms, Charles Schwab, and determine whether it’s the way to go for you as an investor.

Introduction

Based in San Francisco, California, Charles Schwab was founded in 1971 by Charles R. Schwab and is currently one of the most prominent names in the financial services industry.

The company offers online investing services through its internet-based trading platforms, StreetSmart (web based) and StreetSmart Edge (desktop based).

This enables its clients to deal in stocks, options, ETFs, mutual funds, and fixed income investments while offering a full suite of portfolio management solutions.

Charles Schwab has been consistently ranked as a leader by winning coveted titles such as “Highest in Investor Satisfaction” by J.D. Power, in 2016, 2017, and 2018 consecutively.

They are also one of Fortune’s “World’s Most Admired Companies” ranking first in innovation.

History

As elementary as it sounds, it all started with a newsletter. Charles R. Schwab, along with two partners, launched a newsletter named “Investment Indicator” to increase the accessibility of high-quality information for small investors.

The newsletter was then registered to run under First Commander Corporation, a subsidiary of Commander Industries Inc. Which also provided traditional brokerage services.

Charles R. Schwab bought all shares from Commander Industries Inc. in 1972. The company was renamed to Charles Schwab & Co. in 1973.

The biggest break for the firm came in 1975 with the announcement of the Securities and Exchange Commission on the elimination of fixed brokerage commissions.

This opened the gates for low commission discount brokerage firms, an opportunity Charles Schwab lunged at.

Charles R. Schwab had always focused on providing solutions to small, individual investors, and kept the culture alive throughout the company even after it went public in 1987.

Currently, Charles Schwab holds over $3.31 trillion in total client assets and 11.1 million active brokerage accounts.

Types of Accounts

Like other online brokerage firms, Charles R. Schwab works in a simple format.

You create an account on their portal, provide your identity proof such as your social security number, add money to your account, and you’re ready to start investing!

Schwab brokerage account offers a host of facilities to individual investors as well as corporate investors. Let’s take a look at the options.

Schwab Brokerage Account

Charles Schwab offers distinct facilities for international investors, both individual and corporate. These facilities are  through the Schwab One International Account and the Schwab One International Corporate Account.

Features

• A diverse portfolio of mutual funds, ETFs, stocks, options, and bonds.
• Visa debit card with no ATM fees anywhere in the world.
• Access to round the clock customer service and tailored assistance from Schwab advisors.
• Access to StreetSmart and StreetSmart Edge, intuitive and advanced online trading platforms for investors.

Minimum Deposit and Fees

• Trading fee of $4.95 for all stocks
• Options base fee of $4.95 and $0.65 per contract fee.
• No fees to open or maintain the brokerage account.
• Minimum account deposit of $1,000.

Competition

While some of the top brokerage firms offer similar facilities to investors, there are always some aspects that differ for each firm.

These differences consist of their commission charges, minimum amount deposits, number of commission-free ETFs, no-transaction-fee mutual funds, or simply the ease-of-navigation offered by their online trading platforms.

These distinct variables are what affect the final decision of an investor.

E*TRADE

One of the many brokerages with headquarters in NY City, E*TRADE is well known as one of the first online brokerage providers. The services tools and navigation make the brokerage easy for investors of all experience levels.

Pros

• Platform is very user-friendly, making trading easy for experienced and beginner investors.
• Elaborate and abundant information available on their website to guide investors.
• Free upgrade to E*TRADE Pro in case of more than 30 stock trades in a quarter.
• Those who make 30 trades or more in one quarter, get a free upgrade to E*Trade pro
• Large portfolio of funds, with over 220 commission-free ETFs.

Cons

• $6.95 trading fee is high compared to much of the competition.
• $500 minimum is required for opening an account.

Fidelity

Based in Boston, Fidelity International is a leading online brokerage firm,offering a diverse portfolio to its clients including a number of no-transaction-fee mutual funds along with a vast resource center with first-grade content.

Pros

• A flat fee of $4.95, much cheaper than many other firms.
• Extensive resource center containing reports and data insights.
• Great for intermediate to experienced investors.

Cons

• Minimum deposit of $2,500 for certain accounts.
• Might be a bit intimidating for beginners.
• Premium platforms like Active Trader Pro and Wealth-Lab Pro restricted to a certain class of investors.

Merrill Edge

Owned by the Bank of America, Merrill Edge is one of the top competitors in the investment industry, offering cutting-edge research resources to its clients.

It is a part of Bank of America’s retail banking division and brings to the forefront the expert capabilities of Bank of America and Merrill Lynch.

Pros

• No minimum account deposit needed.
• Access to highly sophisticated research resources for clients.
• Offers over 3,290 mutual funds with no transaction fees.
• Round the clock customer support.

Cons

• A relatively high flat commission charge of $6.95.
• Merrill Edge MarketPro
• Only available to traders who cross minimum 15 trades per quarter or maintain an account balance of over $50,000.

Charles Schwab: Pros

• The flat stock trading fee of $4.95 is one of the lowest among its competitors.
• A raving customer support team, available 24/7, along with a highly responsive online chat support.
• More than 200 commission-free exchange trading funds.
• A gigantic selection of more than 4,000 mutual funds with no transaction fees.
• StreetSmart and Trade Source, Schwab’s online trading platforms, available to all traders without any bar on minimum balance or fees.
• An excellent resource center that provides real-time market insights and portfolio management information along with in-depth research resources for the seasoned traders.
• Advanced trading solutions for active traders through the online portal StreetSmart Edge.
• Over 300 physical branches across the United States for in-person guidance.
• Highly-functional mobile apps available on Android and iOS that work well with the web platforms.
• Freedom to transfer between investment and bank accounts without any extra service charges.

Charles Schwab: Cons

• A minimum balance of $1,000 to open an account, though this restriction is waived off if you deposit $100 in your account every month.
• A high fee of $76 on transaction-fee mutual funds.
• Does not offer forex trading, unlike some of its competitors.
• Lack of some basic but important features, like automatic refresh and alerts.

Charles Schwab Review Bottom Line

Charles Schwab has a great record of offering world-class customer service and access to a superior resource center.

With their tagline, “Own Your Tomorrow”, Charles Schwab definitely focuses on building the wealth of its clients without making them go through any trade-offs.

Schwab’s web platform integrates seamlessly with its Android and iOS mobile apps, making it easier for investors to keep a track of their portfolio.

Both platforms offer advanced facilities and insightful tools to understand the trading processes, as well as detailed data on their portfolio performance.

The minimum account balance of $1,000 is a disappointing aspect for many investors.

However, the firm offers so much more in return that the impact of this restriction is diminished to a great extent. These offers include one of the lowest commission charges and one of the most diversified funds portfolio in the industry.

The company was ranked as number one in “Customer Service, ETF Choices, Trade Reliability, and Site Performance” by Investor’s Business Daily.

Charles Schwab stands as a trusted provider of financial services for all individual investors, whether they are beginning their journey or are seasoned traders.