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Online Brokerage Review: E-Trade, Zecco, ING (sharebuilder), HSBC, and Tradeking
Now that the stock market has dropped drastically over the last year, it’s actually a great time to buy. Remember this sage advice from the world’s most successful investor:
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” – Warren Buffett
Looking at today’s market, many people are fearful – that should trigger the time to be greedy. You would be hard pressed to find someone who’s confident in today’s market, or who’s not apprehensive about what the market is doing. Ironically that is the perfect time to buy. Prices are down, people are on the fence and afraid to buy, and that means bargains are a plenty.
But how does the average Joe go about buying stocks? If one hasn’t invested in stocks before, where should they look? The first thing you’ll want to do to be able to buy stocks, is to choose a brokerage. Here’s five, everyday brokerages that have easy interfaces, low fees, and even some great trend and charting features.
Here’s a review of 5 of the most popular online brokerages and banks:
E-Trade. A long time staple in online investing, I think almost everyone has seen one of their commercials. Although after I did some research and dug around their site, I realized it’s a lot of overkill. I found it difficult to find important information on their site quickly because it was cluttered, and offered way too many options for what I was looking for.
- The Good:
- Lots and lots of account types, and features. Including savings, trading, and retirement.
- International Trading
- Great interest rate
- The Bad:
- Simply too many features and options for me. Personally I like a bank to handle my checking and savings accounts, and a brokerage to handle stock trading.
- Complicated pricing on stock trades. I hate trying to figure out how much my trades will be based on how many I do and how much assets I have. Just make it simple please.
Zecco. Kind of the new kid on the block – they focus on trading only, and offer 10 free trades per month. I like their philosophy, but wonder if they have lasting power.
- The Good
- Easy and focused website. They only do trading accounts, so there is no overkill on various other types of accounts.
- First 10 trades per month are free – as long as your account has at least $2500 balance.
- Offers international trading.
- The Bad
- Doesn’t offer other accounts, such as checking and savings, if you’re looking for that.
- They’ve only been around for roughly 2 years, and might not have the experience or solidity of someone like E-trade or ING.
ING Direct (Sharebuilder). All things considered, sharebuilder is a great site, and ING is a great bank to work with. I have a lot of friends who use them for their online checking account.
- The Good:
- ING offers many account types (checking, savings, retirement, etc) but separates it’s investing site into sharebuilder.com. I like the separation, it gives me the feeling when I go to sharebuilder, that I’m not bombarded with all kinds of accounts.
- Offer a nice automatic investing program, for $4 dollars commission, you can buy stocks automatically each month. I like this because if you buy automatically, you 1) forget about it while you’re wealth grows. 2) the average cost per share goes down because you buy more shares when the price is low, and less shares when the price is high.
- No Account minimums.
- I like their site. It’s simple, and offers only the essential information without feeling cluttered and bloated.
- The Bad:
- $9.95 cost per trade, which is expensive compared to zecco.com’s $0.
HSBC is also an online bank, that offers trading as well. They have been in business for a while, and have proved to have lasting power. Although because they are a complete online bank, I found that they offered more than what I wanted in terms of just investing. I found it hard to find what I was looking for, because there was simple so much information on their site.
- The Good:
- Great savings accounts. I like online banks because they usually offer great rates on savings accounts. As of this writing HSBC offered 3.0% APR on it’s savings account.
- The Bad
- Offers an “assisted” system for trading stocks. Their first step was to fill out a contact form, for an advisor to contact me. I’m looking for something more hands on, so this wasn’t what I was looking for.
TradeKing focuses on trading and stocks only. This I like. Their site is easy to navigate and offers a nice FAQ and community sections. I’ve read lots good reviews about them. Also they have received numerous awards (for customer service, and their website among other things). If you’re ok with the slightly higher commission than zecco, tradeking is the place to be.
- The Good:
- Offered “Live Chat”. I love this, and think it’s great when websites utilize it. Of course there wait times, and lag to deal with but the fact that they offer it, I think is wonderful.
- Offers a nice “community” section of their website, where you can compare, talk with, and befriend other investors. Great idea.
- Cheap trades at $4.95 per trade.
- The Bad:
- Online bank transfers take 5 days to clear, that’s in addition to the 5 days taken to verify your account when you first sign up. So you’ll have to be patient when you first sign up, and when making transfers.
Goldman Sachs Group Inc. Considers Launching an Online Bank
Goldman Sachs is considering starting an online bank similar to that of Bank Of America, Citigroup, and ING. Now that GS is a bank-holding company, starting an online bank would allow them to take deposits and use them to fund various businesses. And, with the very uncertain economic future of banks and financial institutions, GS would do themselves well to broaden their stroke to as much of the market as possible.
The possible online bank hasn’t been named yet, and many details of its operating plans are undecided. It is likely to offer a range of savings products, such as certificates of deposit, people familiar with the matter said.
The possibility of GS starting an online bank shows the rapid change on Wall Street these days. The company which once only did investments, now is seeking to broaden its range of products and its direct consumer interaction.
Goldman executives haven’t ruled out acquiring a bank with substantial retail operations, according to people familiar with the discussions. But the firm’s decision to seek a state banking license in New York is a sign that expanding across state lines is a low priority. Regulators approved the license last week.
US Credit Card Industry Cutting Lines
The news this morning was inevitable, with credit card companies slashing credit lines by 45% over the next year and half.
Although on one side, it may be a good idea for the issuers to limit their risk and to help consumers from racking up even more debt. However, with so many people struggling, especially those who are unemployed, the credit reductions could be dangerous and lead to defaults.
FDIC Reports: 171 Banks on “watch list”, 22 Failed So Far
Photo by andrewcarroll
The FDIC has reported that there are 171 firms on its list of troubled banks. This number has grown, and is now the largest it’s been since 1995.
“We’ve had profound problems in our financial markets that are taking a rising toll on the real economy,” said Sheila Bair, FDIC chairman, at a press conference. “Today’s report reflects these challenges.”
The FDIC does not reveal the names of the banks, but does show the total assets of the troubled institutions to be $115.6 billion. This is the first time since 1994 that the amount has exceeded $100 billion.
On Friday, three more banks where added to the failed list, bringing the total number of failed institutions so far this year to 22, including Washington Mutual, the largest bank failing in history.
- PFF Bank and Trust, Pomona, CA
- Downey Savings and Loan, Newport Beach, CA
- The Community Bank, Loganville, GA
- Security Pacific Bank, Los Angeles, CA
- Franklin Bank, SSB, Houston, TX
- Freedom Bank, Bradenton, FL
- Alpha Bank & Trust, Alpharetta, GA
- Meridian Bank, Eldred, IL
- Main Street Bank, Northville, MI
- Washington Mutual Bank, Henderson, NV and Washington Mutual Bank FSB, Park City, UT
- Ameribank, Northfork, WV
- Silver State Bank, Henderson, NV
- Integrity Bank, Alpharetta, GA
- The Columbian Bank and Trust, Topeka, KS
- First Priority Bank, Bradenton, FL
- First Heritage Bank, NA, Newport Beach, CA
- First National Bank of Nevada, Reno, NV
- IndyMac Bank, Pasadena, CA
- First Integrity Bank, NA, Staples, MN
- ANB Financial, NA, Bentonville, AR
- Hume Bank, Hume, MO
- Douglass National Bank, Kansas City, MO