TD Ameritrade offers one of the most comprehensive trading platforms available anywhere. They offer the full range of investment choices, on a state-of-the-art trading platform, that includes virtually every tool, calculator, or information source that you will need to be a successful trader.
TD Ameritrade is not the lowest cost online brokerage platform, which likely makes it better suited to long-term investors than to active traders.
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About TD Ameritrade
TD Ameritrade got its start in 1975, back when the Securities and Exchange Commission (SEC) eliminated the practice of fixed brokerage commissions. That was the start of the discount brokerage wave. One of those companies was First Omaha Securities, which would eventually become TD Ameritrade. Since then, TD Ameritrade has been one of the most innovative brokerage firms on Wall Street.
The company has maintained an orientation toward self-directed investors since the late 1990s. Since that time, they have worked to improve online trading, and were one of the first companies to offer online options order entry and electronic trade confirmations by email. They were also in the forefront of rolling out extended hours trading.
The TD Ameritrade name actually came about in 2006, when Ameritrade purchased TD Waterhouse USA, forming one of the largest discount brokerage firms in the country, and the largest in terms of average client trades placed per day.
The company has since improved its trading platform, expanding its offerings for active traders by adding complex options, futures, and foreign exchange trading. They also began offering applications for mobile devices back in 2010.
Today TD Ameritrade provides investment and trading services for almost 6 million clients, who have a total of more than $600 billion in assets, as well as custodial services through more than 4,000 independent registered investment advisors. The company now places about 400,000 trades each day.
TD Ameritrade Features and Benefits
Available accounts. TD Ameritrade offers standard taxable investment accounts, that can be held either individually or as joint accounts. Retirement accounts include traditional and Roth IRAs, as well as rollover IRAs. They offer education accounts including various state qualified 529 plans, tax-free Coverdell plans, or UGMA and UTMA accounts. They also offer specialty accounts, including individual trusts and pension plans (Solo 401(k), SEP and SIMPLE IRAs, and Profit-Sharing) for business partnerships and sole proprietorships.
Minimum initial account balance requirement. TD Ameritrade does not have a minimum requirement, so you are free to open up an account with as little funding as you choose. There is however a minimum initial deposit of $2,000 required for either margin or options privileges.
Opening an account. This is accomplished by completing a single page application on the TD Ameritrade website. Basic information will be required, including your Social Security number, your employer name and address, as well as your contact information. You will then choose the type of account you want to open, and then give an assessment of how active you intend to be as a trader. Certain additional information may be required in order to comply with government regulations. This may include a copy of your driver's license or other identifying documentation.
Investments available. You can trade stocks, options, mutual funds, ETFs, futures, Forex, and bonds and certificates of deposit.
Mobile App. TD Ameritrade's mobile app enables you to monitor the market, research investment ideas and trade virtually any security or investment wherever you are located. This includes real-time streaming quotes, access to charts to conduct technical analysis, and the ability to transfer funds to and from other accounts. The app works for iPad, iPhone, Apple Watch, Android, and Windows smartphones and tablets.
Account funding. Your account can be funded through electronic funding. Transfers must be between a minimum of $50, and a maximum of $250,000. You can also fund your account using a wire transfer from either a US or foreign based financial institution. Check deposits are permitted, but they must be payable in US dollars and made through a US bank. ACATS (transfers from other brokerage accounts) take approximately 3 to 4 weeks to complete. You can transfer stock certificates into your account, but there is a fee of $500 for doing so.
Forex Trading. TD Ameritrade offers Forex trading in pairs of the following currencies: Australian dollar (AUD), British pound sterling (GBP), Canadian dollar (CAD), Danish krone (DKK), Euro (EUR), Japanese yen (JPY), New Zealand dollar (NZD), Norwegian krone (NOK), Swedish krona (SEK), Swiss franc (CHF), and the US dollar (USD).
Customer Service. You can contact TD Ameritrade by either toll-free phone or email 24 hours a day, seven days a week. Of course you can also contact them by mail, but they also have more than 100 branches located nationwide that you can visit for a face to face meeting about your account.
Investment Research. TD Ameritrade provides third-party research to help you plan and evaluate your investment strategy. You can analyze both investment performance and market conditions to test out your investment ideas. One of the research tool is Market Edge, which offers timely information and technical analysis of the markets, including in-depth technical market commentary.
Account/asset protection. Your account is protected by SIPC (Securities Investor Protection Corporation) for up to $500,000 in cash and securities, including $250,000 in cash. Each client also has protection of up to $149.5 million for securities and up to $2 million for cash through supplemental coverage provided by London Insurers. This coverage is for broker failure, and not for declines in investment values owing to market changes.
Account Security. TD Ameritrade uses advanced firewalls to protect personal information, as well as anomaly detection intrusion detection technology to search for unusual behavior in your account. The secure website uses 128 bit encryption on the transmission of all data transmitted between the website and your computer.
TD Ameritrade Tools and Calculators
TD Ameritrade offers too many tools and calculators to fully list here. But below is a list of some that we consider to be more interesting:
Trade Architect. This is a streamlined platform that enables you to stay connected to the market and where you can monitor and analyze potential investment opportunities using various tools, customized charting, live streaming video and integrated research.
thinkorswim. This feature provides elite level tools, including full charting, market monitoring, beta weighing, pairs trading, paper trading and another feature called Strategy Roller. That feature enables you to simplify your options strategy, by creating a covered call strategy upfront using predefined criteria. The thinkorswim platform will automatically roll it forward each month.
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Morningstar Instant X-Ray. This tool enables you to analyze your stocks and mutual funds using in-depth data provided by Morningstar.
IRA Tool Selection Tool. If you've read enough blog posts about the traditional-vs-Roth IRA decision, this tool could go a long way toward uncomplicating the decision. It offers you the ability to determine whether a Roth IRA or a traditional IRA will work best for you. It does this by analyzing your age, tax filing status, income, and employer-provided retirement plans. With this information, the tool can help you decide which IRA type is best for you.
Retirement Calculator. This tool analyzes your personal information, goals, income, assets, and risk tolerance, and it then shows you your progress toward your retirement goals. This is an excellent tool to use throughout your retirement planning years.
College Planner. This tool enables you to estimate how much you'll need to save for your children's college education. It can also potentially save you money on taxes. There is a related tool referred to as the 529 Savings Plan that will help you to estimate how much money you will need to save toward that goal, and how a 529 plan can save you on taxes.
TD Ameritrade Fees
Like other brokerage firms, TD Ameritrade has a wide range of fees due to the large amount of services that it provides. There are no fees for platform, inactivity or market data. But the fees most relevant to the greatest number of investors includes:
Stocks and ETFs. TD Ameritrade's commission on stock and ETF trades is $9.99 for trades executed online. Broker assisted trades have a fee of $44.99, while trades made via the interactive voice response phone system is $34.99 per trade. TD Ameritrade also offers about 100 commission-free ETFs, but you must be enrolled in the commission-free ETF program in order to take advantage of that offer. The stock trading is about twice as high as Trade King and why we suggest using them for long term investing.
Mutual funds. TD Ameritrade offers hundreds of no transaction fee mutual funds from various leading fund families. Referred to as NTFs, there is no commission charged for trading these funds, as long as they are held for a minimum of 180 days. Other no-load mutual funds carry a transaction fee of $49.99. And on mutual funds that have loads, there is no commission fee charged.
Options. TD Ameritrade charges a commission of $9.99 per trade, plus a $0.75 fee per contract. If you trade using the interactive voice response phone system, the commission is $34.99 per trade, plus $0.75 per contract. Options exercises and assignments have a fee of $19.99. Broker assisted transactions are charged a fee of $44.99 per trade, plus $0.75 cents per contract.
Futures and options on futures. TD Ameritrade has a flat fee of $2.25 per contract, plus exchange and regulatory fees.
Forex. There is no charge on non-commission currency pairs trades in increments of 10,000 units. However commission currency pairs trades in increments of 1,000 units are subject to a fixed commission structure based in counter-currency units. As an example, the commission on a 1,000 lot EUR/USD trade would be $1, or $0.10 per 1,000 units.
Checking account fees. Checkbook reorders are free on up to 100 checks on any checking account. Fees do apply to reorders in larger quantities. There is also a $15 fee in the event that you need a copy of a check.
Debit Card fees. Unlike many other brokerage firms, TD Ameritrade does not charge an annual fee for its debit cards. In addition, they offer unlimited rebates of ATM fees from other financial institutions nationwide. Also, there is no required minimum balance in order to have a debit card.
Statement and confirmation fees. You can order either free of charge if your account has a minimum net value of $10,000. If your account balance is lower, then a fee of $2 per document applies.
Outbound transfers. Partial transfers are free, but an outbound transfer of your full account is $75. There is also a $25 fee for outgoing domestic or international wire transfers.
Bond orders. The fee for bond trades is $25, and TD Ameritrade has a minimum buy order requirement of five bonds, at $5,000 par value. CDs are priced on a net yield basis, and have a minimum order requirement of two certificates with a minimum par value of $2,000.
Margin interest rates. Interest rates on margin accounts range from 9.25% for accounts with balances under $10,000, to a low of 6.50% for an account balance of $1 million or more.
TD Ameritrade Investment Management
If you are not into do-it-yourself investing, TD Ameritrade has a couple of options for you. One will handle the entire investment process for you, while the other will provide you with direct assistance as you primarily manage your own investments.
AdvisorDirect is for investors who want comprehensive financial or wealth management. The program provides access to independent registered investment advisors. Those advisers will invest your money based on your big picture financial situation, including investing and tax strategies, retirement planning, estate planning, and wealth transfer. The advisers are experienced and offer transparent fee-based services.
Amerivest Portfolios from Morningstar Associates LLC provides a professionally managed portfolio. That includes ongoing portfolio management and rebalancing, as well as diversified portfolios comprised of both ETFs and mutual funds. That management is based on two portfolio types, one of which is the Core portfolio, which is designed to represent the foundation of your investments, and to build wealth slowly over time. The second is the Opportunistic portfolio, which is designed to take advantage of emerging market opportunities. You can put some of your investment capital into the portfolios, while still maintaining independent positions through your TD Ameritrade account.
TD Ameritrade Caveats
TD Ameritrade is easily one of the most comprehensive trading platforms available. As a result, we were able to come up with only a single negative, and that may not be that important if you are mostly a passive investor.
TD Ameritrade's trading fees aren't the lowest. While the transaction fees are reasonable, they are not the lowest in the industry. If you are an active trader, you may want to investigate lower-cost options.
Will TD Ameritrade Work for You?
TD Ameritrade is the perfect trading platform for long-term investors, like those who favor buy-and-hold investing. Their fees are higher than some other very low cost brokers, and probably not well suited for active traders. But they provide a wealth of tools and information, and as much or as little investment assistance as you may need. This can be especially important since your investment goals and interests will change over the years. TD Ameritrade has all of the services that you will need to guide you through all of those changes.