Charles Schwab has a good reputation in the investing community for a reason: The broker offers high-quality customer service, competitive trade commissions and a large selection of commission-free ETFs and no-transaction-fee mutual funds. The company offers its customers two strong trading platforms and has a low minimum investment requirement, making it suitable for both new and active traders.
NerdWallet’s rating: / 5
Charles Schwab is best for:
- Beginner investors
- Advanced traders
- Commission-free ETFs
- Low-minimum mutual funds
- Premium research
Current promotion
Customers who open an account with $50,000 or more get 500 commission-free online trades, plus a year of check-ins with a trading coach.
Charles Schwab at a glance
| Account types | • Individual and joint non-retirement accounts • Traditional, Roth, rollover, SEP and SIMPLE IRAs • Individual 401(k) • Trust accounts • 529, ESA and custodial accounts |
| Account minimum |
$1,000; often waived with automatic monthly transfers of $100 or more |
| Account fees | $50 account closing fee |
| Stock/ETF commissions | $8.95 |
| Mutual funds | More than 3,000 no-transaction-fee mutual funds |
| Commission-free ETFs | More than 200 commission-free ETFs |
| Options | $8.95 plus 75 cents per contract |
| Tradable securities | • Stocks • Bonds • Mutual funds • ETFs • Options |
| Broker-assisted trades | $25 |
| Research and data | Yes |
| Customer service | 24/7 phone support; live chat and email support; more than 300 local branches. |
Where Charles Schwab shines
Commission-free ETFs: Schwab comes through here, offering more than 200 commission-free exchange-traded funds, which landed it NerdWallet’s pick for the best online broker for beginners who want to trade these funds. The company offers an ETF Select List, which features the company’s picks for the best ETF in selected categories (more on this below). The list is easily sorted by feature, including expense ratio, Morningstar category and benchmark index.
There is also the Schwab ETF Portfolio Builder tool, which guides investors through the process of creating a diversified ETF portfolio based on risk tolerance.
Customer service: Like many online brokers, Schwab offers around-the-clock phone support. But the company’s chat support is just as good, and we found it to be a quick way to get answers to our questions. Schwab also has a large network of branches, where customers can attend complimentary workshops and meet with financial consultants by appointment. (Schwab also has a robo-advisor offering, Schwab Intelligent Portfolios, for customers who want complete management.)
Account and investment minimums: Schwab’s account minimum is mid-range at $1,000. That’s lower than Fidelity and in line with Vanguard; still, it’s possible to find great brokers that require no minimum, including TD Ameritrade and OptionsHouse. That said, Schwab waives minimums on many of its accounts for customers who agree to automatic monthly transfers of $100 or more.
The real highlight of Schwab’s minimums, though, is that most of the mutual funds on its Mutual Fund OneSource platform — which are no-transaction-fee funds — carry minimum initial investments of as little as $100 for retirement, brokerage and custodial accounts. Subsequent investments can be made for as little as $1. This means investors with small amounts of money can still get started and maintain the momentum with small, regular investments.
Research: Schwab’s research offerings are hard to beat, perhaps the best available from an online broker. The company provides its own equity ratings, along with reports from Morningstar, S&P Capital IQ, Market Edge, Ned Davis and others. News and earnings reports come from Briefing.com and Reuters.
Schwab’s investment screeners are easy to use and allow investors to save their screens. Select Lists — like the previously mentioned one for ETFs — are compiled by the company’s experts and released quarterly to provide investors with a pre-screened selection of mutual funds and ETFs. The funds on the list are divided by category, so investors can easily see the company’s picks for, say, large-cap stock mutual funds.
Trading platforms: Schwab offers two trading platforms, both available with no trade minimums or fees.
The web platform, StreetSmart.com, is ideal for beginners.
The company’s desktop platform, StreetSmart Edge, is the next step up. It’s available for Windows and as a cloud-based solution, accessible online.
StreetSmart Edge is designed for efficiency, with simple navigation and easy customization, but has many advanced features: The platform allows for multiple customized trading layouts, and advanced charting functionality allows investors to create multiple charts of the same stock. A “Balances Bar” gives you a quick overview of your account and buying power, and an account detail window allows you to dial down to your portfolio, orders and trade history. Through the platform’s Symbol Hub, you can quickly research a symbol, view streaming market data and news, and enter an order if desired.
Schwab also offers Trade Source, an online feature where trading clients can monitor their portfolio and the markets, access research and view technical data. Trade Source features an intuitive trade ticket for stock, ETF and options orders that incorporates current market information.
Finally, the company’s mobile trading app pretty closely mirrors the capabilities of the web platform.
Where Charles Schwab falls short
Trade commissions: Schwab’s $8.95 trade commissions are on the high side compared to discount brokers like OptionsHouse, and they’ll add up quickly for active traders. Still, the cost is in line with other competitors: TD Ameritrade charges a $9.99 trade commission, and Fidelity’s commission is $7.95.
Transaction-fee funds: With a wide selection of no-transaction-fee funds, it’s easy to avoid these. But if they’re in your portfolio, you’ll pay for them at Schwab: The fee to purchase these funds is a whopping $76, one of the highest charges of all the brokers we’ve surveyed at NerdWallet.
The bottom line
Investors at Charles Schwab will pay a bit more in trading commissions, but the return for that extra cost is substantial. The company is one of the best online brokers available due to its high-quality research, strong trading platforms and commission-free ETF selection. Additionally, beginner investors will love Schwab’s low-minimum mutual funds, helpful customer service and in-person educational support.
Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com. Twitter: @arioshea.
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