Charles Schwab Review 2022: Is this the best online stock broker?

Charles Schwab review

Charles Schwab has more than 30 million customers, making it one of the biggest stock exchanges in the world. With Schwab, investors can trade stocks and ETFs commission-free. More so, they can access a Robo advisor without paying advisory fees.

The company was founded in 1971 and is a full-service investment brokerage with more than 400 branches throughout the country.

For those who prefer trading on their own, Schwab provides a self-directed online platform and a Robo-advisor with expert guidance.

There are also many investment options, including more than 2,000 index funds and ETFs and about 200 index mutual funds with no transaction fees. The exciting part is that Charles Schwab Investment Management and third parties do not charge commissions on index ETFs.

Using Charles Schwab, you can diversify your investments with index funds such as the S&P 500,  rather than investing in just one company. The investment protects your portfolio if one company has a bad year.

Who is Charles Schwab for?

On its platform, Charles Schwab manages assets of over $6.6 trillion on behalf of its clients. With TD Ameritrade’s acquisition, Schwab’s customers will inevitably be able to access thinkorswim’s trading platform. This trader-focused platform will complement Schwab’s StreetSmart platform, which already serves less intense investors and is already available on TD Ameritrade. For active options traders or those looking for forex (FX), cryptocurrency, and futures market access, Schwab’s wide range of financial products may not be the best choice.

Top Recommended Platforms

MIN. DEPOSIT

$50

EXCL. OFFER

USER RATING

9.8

4.9/5

78% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

MIN. DEPOSIT

$100

EXCL. OFFER

USER RATING

9.7

4.8/5

Trading forex or CFDs on margin involves a high degree of risk and may not be suitable for all investors. There is a possibility that you may suffer a loss equal to or greater than your entire investment.

MIN. DEPOSIT

$250

EXCL. OFFER

USER RATING

9.6

4.5/5

CFDs are complex instruments and involve a high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Charles Schwabs’ Pros and Cons

Pros

  • Several platforms to serve a wide range of customers’ demands
  • Free trading of stocks and ETFs
  • Full service includes real-time client assistance, news, analysis, stock/ETF screeners, and instructional materials.
  • The platform’s ability to integrate external accounts for a complete financial picture
  • A physical branch network and Robo-advisory services

Cons

  • There is still no automated money market account sweep.
  • The cost of options trading may be prohibitive for aggressive option traders, especially those who use numerous leg techniques.
  • There is only Bitcoin futures trading in the cryptocurrency market; there is no FX trading, and futures trade on a different platform.
  • Margin rates are greater than those of certain rivals.
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A Quick Look at Charles Schwab

  • An extensive selection of accounts and investments are available from Charles Schwab.
  • Accounts managed by professionals, Robo-advisors, and online brokerage firms
  • IRAs come in a variety of forms, including Roth IRAs, standard IRAs, rollover IRAs, custodial IRAs, 529 college savings programs, educational savings accounts (ESAs), and individual 401(k)s, company 401(k)s, SEP IRAs, and Simple IRAs.
  • Stocks, bonds, fractional shares, CDs, mutual funds, index funds, ETFs, options, and futures are examples of tradable securities. There are almost 4,200 mutual funds available without fees.
  • A mobile investing app is accessible for iOS and Android, and phone support or live chat is always available.

What makes Charles Schwab unique?

Charles Schwab offers low-cost products suitable for novice and experienced investors. The following are what makes Schwab unique:

Fractional shares: At Schwab, however, you can purchase S&P 500 stocks for more than $5 in proportional shares, also known as fractional shares. 

Generally, the S&P 500 index represents the overall market performance of the largest U.S. corporations. Other brokerages offer fractional share stocks, like Fidelity Investments, which provides a broader range.

Fee-free Robo advisor: Schwab Intelligent Portfolios use low-fee ETFs to build automated portfolios. Based on your financial goals, the portfolio’s asset allocation is determined. 

An algorithm will adjust your portfolio as needed depending on your asset allocation. The Schwab Robo also features tax-loss harvesting. 

When you sell stocks for a profit, you incur capital gains taxes, which can be offset by selling declining investments. It can be challenging for some investors to meet the $5,000 minimum investment requirement. 

There is no minimum investment requirement for thefts through Betterment, Wealthfront, and Fidelity.

Debit card: Besides securities, Schwab Bank offers Schwab Bank Visa Platinum Debit Cards. You are reimbursed for ATM fees worldwide with this interest-bearing checking account.

No commissions: Online trading of U.S.-listed stocks, ETFs, and options are commission-free at Schwab. Over-the-phone trades with Schwab cost $5, whereas broker-assisted trades cost $25. Commissions also apply when trading Canadian stocks and OTCs online and $25 + $6.95 when trading through a broker.

Schwab’s shortcomings

Schwab is not suitable for everyone, despite its massive reach. Schwab’s purchase of TD Ameritrade may change its product offerings, but here are some drawbacks.

Direct investments in cryptocurrencies unavailable: A Schwab account does not allow direct investments in cryptocurrencies such as bitcoin, Ethereum, and Dogecoin. The Schwab futures account enables you to trade bitcoin futures contracts. Futures contracts specify a specific price and time to buy or sell an underlying asset. Coin trusts hold large cryptocurrency pools, which may be a better investment. Investing in both is highly volatile and suited to sophisticated investors.

Managed-account fees are high: Schwab may charge higher fees if you want a team of human advisors to handle your portfolio. Managing an account at Schwab can cost as much as 0.90%, and there’s a $25,000 minimum investment.

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Robo-advisors require high investment minimums: Generally, there is no minimum investment requirement for Robo advisors. A Schwab Robo advisor account requires a minimum deposit of $5,000. There is no ongoing advisory fee associated with Schwab’s Robo advisor. There is an industry standard of 0.25% per year or $25 per $10,000.

Schwab research and tools

Using the Schwab trading platform, you can find securities easily, and it is mobile-friendly.s simple. In the “research” tab, you can find links to stock screening tools, for example. Using this tool, you can easily filter stocks based on industry sector, market cap, and other factors. You’ll also find Schwab Equity Rating reports for most stocks. Schwab also offers thematic stocks. You can explore stocks related to specific themes, such as blockchain technology and renewable energy.

Also included is StreetSmart Edge. The platform allows you to stream market news from numerous media sources. Additionally, you can customize charts to track indices. It is possible to monitor an index’s performance day by day or year by year. Using that platform, you can also create a watch list of the top gainers.

You can view detailed information regarding a stock by clicking on its name. This includes earnings reports, third-party analyst ratings, and metrics such as earnings-per-share. 

Another technical analysis method is examining a stock’s simple moving average.

Schwab mobile app

Mobile apps from Charles Schwab provide real-time quotes and access to streaming market news while monitoring your portfolio. Aside from stocks and ETFs, you can also trade options and mutual funds.

On Google Play, Charles Schwab’s mobile app has a rating of 3.5/5, and on Apple, it has a rating of 4.8/5.

Transparency

On Schwab’s website, pricing structures, fees, leverage, and margin trading details were displayed and explained.

Schwab divides its fees and commissions into four sections: 

  • Trading fees and commissions.
  • Account fees and minimums 
  • Investment management fees and minimums.
  • Money management fees. 

The margin and leverage section included a video and text describing the benefits and risks of leveraged trading. Schwab’s website also includes information about its services, fees, and obligations, as well as an explanation of mutual fund fees.

Using their proprietary order routing system, Schwab puts their customers first and gets the best execution through their order routing process. 

Also, in this website section, Schwab offers statistics on average savings and price improvement for customers but does not disclose that they receive payment for order flow. 

Even though Schwab’s execution efforts benefit customers, it is reluctant to disclose the revenue it earns from its order flow. 

However, commission-free trading and many other benefits are provided to customers by this revenue.

Customer Service

  • Whether you’re a potential or existing customer, live customer service is available 24/7.
  • For trades made through a broker, there is a surcharge.
  • Help is available through a chat feature and over the phone.
  • The website has an easy-to-navigate FAQ section broken down by topic.
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How to Open a Charles Schwab Account

Determine what you require from a brokerage. Determine whether Charles Schwab is a suitable fit for you by knowing whether you plan to trade, manage your portfolio, do the research, use a Robo advisor, or receive expert advice.

Do your research on costs, available investments, and resources. Learn more about the charges associated with trading and account maintenance. Knowing the different investment options and the sources, tools, and information that can guide your investment choices is crucial.

Create an online account. The Charles Schwab website estimates that completing the application and opening a trading account will take roughly 10 minutes. Your Social Security Number should be on hand. 

Conclusion

Through its recent acquisition of TD Ameritrade, Charles Schwab has strengthened its position as one of the largest online brokerages. Schwab is a large, diversified investment firm that offers a wide range of products, services, education, and support for nearly all types of investors, especially those who invest in equities, mutual funds, ETFs, and fixed income. 

The Schwab web, desktop, and mobile applications are easy to use and intuitive for trading stocks and ETFs. Since Schwab’s website is so large and there is so much information available, it has a category-based menu system and usually an intuitive layout.

Although Schwab is a good choice for most investors and traders because of its breadth of services, low costs, and a full suite of services, it may not be the best choice for some smaller subsets of the investing/trading universe. 

Some high-volume options traders are not currently able to trade currencies or cryptocurrencies at Schwab due to its $0.65 commission per leg, futures traders who require a separate platform, and people who are trading on margin but find lower rates elsewhere.

FAQ for Charles Schwab

Is Charles Schwab suitable for beginners?

Most beginner investors should be content with Schwab because the brokerage offers commission-free stocks and ETFs. 

Also, stock fractions are available for $5, and Schwab offers user-friendly study resources for beginners.

Additionally, if you have a job, you’ll need the address of your company. Your address, date of birth, email address, and phone number are just a few of the many pieces of information you’ll have to give.

For Schwab accounts, what is the minimum deposit?

It’s easy to open a traditional brokerage account with Schwab whether you have a few hundred dollars or ten thousand. Accounts do not require a minimum investment.

Charles Schwab: what are its pros and cons?

Schwab offers beginner-friendly investing products at low costs. Trading stocks and ETFs on U.S.-listed exchanges is commission-free with no minimum deposit. 

Schwab does not allow cryptocurrency trading. You could access crypto indirectly using products such as bitcoin futures contracts and coin trusts, though they’re volatile and come with high fees.

Is Schwab’s pricing transparent?

Schwab’s mutual funds, ETFs, and stocks don’t charge account maintenance or opening fees, but non-Schwab mutual funds and options charge trading fees.

Additional fees include fund expenses, brokerage commissions, and account maintenance fees. 

 

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