You're thinking about opening an ETRADE account, and you're wondering, “How much is an ETRADE account going to cost me?” That's an excellent question, and frankly, it's one of the most important things to consider before committing to any brokerage. While E*TRADE, now part of Morgan Stanley, is known for its competitive pricing, understanding the nuances of their fee structure is crucial for any savvy investor.
Let's dive deep into the world of E*TRADE costs, breaking down everything from account opening to trading, and even those pesky, often overlooked, miscellaneous fees.
The Cost of an E*TRADE Account: A Comprehensive Guide
Step 1: Are You Ready to Uncover the Real Costs?
Before we even talk about specific numbers, let me ask you this: Are you the kind of investor who likes to make a lot of trades, or are you more of a long-term holder? Do you prefer to manage your own investments, or are you looking for a little professional help? Your investing style significantly impacts how much you'll pay at E*TRADE, so keep that in mind as we go through each section!
Step 2: Account Opening and Maintenance Fees – The Basics
One of the best things about E*TRADE is their commitment to making investing accessible.
No Account Minimums (Generally) and No Maintenance Fees!
Zero Minimums: For most standard brokerage and IRA accounts, E*TRADE boasts $0 minimums to open a new account. This is fantastic news for new investors or those who want to start small. However, note that you will need to fund the account within 30 days to keep it open.
No Account Maintenance Fees: You won't be charged recurring fees just for having an E*TRADE account, which is a significant saving compared to some other financial institutions.
Exceptions to the "No Minimums" Rule:
While most accounts are free to open, there might be specific products or services with their own requirements. For instance:
Managed Portfolios: If you opt for E*TRADE's managed portfolio services (where they handle your investments for you), there will be minimum investment requirements and advisory fees. For example, their Core Portfolios have a $500 minimum.
Step 3: Trading Costs – Where Your Activity Matters
This is where your investing style truly comes into play. E*TRADE has largely embraced the commission-free trading trend, but there are still scenarios where you'll incur costs.
A. Commission-Free Trading: The Big Win!
Online US-listed stocks, ETFs, and options: E*TRADE offers $0 commission for online trades of US-listed stocks, exchange-traded funds (ETFs), and options. This is a massive benefit for active traders.
Mutual Funds: Many mutual funds on ETRADE are no-load and no-transaction-fee, meaning you won't pay a commission to buy or sell them. They even have their own "ETRADE No Fee Index Funds" with 0% expense ratios.
B. When Commissions Apply:
While "commission-free" is great, it's not universal. Be aware of these scenarios:
Options Contracts: While the base commission for online options trades is $0, there's a per-contract fee.
For clients who execute fewer than 30 stock, ETF, and options trades per quarter, the fee is $0.65 per contract.
For active traders executing 30 or more stock, ETF, and options trades per quarter, the fee drops to $0.50 per contract.
Regulatory and exchange fees may also apply.
Futures Contracts: Futures trades are $1.50 per side, per contract, plus exchange fees. Cryptocurrency futures are $2.50 per side, per contract.
Bonds: Online secondary market trades for bonds typically cost $1.00 per bond ($10 minimum, $250 maximum).
Over-the-Counter (OTC) Securities: Trades of OTC stocks can incur a commission, often around $6.95 (for customers with 0-29 trades per quarter) or $4.95 (for 30+ trades per quarter).
Broker-Assisted Trades: If you call E*TRADE and have a broker place a trade for you, there's typically a $25 service charge in addition to any applicable commissions.
Transaction Fee Mutual Funds: While many are free, some mutual funds on E*TRADE do carry a $19.99 transaction fee per trade. Additionally, an early redemption fee of $49.99 may apply if you sell a no-load, no-transaction-fee mutual fund within 90 days of purchase.
Step 4: Managed Portfolio & Advisory Fees – For a Helping Hand
If you prefer professional management, E*TRADE offers various managed portfolio options, each with its own fee structure. These are typically annual advisory fees calculated as a percentage of the assets under management.
Understanding Advisory Fees:
Core Portfolios: Their automated investment management service charges a low annual advisory fee of 0.30% of your assets.
Other Managed Portfolios: For more customized or actively managed portfolios, the fees can vary:
Blend Portfolios: For the first $100k, it's typically around 0.90%, with rates decreasing for higher balances.
Dedicated Portfolios: Can be higher, starting around 1.25% for the first $1M.
Fixed Income Portfolios: Often lower than equity-focused managed portfolios, perhaps starting around 0.75%.
These fees are typically deducted from your portfolio on a quarterly basis.
Step 5: Miscellaneous Account Fees – The Less Obvious Costs
These are the fees that can sometimes catch investors by surprise. While not always applicable, it's good to be aware of them.
Common Miscellaneous Fees:
Wire Transfers:
Outgoing domestic wires: $25 per wire.
Incoming wires: Generally free.
Account Transfers (ACATS):
Full account transfer out: $75.
Partial account transfer out: $25.
IRA Premature Distributions: If you withdraw money from an IRA before age 59½ (without an exception), there can be a $25 fee from E*TRADE, in addition to any IRS penalties.
Returned Electronic Transfers (Insufficient Funds): $25.
Check Request/Stop Payment: $10 per check request, and $25 for a stop payment request.
Paper Statements: While online statements are free, you might incur a small fee (e.g., $2 per statement) if you opt for mailed paper statements.
Physical Stock Certificates: Requesting a physical stock certificate can be quite expensive, sometimes $500.
Reorganizations: Fees apply for mandatory and voluntary corporate actions, typically $38.
Alternative Investment Fees: For certain alternative investments, there can be annual custody fees ($250 per position), new purchase fees ($75), and liquidation fees ($75).
Margin Rates: If you trade on margin, you'll pay interest on the borrowed funds. These rates are variable and depend on the debit balance.
Step 6: Understanding the True Cost – Beyond the Numbers
The "cost" of an E*TRADE account isn't just about the explicit fees. It's also about the value you get:
Research and Tools: E*TRADE offers extensive research, powerful trading platforms, and educational resources. These can be incredibly valuable, especially for new investors, and are essentially free with your account.
Customer Service: Access to their customer support, whether by phone or online, is part of the package.
Investment Options: The sheer breadth of investment products available – from stocks and ETFs to options, futures, mutual funds, and fixed income – adds significant value.
10 Related FAQ Questions
How to minimize E*TRADE account fees?
To minimize fees, aim for online trades of US-listed stocks and ETFs as these are commission-free. For options, try to execute 30+ trades per quarter to get the lower per-contract fee. Opt for no-transaction-fee mutual funds. Use electronic transfers for funding and withdrawals instead of wire transfers. Choose online statements over paper.
How to avoid E*TRADE's options contract fees?
You cannot entirely avoid options contract fees at E*TRADE, but you can reduce them. Execute 30 or more stock, ETF, and options trades per quarter to qualify for the lower rate of $0.50 per contract instead of $0.65.
How to check E*TRADE's current margin rates?
E*TRADE's margin rates are variable and dependent on your debit balance. You can typically find the most up-to-date margin rates on their official website under the "Pricing" or "Rates" section, or by logging into your account.
How to transfer an account to E*TRADE without fees?
While ETRADE itself doesn't typically charge for incoming account transfers (ACATS), the outgoing brokerage firm might charge a transfer fee. ETRADE does charge a fee if you transfer your account out of E*TRADE ($75 for full, $25 for partial).
How to avoid the early redemption fee for mutual funds on E*TRADE?
To avoid the $49.99 early redemption fee on no-load, no-transaction-fee mutual funds, simply hold the fund for at least 90 days before selling.
How to get free wire transfers with E*TRADE?
Incoming wire transfers to E*TRADE accounts are generally free. However, outgoing wire transfers typically incur a $25 fee. There is no common way to get outgoing wire transfers for free, though some premium banking accounts might offer a limited number of free wires.
How to prevent E*TRADE from charging a paper statement fee?
To avoid paper statement fees, ensure you are opted into electronic delivery for all your account statements and tax documents within your E*TRADE account settings.
How to avoid fees for broker-assisted trades on E*TRADE?
To avoid the $25 broker-assisted trade fee, always place your trades online through the E*TRADE website or mobile app. The $0 commission applies to online trades.
How to find out the exact fees for a specific mutual fund on E*TRADE?
For any specific mutual fund, you should always consult the fund's prospectus. E*TRADE will provide a link to the prospectus on the fund's detail page, which outlines all fees, including expense ratios and any transaction fees.
How to close an E*TRADE account without fees?
Generally, ETRADE does not charge an account closing fee. However, if you are transferring your assets to another brokerage, the receiving firm might charge a fee, or ETRADE might charge a full or partial account transfer fee if you initiate an ACATS transfer out. Ensure all your positions are liquidated or transferred before closing.
