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With more than 30 million customers, Charles Schwab is one of the biggest stock trading platforms around. Schwab offers low-cost products and user-friendly tools suitable for a wide range of investors, including commission-free stock and ETF trading as well as a robo advisor that charges no advisory fee.
It also made our list of best online stock trading platforms for 2022. And its recent acquisition of TD Ameritrade, another major brokerage, means Schwab clients may soon have access to advanced research tools from the TD suite, including the thinkorswim platform. Just look elsewhere if you want to directly trade cryptocurrencies like bitcoin and ethereum, since — like its main competitors — Schwab offers access to digital currencies only through products like bitcoin futures contracts, which are generally recommended for highly experienced investors.
Schwab at a glance
- Account minimum investment: $0
- Fees: $0 commissions on U.S. stock, ETF and options trades
- Tradable securities: Stocks, ETFs, options, mutual funds, bonds, futures
- Account types: Taxable brokerage account, traditional IRA, Roth IRA, managed accounts, 529 college savings plans
Schwab pros and cons
|No commissions for trading stocks and ETFs||High fees for managed accounts and financial advisor assistance|
|Fractional shares as low as $5||No direct access to cryptocurrencies|
|Robo-advisor with 0% advisory fee|
Where Schwab stands out
Charles Schwab is known for offering a wide range of low-cost products for all types of investors, from beginners to seasoned traders. Here are some highlights.
Fractional shares: One share of stock in a major company can go for hundreds or even hundreds of thousands of dollars, like Warren Buffett's Berkshire Hathaway, a holding company containing names like GEICO and Kraft Heinz. But you can get proportional shares, also called fractional shares, of stocks in the S&P 500 for as low as $5 at Schwab. The S&P 500 is an index that tracks the largest U.S. companies and is commonly considered to be representative of the overall U.S. stock market. While this is great for beginners, other brokerages such as Fidelity Investments offer a wider selection of fractional share stocks.
No-fee robo advisor: Schwab Intelligent Portfolios are automated portfolios built with low-fee ETFs. The portfolio’s asset allocation is based on your answers to a questionnaire about your financial goals. An algorithm manages these portfolios and rebalances your asset allocation if deemed necessary. Moreover, Schwab’s robo also has tax-loss harvesting features. This allows you to sell declining investments to offset capital gains taxes, which you incur when you sell stocks for a profit. But the $5,000 minimum investment can be quite high for some investors. You can find robos with little-to-no minimum investments at firms like Betterment, Wealthfront and Fidelity.
Debit card: In addition to securities, the Charles Schwab Corporation also offers a range of banking products like the Schwab Bank Visa Platinum Debit Card. This interest-bearing checking account reimburses you for ATM fees worldwide.
$0 commissions: Schwab doesn’t charge commissions for trading U.S.- listed stocks, ETFs and options online. However, Schwab charges $5 trading fees for over-the-phone trades and $25 for broker-assisted trades. The firm also charges $6.95 commissions for trading Canadian stocks and U.S. OTCs online and $25 + $6.95 for doing it through a broker.
Where Schwab falls behind
Despite its massive reach, Schwab may not be the best brokerage for everyone. Here are some drawbacks, but keep in mind that product offerings may change because Schwab has purchased TD Ameritrade.
No direct cryptocurrency trading : You can’t directly invest in cryptocurrencies such as bitcoin, ethereum and dogecoin with a Schwab account. However, you can access bitcoin futures contracts if you open a Schwab futures account. Generally speaking, a futures contract is an agreement to buy or sell an underlying asset at a fixed price at a specific time. Alternatively, you can invest in coin trusts, which hold large pools of cryptocurrency. Both are considered highly volatile and intended for sophisticated investors.
High managed-account fees: If you want a portfolio managed by a team of human advisors at Schwab, you may face some high fees. Managed account fees at Schwab can be as high as 0.90%, and the minimum investment is $25,000.
High investment minimum for robo-advisor: Most major robo advisors don’t require a minimum investment. But to get an account with Schwab’s robo advisor, you need at least $5,000. The trade off is that Schwab’s robo advisor charges no ongoing advisory fee. The industry standard is usually 0.25% a year, or $25 a year for every $10,000.
What you can find at Schwab?
|Stocks||$0 trading commission|
|ETFs||$0 trading commission|
|Options||$0 trading commission, $0.65 per-contract fee|
|Mutual funds||Access to thousands of mutual funds, including Schwab Mutual Fund OneSource Select List, a prescreened, no-load, no transaction-fee list of funds.|
|Bonds||$0 for new-issue individual bonds|
|Robo advisor (Schwab Intelligent Portfolios)||Automated portfolio built with low-cost ETFs. No advisory fee. Minimum investment is $5,000. Offers automatic tax-loss harvesting services.|
Schwab research and tools
Schwab offers a sleek, mobile-friendly trading platform that makes finding securities simple. You can click on the “research” tab and find links to various tools like stock screeners. This allows you to easily filter stocks based on industry sector, market cap and other factors. And for most stocks, you’ll find a Schwab Equity Ratings report that evaluates the stock. You can also access Schwab’s thematic stocks page. This allows you to explore stocks based on specific themes such as blockchain technology and clean energy.
In addition, you’d have access to StreetSmart Edge. This platform provides you with streaming market news from various media sources . You can also track indices via customizable charts. For example, you can monitor the performance of an index by day or throughout the year. That platform also identifies the top gainers, which you can then put on a watch-list.
If you click on a stock, you can get detailed information about the company, including earnings reports, third-party analyst ratings, and metrics like earnings-per share. In addition, you can conduct different technical analytical procedures such as examining a stock’s simple moving average.
Schwab mobile app
The highly-rated Charles Schwab mobile app allows you to monitor your portfolio and access real-time quotes and streaming market news. You can also use it to trade stocks, ETFs, options and mutual funds.
As of this writing, the Charles Schwab mobile app is rated 3.5/5 on the Google Play Store and 4.8/5 on the Apple store.
Customer service at Schwab
You can reach customer service at Schwab via phone by dialing 1 (800) 435-4000. You can also access its website for online chat. Moreover, you can locate a branch by visiting Schwab’s official website. Schwab runs more than 400 banking centers across the country.