Charles Schwab Brokerage Review: Invest in Low-Cost Funds
If you're ready to start investing, an online brokerage account could be what you need.
Charles Schwab offers online brokerage accounts that you can open in minutes with $0 equity trades. There's no minimum deposit to start investing.
Compared to other brokerages like Vanguard or Fidelity, Charles Schwab has some standout features. It's suited to both beginners and more experienced investors.
But how do you know if it's right for you? This Charles Schwab brokerage review breaks down everything you need to know before you start investing.
Charles Schwab Brokerage Is Good For…
- Investors who want to pay $0 for equity trades
- Beginners who don't have a lot of money to invest
- People who want 24/7 professional guidance
- Investors who want access to investment tools and research
Charles Schwab Brokerage Pros & Cons
Types of Accounts Offered
Charles Schwab offers both individual and joint brokerage accounts.
It takes about 10 minutes to set up your brokerage account online. There's no minimum amount required to start investing.
That's a significant change, since Schwab used to require at least $1,000 to open an account. But it's good if you're a newer investor and don't have a lot of money to put in the market yet.
Along with individual and joint brokerage accounts, there are other accounts you can open with Charles Schwab.
Your options include:
- Traditional and Roth Individual Retirement Accounts
- Rollover IRA accounts
- SEP and SIMPLE IRAs
- Trust accounts
- Coverdell ESAs
- 529 college savings accounts
- Custodial accounts
- Checking and savings accounts
You might appreciate that kind of variety if you'd like to keep all your financial accounts in one place. However, Schwab doesn't offer money market accounts, CDs or service 401(k) plans.
This Charles Schwab brokerage review is all about the brokerage accounts. So let's take a closer look at how those work.
Are There Different Account Tiers?
Some online brokerages and robo-advisors offer one account tier; others give you multiple options.
With Schwab, you can open one account but add on trading features.
Specifically, you can add on Schwab Trading Services. As a Schwab Trading Services client, you get access to:
- Online trading tools and research
- StreetSmart Edge trading platform
- Mobile trading resources
All of those features can enhance your trading experience with Schwab. There are no opening or maintenance fees or account minimums.
You might like Schwab Trading Services if you're more than just a beginner investor. The trading tools can help increase your investment knowledge and potentially build a better portfolio.
Plus, you get access to Schwab's professional investment team if you need help. There's no fee to add Schwab Trading Services to your account. So even if you don't think you'll use it right away, it may be worth adding on as you get more comfortable with investing.
Charles Schwab Investment Options
There's more than one way to invest. And online brokerages don't always offer the same things.
With Schwab, you have different options for investing your money. For example, you can build a diversified portfolio with:
- Stocks, including international stocks
- Mutual funds
- Exchange-traded funds (ETFs)
- Money market funds
- Bonds and other fixed-income investments
Schwab also offers margin loans, annuities and insurance. If you're hoping to trade options, your account has to be approved for that first.
One unique thing the brokerage offers is fractional share investing through Schwab Stock Slices.
When you invest in fractional shares, you're buying partial shares of a stock. This lets you own more expensive stocks without having to spend hundreds of dollars all at once to buy a single share.
With Schwab Stock Slices, you can buy partial shares of select stocks for as little as $5 each.
You can buy up to 10 slices at a time of any stock on the S&P 500. And there are $0 commission fees to trade.
This is a good option to have if you want to own Amazon, Facebook or another expensive stock. And it's something that the majority of online brokerages don't offer, at least not yet.
Are Managed Portfolios an Option?
Managed portfolios might be something you're interested in if you want professional investment advice.
You can get a personalized portfolio strategy to help you reach your goals. While there is a fee, they're competitive.
There are two managed portfolio options you can try with Schwab.
Schwab Managed Portfolios - mutual funds
This option could be right for you if you want to build a portfolio around mutual funds.
There are 24 different investment models to choose from, ranging from conservative to aggressive. You can get a diversified portfolio that aligns with your risk tolerance.
Schwab's portfolio management team chooses your mutual funds and rebalances for you automatically.
There's a $25,000 minimum to open an account. And there are fees to keep in mind, too.
Here's how the management fee breaks down:
- First $100,000: 0.90%
- Next $150,000: 0.70%
- Next $250,000: 0.50%
- Next $500,000: 0.30%
- Over $1,000,000: 0.20%
Compared to other brokerages, the fee is on the higher side unless you can pass the half million in assets mark.
Charles Managed Portfolios - ETFs
Exchange traded funds can be more tax efficient than mutual funds and have lower costs.
If you'd rather invest in ETFs with a managed portfolio, Schwab offers a dozen models to choose from. Again, rebalancing is included automatically.
The account minimum of $25,000 is the same. But the fees are slightly different:
- First $100,000: 0.90%
- Next $400,000: 0.75%
- Next $500,000: 0.65%
- Over $1,000,000: 0.50%
A Schwab Managed Portfolios account might be right for you if you're not a DIY investor. There are fees to consider but you're getting the benefit of professional management.
Charles Schwab offers low-cost trading with its brokerage accounts.
Like Vanguard, TD Ameritrade and other brokerages, it features a $0 trading fee model for online stock and ETF trades.
Here's more on what you'll pay to trade with Schwab.
Charles Schwab brokerage trading fees
|Investment options||Trading fee|
|Individual stocks||$0 for online trades; $5 for automated phone trades and $25 for broker-assisted trades|
|Charles Schwab mutual funds and funds offered through Schwab Mutual Fund OneSource||$0 for online and automated phone trades; $25 for broker-assisted trades|
|All other mutual funds||Up to $49.95 per purchase|
|Options||$0 + $0.65 per contract fee; $5 service fee applies to automatic phone trades and a $25 fee applies to broker-assisted trades|
|Futures||$1.50 per contract|
|Preferred stocks and REITs||$0|
|Treasuries||$0 for online trades; $25 for broker-assisted trades|
For the most part, fees are low if you're trading in a standard brokerage account.
You'll just want to watch out for the broker-assisted trade fees and purchase fees for non-Schwab mutual funds.
Are Tax Loss Harvesting and Automatic Rebalancing Included?
Tax loss harvesting and automatic rebalancing can both give your portfolio a boost.
Harvesting losses can help minimize taxable gains. Rebalancing can keep your portfolio aligned with your goals.
Neither one is included with Charles Schwab brokerage accounts unfortunately.
But you can get automatic rebalancing with a managed portfolio account. And tax loss harvesting is included with Schwab Intelligent Portfolios.
This is Schwab's robo-advisor service. You'll need $5,000 to start investing with Schwab Intelligent Portfolios. And tax loss harvesting only kicks in once your account balance reaches $50,000.
Online and Mobile Experience
Charles Schwab offers both online and mobile access to its brokerage accounts.
Generally, both the website and mobile app are easy to use and navigate. Which is a good thing if you're still learning the ropes of investing.
With the mobile app, you can:
- See your positions at a glance
- Trade stocks, ETFs, mutual funds and options
- Create watchlists
- Check order statuses
- Deposit checks to your Schwab bank or brokerage account
- Set up alerts
Overall, the mobile app was rated #1 customer satisfaction in J.D. Power's Wealth Management Mobile Apps survey.
Research and Investing Tools
Charles Schwab offers a variety of research and tools that make investing easier.
For example, you can:
- Track major stock market indices
- Get breaking news
- Create watch lists
- Access real-time charts and stock quotes
- Screen individual stocks, mutual funds and ETFs
- Compare securities side by side
- Review independent research from organizations like Morningstar and Credit Suisse
All of those tools can help with making more informed investment decisions.
And remember, you can dive even deeper into research when you add on Schwab Trading Services to your brokerage account.
Should You Invest With Charles Schwab Brokerage?
Hopefully, this Charles Schwab brokerage review has shed some light on what Schwab has to offer.
If you're looking for a place to invest with low trading fees and no account minimum, Schwab could be a great fit. And being able to try out managed portfolios or robo-advisor services might also appeal to you.
Overall, Charles Schwab is a great brokerage option based on cost and investment options.
Keep fees and account minimums in mind if you're considered managed portfolios or Schwab Intelligent Portfolios.