My Charles Schwab Review: The Complete Broker For Investors

charles schwab reviewYears ago, when I was looking for an online discount broker to invest my money, I did a ton of research. There were a handful that I was considering, but in the end, I chose Schwab because they had all of the features I was looking for.

As time went on, I realized just how much I loved their service and how they offered a new investor like me ways to invest cost efficiently without many fees.

Fast forward to today and even though I have an account at Vanguard and M1 Finance, I still have the majority of my money with Schwab and I wouldn’t change it.They make it easy for me to follow my investment plan and allow me to be a successful investor.

Below is my detailed review of Schwab.

Schwab Review Summary
  • Ease of Use
  • Account Fees
  • Account Types
  • Features
  • Customer Service

Summary

You can't go wrong if you chose to invest your money with Schwab. They have thousands of investment vehicles including no cost mutual funds and ETFs to invest in. Customer support is top notch as well. Their commissions for stock trades are in the ballpark when compared to other online brokers. If you are a die hard technical analysis investor, you might be better off with another option. But for the other 99% of investors, Schwab should be at the top of the list.

5

My Schwab Review

Schwab History and Background

It all started back in 1975 when the Securities and Exchange Commission deregulated broker commissions. Schwab was the first discount broker on the scene. The company steadily grew over the years and in 1983 was purchased by Bank of America.

One year later, Schwab introduced 140 no-load mutual funds as well as The Equalizer, a DOS based tech solution that would eventually be online trading as we know it today.

By 1985, Schwab signed up its 1 millionth customer and two years later, Charles bought the firm back from Bank of America. Then in 1995, Schwab.com was born. Today, Schwab has close to 2 trillion in assets, over 9 million active brokerage accounts, and is still innovating the discount broker scene.

Schwab Features

OK, now on to the features that makes Schwab so great for investors. I’ll highlight these in bullet points and then go into more detail:

  • $8.95 online trades (this includes market and limit orders) for stocks priced $1 or more.
  • Streaming quotes are free for investors. Most other brokers give you free delayed quotes (they are delayed up to 15 minutes). If you want streaming quotes from these brokers, it will cost you.
  • Tons of investment options for investors. Choose from stocks, bonds, exchange traded funds, mutual funds, options and CDs. You can invest in non-retirement, retirement, small business, trusts and educational accounts as well.
  • Crazy amounts of research. Not only do you get research reports from Schwab itself, but also from other third party industry experts.
  • Easy to use website. There is a lot to be said when you find a website where you can easily find what you are looking for. I found this to be the case with Schwab. I had no issues finding what I was looking for.

Schwab Benefits

I could easily argue that Schwab is the king when it comes to online brokers. Not only is investing low cost, they offer tons of investment options, which include a large amount of no fee mutual funds and exchange traded funds.

The fact that they have been around so long and continue to innovate is the main reasons why investors flock to them.

In addition to investing services, they also have a bank. You can open checking and saving accounts to do all of your banking with one firm. The nice thing about their savings accounts is that you can have sub-accounts like with CIT Bank.

Other benefits include:

Low initial investment. To open an account, all you need is $1,000. For most mutual funds, additional investments are $500 unless you set up an automatic investment plan. But, if you invest in Schwab funds, additional investments are $1. How cool is that?

No fees. Other than your standard banking fees or trade commissions, there are no other fees Schwab charges. No maintenance fee, no inactivity fee, nothing.

Commission free ETFs. Most brokers charge for investing in ETFs through a commission like when you trade stocks. But with Schwab, you can trade all Schwab ETFs as well as a handful of non-Schwab ETFs for no commssion.

Super customer service. When I call or chat with customer service, my questions are answered quickly and in a way that I can understand too. I’ve dealt with too many customer service departments over the years only to be left with more questions than when I started. This isn’t the case with Schwab.

Mutual fund and ETF screener. I love playing with this tool. You can input virtually any criteria you want, and the screener will give you the mutual funds or ETFs that match that criteria.

No foreign transaction fees. The other great thing about Schwab Bank is the debit card. Schwab does not charge foreign transaction fees when you use it and they rebate you any ATM fees other banks might charge you. (Schwab doesn’t charge ATM fees.) When we went on our honeymoon, we took my Schwab debit card with us and used it the majority the time – note that the card is branded with Visa so it is accepted just about everywhere and it has the new chip technology too! Now, if they would only bring back the credit card they used to have!

Options trading. Schwab recently acquired OptionsExpress which really made an impact on their trading platform. In addition, Schwab’s new StreetSmart Edge platform makes options trading a breeze. (Note that the StreetSmart platform is also used by active traders who are interested in detailed technical analysis of the market.)

Intelligent Portfolios. Schwab recently introduced their automating investing service, Intelligent Portfolios, to the public. While I talk about this in more detail below, it is a free way to get professional management of you investments.

Downsides To Schwab

I have found one downside to Schwab in my years investing with them.

Late 1099. Most brokers will send you your 1099 in early February. But not Schwab. The earliest Schwab will have 1099s available is February 15th. While this is annoying, I understand where they are coming from. Many times, late dividends and adjustments are made to various mutual funds, which affect your taxes. If Schwab sends out 1099s as early as possible, they risk needing to send a corrected 1099. By waiting, they cut down on costs. Also, they cut down on the chances of you filing your taxes in the meantime, only to have to submit an amended tax return.

High expenses on mutual funds. While there are many mutual funds with Schwab that you can invest in with very low fees, there are some in certain asset classes – like small cap and international – that don’t have a large selection with low fees. You can always go with a Schwab fund here, but your options for low cost alternatives is slim. And just to note, they “high fees” are in line with what other brokers charge. I would just like to see some more lower cost options.

Schwab Intelligent Portfolios

I touched on this above, but wanted to give some more detail regarding Schwab’s entry into automated investing, also known as robo advising. Schwab rolled these out in 2015 and they have taken off like gangbusters. All you need is $5,000 and to answer a few questions.

Schwab will then put you into a portfolio made up of low cost ETFs. Schwab will monitor this portfolio for you and rebalance it free of charge and will tax loss harvest for free as well (for tax loss harvesting, your account balance needs to be at least $50,000).

You might read some stories about how Schwab holds some of you money in cash and how this is a bad thing. I disagree. Cash is an investment class and just because it isn’t earning much interest today doesn’t mean it should be abandoned completely.

If you would rather have more of your money invested, be sure to check out the alternatives to Schwab that I list below.

If you want to learn more about the Intelligent Portfolio’s, you can do so here.

Who Is Schwab For?

With so many choices when it comes to investing and low fees, you simply cannot go wrong when choosing to invest with Schwab. I invest in both Schwab mutual funds and Schwab ETFs for my taxable account and my retirement account. When I check out the fees I am paying using Personal Capital, I see that they are more than acceptable in amount.

If you still have concerns, know that all new clients get a free personal consultation with an investment professional to review your goals and investments.

Regardless of which online broker you do choose, you should check out my book, 7 Investing Steps That Will Make You Wealthy, to ensure you earn the highest return with the least risk possible.

Alternatives To Schwab

Ally Invest: This might be a surprise to some investors but Ally Invest is secretly a powerhouse for active traders. They bought TradeKing a couple years ago and combined the great features and tools both businesses had to offer. It really is worth checking out if you are an active investor. You can get started with Ally Invest here.

M1 Finance: A new player to the broker industry, M1 is changing the game. They offer free stock trading on all transactions. You can build a portfolio using any combination of stocks and ETFs. The choice is yours. They also have some pre-built portfolios to choose from as well. You can get started with M1 Finance here.

Are you looking for the best online broker for your needs? Check out my broker comparison chart to find the perfect match for you.

Wealthsimple: This is a new robo-advisor that does everything for you. All you have to do is choose your goal and set up an automatic investment and Wealthsimple does the rest. They even let you invest for free on balances up to $5,000. You can get started with Wealthsimple here.

Final Thoughts

At the end of the day, I highly recommend Schwab. They are my primary broker because they offer so much at a reasonable cost. And they are actively working to drive costs down even more. As a result, I feel they should certainly be on your list for brokers if you are in the market for one.

You can click here to be taken to their site to learn more or open an account.

8 thoughts on “My Charles Schwab Review: The Complete Broker For Investors”

  1. You can do a lot better than $8.95 per trade. Fidelity, for example, has everything you speak of and trades are $7.95. And there are no fees at all when purchasing Fidelity Funds and ETF’s.

    But if you’re just going to buy funds, then your best choice is likely Vanguard.

    1. Yeah, I agree that there are lower cost options when trading stock. But for mutual funds and ETFs, Schwab is on par with Vanguard.

      On the mutual funds I own at Schwab, my expenses are 0.09%, 0.19% and 0.19%. For my ETFs, I use Schwab ETFs and don’t pay a commission to trade and my expenses ratios are all under 0.10%.

  2. Rethink Retired

    Great review! This is timed perfect for me since I’ve been looking around at brokers. I started a Loyal3 account but it’s pretty barebones. I think I would prefer something with more options, and especially research like Schwab. Will check them out =)

    1. I looked into to Loyal3 – love the idea of no trading fees – but the options for investing are very slim. Hopefully in time they will be able to add in more companies to invest in.

  3. What I love about the Charles Schwab is that the trading platform includes all tools I would expect for a software. As a matter of fact, there is a customizable desktop with alerts, level I to II quotes, option watch lists, charts and graphs. More than those, I think one very good feature of Schwab is that there are also risk and volatility calculators to help us estimate our risk and potential earnings or loss on specific securities. This platform however does not allow for automated trading. All in all, very recommendable!

  4. I hate how each year tax forms start coming in later and later. I think it might have been 5 years ago when I finished my taxes in mid January and had my refund in the beginning of February.

    Computers handle the majority of this, so why is it getting so hard and delayed each year.

    1. Computers may be the norm, but it is still humans entering the data and we all make mistakes. When I was working in fund accounting, we would come across errors in the funds financials all the time. We did our best to catch everything before the 1099s were created, but invariably, there were some errors that slip through the cracks.

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