TD Ameritrade vs. Charles Schwab vs. Tastyworks
When it comes to managing your investments, no relationship is more important than the one between you and your brokerage. TD Ameritrade, Charles Schwab and Tastyworks are all popular brokerages that cater to different needs. One of them may be a good fit for you.
TD Ameritrade and Schwab both appeal to a wide range of investment needs, while Tastyworks is a more niche offering for active traders. But that doesn’t mean you should overlook the trading tools offered by TD Ameritrade or Schwab. Today, we’re going to dive into the details to help you decide which is a better fit for your money.
About TD Ameritrade
TD Ameritrade is a major U.S. brokerage founded in 1971. Based in Omaha, TD Ameritrade is noteworthy for its top-tier trading platform and access to a very wide range of tradable assets. While TD Ameritrade is squarely within the discount brokerage industry, it’s actually the most expensive of the three on this list on a per-trade basis.
This brokerage has made a few big acquisitions over the years, including TD Waterhouse, thinkorswim and Scottrade. It maintains more than 11 million accounts with more than $1 trillion in total assets.
About Charles Schwab
Charles Schwab, founded in 1973 and headquartered in San Francisco, has vaulted itself to become one of the biggest and most affordable brokerages in the United States. It offers among the lowest trade commissions in the discount brokerage industry and its own family of very low-fee mutual funds and exchange-traded funds (ETFs). You can open just about any type of investment account at Schwab.
While it doesn’t offer quite the range of investments or the power of TD Ameritrade’s platform, Schwab caters to the needs of the vast majority of long-term investors and active traders. Schwab is a jack-of-all-trades. And it does a very good job of keeping investing affordable. Schwab maintains 11.5 million accounts with over $3.25 trillion in client assets.
Tastyworks is a more boutique brokerage with a focus on active trading. But Tastyworks is adding new types of accounts and could reasonably act as your primary brokerage. Tastyworks is an offshoot of Chicago-based Tastytrade, a financial news network. Tastytrade is kind of like an online ESPN for the financial markets.
However, the bigger brokerages should take Tastyworks seriously. It offers serious pricing and serious trading tools and supports a wide range of account types. It’s definitely worth checking out.
How Are They the Same?
All three services offer many features. First, let’s take a look at how they’re similar.
None of the three platforms require a minimum investment to get started.
Investment Account Types
All three offer taxable individual and joint accounts and traditional and Roth IRA accounts.
All three services allow you to invest in stocks and options.
All three services emphasize investing with an Android or Apple mobile device.
How Are They Different?
Although the three brokerages are somewhat similar, they’re each different.
Charles Schwab and Tastyworks cost about the same: $5/stock trade. TD Ameritrade is a little more expensive at $6.95.
Both TD Ameritrade and Schwab offer commission fee-free ETFs; Tastyworks doesn’t.
TD Ameritrade offers the widest variety of investment accounts, including trusts, 529s and Coverdell college savings accounts, annuities, money markets and certificates of deposit (CDs). In addition to taxable accounts and IRAs, Charles Schwab offers checking accounts and savings accounts. Tastyworks is the most limited when it comes to account options.
TD Amertirade and Charles Schwab offer 24/7 phone and live chat support. You can reach Tastyworks during normal business hours.
TD Ameritrade can support virtually any investing and trading needs. Its standout features are its active trading tools and the ability to trade just about anything that exists. That includes stocks, options, ETFs, bonds, mutual funds, futures, forex and even cryptocurrencies. It has cash management and annuity products as well.
The acquisition of thinkorswim, TD Ameritrade’s premier active trading platform, launched this brokerage to the very top of the list for trading tools offered by major brokerages. If you are a professional or expert trader who wants a professional, traditional brokerage that caters to your needs, TD Ameritrade is probably the best choice.
TD Ameritrade offers excellent education resources to level up your trading game. If you want to learn more about active stock and options trading, TD Ameritrade is a good place to get your feet wet, learn a lot, and limit your risk as you get acclimated to an active investing style.
Charles Schwab is best for the “typical” investor. Schwab offers customers a very good active trading platform, StreetSmart, and supports most types of popular investments. Though it doesn’t have the kinds of tools Wall Street pros use every day, Schwab does a good job of covering both active and passive investment needs.
Schwab offers a handful of unique features including a no-fee robo advisor and its own family of mutual funds and ETFs that you can trade fee-free. Schwab’s index funds are some of the cheapest around, even beating Vanguard on expense ratios in many cases.
Tastyworks is run by a team that all used to work at thinkorswim, now owned by TD Ameritrade. This team knows how to cater to active traders, and that’s exactly what they do at Tastyworks. Its low pricing makes sales, or closing trades, free for stocks and options. Futures and “micro futures” do require a sell/close fee, but it is very competitive. It also caps commissions on larger trades, which can add up to big savings.
Its desktop, browser and mobile trading platforms all cater to active traders. When I first came across Tastyworks a while back, I didn’t see it as being a real competitor to major brokerages like Schwab and TD Ameritrade. But the current offering is very compelling, even to people who are not as interested in trading options.
None of the services in this comparison requires a minimum investment to get started.
Winner — Because none of the services require a minimum investment, all three are winners.
TD Ameritrade charges $6.95 per trade for stock trades. Options trades are $6.95 per trade plus 75 cents per contract. Mutual funds are free to trade.
Charles Schwab charges $4.95 per trade for stock trades. Options trades cost an additional 65 cents per contract. Schwab mutual funds can cost as much as $49.95 per trade.
Tastyworks stock trades cost a flat $5. To trade options, you’ll pay just $1 per contract. Also, there is no fee for closing out a trade.
Winner — Charles Schwab and Tastyworks are the cheapest when it comes to stock purchases, but Tastyworks comes out ahead because it charges no closing fee. And TD Ameritrade‘s free mutual funds are appealing too.
TD Ameritrade is well known for its trading platform and the huge varieties of securities you can trade.
Charles Schwab stands out for low pricing and broad support for most investment needs.
Tastyworks is making a name for itself with low pricing and custom-tailored offerings for active traders.
Winner — Tied. It all depends on what you’re looking for from a stock broker.
TD Ameritrade and Charles Schwab both shine in the customer service category with 24/7 phone and live chat support.
If you want to reach someone at Tastyworks, you’ll need to wait for normal business hours.
Who Are They Best For?
TD Ameritrade is best for professional and expert-level traders. Its award-winning trading platform may be too complicated for the newbie or casual investor.
Charles Schwab is best for the average investor who wants all of their accounts at the same brokerage. With an excellent selection of account and investment types, it can be your one-stop shop.
Tastyworks is best for active traders. If you don’t need any handholding and are looking for cheap trades, this is your pick.
Which Is the Best?
Based on a combination of pricing and services offered, Charles Schwab stands out as the best of these three brokerages. I actually like Schwab so much I use it myself and have since I started investing shortly after graduating from college in my early 20s. It has amassed the largest assets-under-management of the three for good reason: It works well for most people.
However, active traders and pros should seriously look at TD Ameritrade and Tastyworks. Based on pricing alone, Tastyworks has the edge. But TD Ameritrade is bigger and has been around for a lot longer, so it offers more, including more extensive support.
Each investor and trader has different needs and criteria. By understanding what you want most, you can pick the best brokerage for your unique needs. Any of these three brokers could be the perfect fit.