Charles Schwab Review (Investment Account) [2024] (2024)

Charles Schwab investments review: brokerage firm fees and commissions, pros and cons, minimum requirements for opening a new stock trading account or an IRA.

Charles Schwab Rating:

• Stocks & ETFs: $0
• Options: $0.65 per contract
• Mutual Funds: $49.95 to buy, $0 to sell
• Minimum to open: $0
• Website: Satisfaction guarantee and $0-fee trades at Charles Schwab.

Overview of Charles Schwab

Charles Schwab is much more than just a brokerage firm. This financial powerhouse delivers a holistic method of money management that rivals anything else out there.

Available Accounts and Products

Investors have two basic paths to take at Schwab: brokerage or advisory. The former setup offers self-directed trading, while the latter comes with investment advisors who make trading decisions on behalf of customers.

Schwab’s investment-advisory service is available in two formats: robo and full service. The automated program uses ETFs to construct portfolios. The latter comes with more investment products, although account minimums and fees go up.

The largest list of asset classes will be obtained with a self-managed account. Here, Schwab offers:

• Bonds and other fixed-income securities
• Stocks
• Futures
• Options
• Mutual funds
• ETFs
• Closed-end funds

The stock category includes foreign stocks and OTC (over-the-counter) instruments, although at higher cost. Schwab does not offer direct trading in cryptocurrencies.

A variety of tax structures is available to both advisory and brokerage customers at Schwab. These include:

• Coverdell
• 401k
• Charitable
• 529
• Custodial
• Individual retirement
• Large and small business accounts
• Annuities

Securities, but not futures, held in any account type at Schwab are protected by SIPC, America’s major defender of investment accounts. Schwab has excess insurance that delivers $150 million of protection per customer.

Customer Support

A good place to begin to find helpful customer service from Schwab is at one of its 300+ branch locations. These are scattered throughout most U.S. states and Puerto Rico. Besides the expected large cities, there are some moderately-sized towns that have these. Radnor, Pennsylvania and Carmel, Indiana are a couple of examples.

Investors who can’t make it to one of the physical locations can reach an associate over the phone anytime of the day or night. There are several phone numbers for all sorts of departments. Schwab has numbers for Chinese speakers and customers outside the United States.

Then there is the website, which offers online chat and a messaging widget that also has a document upload tool. Schwab’s mobile app has the same online chat widget, which starts in robo format but can switch to human chat if necessary.

Many self-help features, including videos that show how to perform various tasks, can be found under the ‘How To’ tab that appears at the top of the site. Underneath the customer service icon (represented by the headset icon), there are links to many forms and documents in pdf format.

Charles Schwab Bank

Investing is only part of the package at Schwab. The company has its own bank, aptly named Charles Schwab Bank, that delivers a wide range of cash-management resources. These include checking and savings accounts, a Pledged Asset Line, mortgage loans (through a partnership with Rocket Mortgage®), credit cards, and a host of perks with these services. We especially like:

- Free debit card with either a savings or checking account
- Unlimited refunds of ATM fees incurred at cash machines around the world
- Free checks with a checking account
- Zelle transfers
- No forex fees when using the checking account’s debit card
- Preapproval for mortgages
- Travel benefits through Schwab’s American Express cards

Margin Service

Another service Charles Schwab Bank provides is leverage for brokerage accounts. Margin rates are competitive but not great.

Schwab’s website and mobile app display the maintenance requirement for each asset. For stocks, this will usually be 30%, although some stocks will have a higher requirement than this. The initial margin requirement is 50% on long positions. Stocks priced below $3 are not marginable.

Charles Schwab Brokerage Commissions

Open Charles Schwab Account

Satisfaction guarantee and $0-fee trades at Charles Schwab.

Other Fees

Besides margin loans, Schwab does charge for a few services. These include $25 for a representative-assisted trade and $50 for a full outgoing transfer. Commissions are generally quite low, with $0 charged on online trades of U.S.-listed stocks and ETFs. OTC stocks are $6.95. Foreign stocks traded directly on local exchanges cost 0.75% of principal. Options are $0.65 each, and futures cost $2.25 per contract.

Self-directed accounts have no minimums of any kind. Managed accounts do have minimums, and these vary from $5k to $1m. Management fees vary as well. The robo service costs nothing, while the traditional programs are generally below 1.0%.

Mobile App

To manage accounts, conduct asset research, and place trades, Schwab clients can use two apps. The main app has most of the account-management and market-news resources. CNBC streams free of charge on this app, and there are news articles from multiple sources. Schwab’s chat bot appears on this app, too.

Stock profiles on this mobile app have option chains (for calls and puts only) and horizontal charting with several useful tools. The order ticket has 5 trade types, 2 duration choices, and a toggle switch for dividend preferences. The ticket can be used to place orders for mutual funds.

The second app is called thinkorswim. This platform is designed for futures trading, although it can trade stocks, closed-end funds, ETFs, and option contracts. Chains this time have integrated spreads. These include butterflies, iron condors, and strangles.

Although many resources are missing on this second app, it does have some good research tools for options. These include Idea Hub and The DragonSM, both of which are scanning tools to find potential trades.

Website Tech

For a somewhat better viewing experience, there is the website, which in most cases will come with a much bigger screen. Charts can be blown up the full width and height of the computer monitor using thinkorswim. This is the site’s browser platform. There are many graphing tools here, including a quick-entry trade ticket, lots of drawing gadgets, and several plot styles.

Off of a chart, Central delivers a more thorough trade ticket that has some advanced orders. These include:

- Market on close
- Stop limit
- OTO (one triggers the other)
- Contingent on volume

The website itself has its own trade ticket, although there are no advanced order types (other than limit and trailing stop). There is also a trade bar that sits at the bottom of the site. This can be used for a variety of purposes, although there is no actual trade ticket here.

Bonus Services

Fully-paid Securities Lending Program: Schwab permits clients with at least $100k in household assets to earn additional income by loaning out their shares.

DRIP Service: It’s possible to enroll individual securities or an entire account in automatic dividend reinvesting. Settings can be changed at any time on the positions page on the website.

Periodic Mutual Fund Investing: It’s possible to invest in a variety of mutual funds at Schwab on a recurring basis.

IPO Access: Schwab offers access to upcoming equity releases. The relevant section can be found under the Trade tab on the website.

Fractional-share Trading: Available in the 500 stocks that make up the S&P 500 Index (and in all mutual funds, of course).

Individual Retirement Accounts: No-fee IRAs are available at Schwab. The investment firm has many kinds, including plans for small businesses.

Extended Hours: Futures trade around the clock, 6 days a week. Securities traders at Schwab can start at 7:00 am, New York time. After-hours trading shuts down at 8:00 pm.

Our Recommendations

Active Stock Trading: Schwab would be a good choice for the frequent trading of equities, although Edge does not have the ability to trade S&P stocks in fractions.

Beginning Investors: An advisory account with Schwab, preferably one with a human advisor (the robo program offers a hybrid plan).

Mutual Funds: Thousands of mutual funds will be found at Schwab, and the brokerage firm delivers many useful tools on its website.

Long-Term Investors & Retirement Savers: Schwab is highly recommended here due to a large assortment of financial products, including annuities, wealth management, and planning calculators.

Small Accounts: Schwab’s robo service, Intelligent Portfolios®, has a $5k minimum, so we can’t defend it for small investors. Self-directed traders, though, have no account minimums, and with very few fees of any kind, they can’t go wrong with Schwab.

Free Charles Schwab Account

Satisfaction guarantee and $0-fee trades at Charles Schwab.

Charles Schwab Review Summary

It’s hard to find fault with Schwab in any area. Beginners and seasoned traders alike will find much to like about this financial heavyweight.