Etrade, Scottrade, Firstrade, or Sharebuilder???

Hey guys, this is my first time and I was hoping that you could give me some advice on choosing an online broker. But first off, I'll give you the breakdown:

--> I am a novice, with no more than $5000 to invest.
--> I'm a college undergrad, looking to get my feet wet by trying out some casual online trading on my own.
--> I am very cheap, and have very little beer money to waste - thus, I would prefer to pay super low commissions. I also despise hidden costs/maintenance fees.

So, with the criteria mentioned above - What online broker do you guys recommend for a 1st-time trader like me?
Any thoughts on Scottrade, Firstrade, TD Ameritrade, or Sharebuilder? Or Etrade? Thanks!

I recommend TD Ameritrade. I also recommend that you put $4,000 of the $5k into a 2006 no-fee Roth IRA through them. $17.99 (I think, it might be lower not with the switch) for a mutual fund trade or $9.99 for an ETF/stock trade.

This way, you will get all of your gains tax-free, but also have an emergency fund (you can take your original money back out penalty-free). You might want to keep the other $1k in a high-yield savings account, and then put it toward your 2007 ROTH IRA.

These are the best investments for you at the moment.

Dingobiscuit hit my recommendations exactly.

One thing I'll add that I'm pretty sure Dingo would agree with as well: You mentioned trying out some casual online trading on my own

I'd recommend that you do some reading about investing for the long haul, and then decide what should be your strategies for investing. The point I'm making is that you mentioned "online trading". "Trading" should not be the activity you're engaging in; investing is what you want to be up to. Check out my reading list at www.bfponline.com/readinglist.htm for some ideas on good books to get you started.

Thanks for the advice guys. Just one question - is there any specific reason why you would recommend TD Ameritrade over all the other competitors? Better than Etrade, or Scottrade?

I've got one more question, that you'll have to excuse me for because it's quite dumb - but what exactly is a ROTH IRA? Is that the optimal investment strategy that you'd recommend, Jim?

I'm looking to join the investment club at Cornell this semester...hopefully I won't sound like such a novice by then..

Yes, a Roth IRA is a very flexible option for you, and it will provide you with tax-free income at your retirement.

One last thing though - you must have income for the year, expressed as Modified Adjusted Gross Income (MAGI) for tax purposes, of at least the amount that you intend to contribute to the Roth IRA. If you don't have income, you can't contribute, or if your MAGI is less than $4,000, then you're limited to the amount of your MAGI in contributions.

Best wishes -

Defintely check out Firstrade. I used to be with ShareBuilder and had found that their fees were way to high.

Firstrade on the other hand has very comparable rates to other leader brokers like TD Ameritrade. The thing I liked about Firstrade was that they had free mutual fund investing. Plus, their stock trading rates are good as well.

I do keep my IRA with Ameritrade though. I would do more research and pick between Firstrade and Ameritrade IMO.

Take care.

The Roth IRA is arguably the best investment tool out there for those who qualify (some people say the 401(k) with employer match is better, but that depends on your company's program).

Hey i have my account with Scottrade and the no fees plus the $7 trades is what got me to got with them. If any of you decide to go with Scottrade let me know can i can send you a referrel email that will let you open your scottrade account with 3 free trades.