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Best Stock Brokers for Mutual Funds 2022
Mutual funds are great investment products for people who don’t feel like researching and buying individual stocks. They can offer the security of a well-diversified portfolio. But you won’t have to pay the high fees of a professional portfolio manager.
You can easily buy mutual funds from most online stockbrokers. It’s a very competitive industry right now. This means you can benefit from reduced minimums and reduced fees.
The best brokers for mutual funds
To make finding a brokerage even more convenient, we’ve compiled this list of the best mutual fund brokers. All of the companies on this list offer low-cost mutual funds, in addition to other services for your portfolio.
1. Invest Ally
Ally Invest is the brokerage arm of Ally Financial, one of the leading financial companies in the United States. The Ally family also includes Ally Bank, one of our top-ranked online banks. This makes Ally a great one-stop-shop for your financial needs.
Ally Invest offers extremely low commissions on mutual funds. You can buy and sell funds free of charge for just $9.95 per trade. Ally currently offers over 12,000 mutual funds.
In addition, Ally Invest recently eliminated commissions on stocks, exchange-traded funds (ETFs), and options transactions. So if you decide to invest beyond mutual funds, this is a great option.
E*TRADE was one of the first online discount brokers to make a splash in the industry. (Remember those old commercials about puking babies?)
The broker currently offers over 4,400 mutual funds with no fees or transaction fees. For funds that require transaction fees, it’s only $19.99.
Like Ally Invest, E*TRADE recently eliminated commissions on stock, options and ETF transactions. This makes E*TRADE an excellent choice if you need a stockbroker.
3. TD Ameritrade
We at Investor Junkie have rated TD Ameritrade as one of our favorite stockbrokers. It offers comprehensive trading tools and platforms that can help you maximize your investing experience. Additionally, stock and ETF trades are now commission-free.
The fact that TD Ameritrade offering hundreds of commission-free mutual funds is just the icing on the cake. Keep in mind that there are no-load funds that require a commission of $49.99.
4. Charles Schwab
Charles Schwab is a juggernaut among brokers. Simply put, it is the largest stockbroker in the country.
Through the Schwab Mutual Fund OneSource service, the brokerage offers a wide selection of mutual funds with no fees or transaction fees. The minimum for these funds is $100.
All other funds are up to $49.95 per purchase.
Schwab also provides helpful tools and research that can help you choose mutual funds that are right for your portfolio. Additionally, it also eliminated transaction fees for most stock, option, and ETF purchases.
Fidelity is one of the oldest investment dealers and is considered a global leader in mutual funds. The Fidelity FundsNetwork offers more than 10,000 funds from Fidelity and other companies.
Fidelity also provides the Mutual Fund Evaluator, a tool that allows you to filter and sort the broker’s fund library.
The broker offers four zero-fee ratio index mutual funds, but there are hundreds that have no transaction fees. Fidelity does not require any minimum to invest. Non-Fidelity funds have a transaction fee of $49.95 per purchase.
Fidelity is now also a free brokerage for stocks, options and ETFs.
A true pioneer in this field, Vanguard branded mutual funds are famous in the investment community. In fact, they are often considered the gold standard.
There are currently over 140 mutual funds bearing the Vanguard name. Besides the oldest index mutual fund in the world – the Vanguard 500 – there are funds that cover bonds, stocks, emerging markets and more. All of these are free from transaction fees.
Additionally, the company offers over 3,000 non-Vanguard mutual funds with no transaction fees as long as you trade online. Another 6,000 funds charge a modest fee of $20 per trade.
Note that Vanguard funds have a minimum: $3,000 for non-retirement accounts and $1,000 for IRAs. And keep in mind that Vanguard still charges commissions on stock, ETF, and options trades.
Mutual fund fees explained
When browsing through a broker’s list of mutual funds, you may find confusing information about several types of fees.
Fees vary from fund to fund – it all depends on the broker. That’s why it’s important to always read the fine print and shop around.
However, note that most funds will pay operating fund expenses from each fund’s assets, instead of you having to foot the bill. Learn more about mutual funds here.
Here are typical shareholder fees
- Sales charges: These are the commissions you pay to the broker who sells you the mutual fund. There are two types of sales charges:
- Front end: You pay them when you buy the units of the fund.
- Back End: You pay them when you sell your fund units.
- Redemption fees: As the name suggests, these fees are assessed when you sell your fund units.
- Exchange fee : If you switch your shares to another fund, you may be charged these fees.
- Account fees: Plain and simple, these are maintenance fees. They vary by broker.
- Purchase costs: These fees are similar to sales load commissions, but are paid to the fund, not the broker.
Here are the fund’s typical annual operating expenses
- Management fees: These are taken from the fund’s assets for the fund’s investment adviser. They cover the management of the fund’s portfolio.
- Broadcast costs (12b-1): These are applied to costs for marketing, advertising, printing, etc. of a fund. Fortunately, FINRA imposes a 0.75% cap on these fees.
- Other expenses: This category includes all other costs you may have to pay, including custodial costs, legal and accounting costs, administration costs, etc.
Pay close attention to the fees your stockbroker charges you – a high-yielding fund with high fees might earn you less money in retirement in the long run than a fund with lower returns but lower fees . Learn more about how to invest in mutual funds here.