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Archives for February 2011

Scottrade Review: Discount Online Stock Brokerages

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I ‘ve been doing quite a bit of research lately into what options are available to me when it come to finding a good discount brokerage.

I’m finding that there are a lot of good companies out there, so making a decision on which one to use may be a bit difficult.

When it comes time to choose the right brokerage for me, I'll be considering quite a few things. Among them, the costs associated with having an account, how much the trades cost, user reviews and the tools they have available to users.  Today I want to look at one of the more popular discount online brokerages, Scottrade.

Scottrade Background

Some background on the founding of Scottrade, from Wikipedia:

In 1980, Rodger Riney, founder, moved from St. Louis to Scottsdale, Arizona where he and a partner incorporated Scottsdale Securities.

In 1981, Riney returned to St. Louis to open a second branch, but ultimately split apart from his partner in 1985 due to conflicting business models. Riney kept the company name, Scottsdale Securities, and lowered the price of commissions to attract more clients. Riney's approach was successful and by 1991 the Scottsdale Securities had a total of 15 branches throughout the US.

Scottrade.com was launched in 1996 (along with Scottrader.com to supply streaming online quotes to clients). Scottrade.com was successful and grew rapidly amidst the dot-com bubble of the 90s.

In 2000, Scottsdale Securities officially renamed to Scottrade due to the success of their online firm.

Scottrade saw substantial growth throughout the 2000s, expanding from 200 branch offices in 2004 to 500 by 2010.

Scottrade Awards

Scottrade has earned quite a few awards and has been recognized as one of the top online brokers, and apparently a great place to work. Among the awards:

  • In 2011, the firm was ranked No. 12 on Fortune's 14th annual “100 Best Companies to Work For” List
  • In 2008-2009, Scottrade was ranked No. 1 in investor satisfaction with online investing services for the eighth time since 2001, according to J. D. Power and Associates'
  • Scottrade was also selected by Computerworld magazine's 2008 16th best place to work in IT.
  • In April 2010, Scottrade was reviewed in CEOWORLD Magazine ranked 2nd Best Online Investments Stock Broker.

Scottrade Fees, Commissions And Minimums

Probably one of the most important things to consider when opening an online brokerage account is to consider what fees, commissions and minimums you’ll see when using an account.

Stock Trades

When it comes to trading stocks, Scottrade isn't the lowest cost in the industry, but they are certainly among the  most competitive with their $7 stock trades.  That rate is for stocks priced $1 and above, regardless of trade frequency, account balance or number of shares.  Phone trades are $17, while broker assisted trades are $27.

Options Trades

Scottrade's options pricing is at a similarly low $7 per trade, plus a $1.25 charge per contract

Fees And Minimums For An Account

There are no fees for an inactive account, annual account maintenance, account closing, IRA termination, or online statements.

There is a minimum account funding level of $2500 to open a cash account.

Investment Account Options

Scottrade offers a plethora of other investment account options for investors. Among them:

  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • SEP IRA
  • ESA
  • ETFs
  • Bonds
  • CDs

Scottrade Tools & Education

Want to learn more about investing, the markets and trading in general?  Scottrade has  live webinars and on-demand webcasts for members.  They also offer local branch seminars and regional user summits that not only go over investing in general but also specific aspects of using the Scottrade platform.

On the website itself they maintain a knowledge center, have tools for market research and real time quotes, in addition to having a variety of trading tools.  In other words, their website has pretty much everything you could need.

Scottrade Mobile Apps

Scottrade mobile apps

Scottrade also has a great set of mobile apps that you can use on a variety of platforms.  Download the apps for free:

What information can you get on the apps?

  • Advanced charts
  • Technical analysis
  • Market news and analyst ratings
  • Real-time streaming quotes and watch lists
  • Investor fundamentals and market earnings.

Customer Service

Scottrade has been rated highly for customer service, and unlike a lot of online brokers they have a network of almost 500 local branches. If you think you may want to sit down with someone face to face at some point, you may want to consider them as an option.

If you want to reach someone by phone, you can do that as well at (800) 619-SAVE.  Your calls will go into your local Scottrade office to be answered by someone there.

Conclusion

Scottrade is one  of the industry leaders when it comes to affordable online trading and investing.  They have $7 trades, low minimums and fees, and on top of it all they've got local branches and customer service should you ever need it.   In my opinion they should definitely be a contender if you're looking for a discount online broker.

So to review, some of the highlights of Scottrade:

  • Cheap stock trading rates, among the lowest of discount online brokers.
  • Few fees to worry about.
  • Local offices and customer service.
  • No fee IRAs and other investment options.
  • No transfer fees if you decide to go to another service.

Get more information or sign up for an account at Scottrade today

Have you used Scottrade? What has your experience been like? Are you happy with them? Tell us your thoughts in the comments.

What Are My Options If I Can’t Pay My Taxes? What Should I Do?

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Tax returns are due on April 18th this year because of a holiday weekend.  Although we'll have an extended time to file and pay this year, there are some out there who still aren't going to have enough money to pay good old Uncle Sam this year.  The reasons why people come up short can be numerous, but usually it's either not withholding  enough money from their paychecks, job losses or self employment income that was higher than expected.

The reasons for why you came up short in paying your taxes may not be the important part, but how you're going to pay.  What are you supposed to do if you can’t pay your taxes?

File Your Taxes And Pay As Much As You Can

The first thing people often think about doing is just not filing their taxes.   While it may feel good to stick your head in the sand, not filing is probably not a good idea because you'll have to file eventually anyway, and not filing  can lead to some hefty penalties for failure to file.

Another reason why you should still file even if you can't pay is that if you don't file, the IRS will prepare a return for you.   Since the IRS really doesn't have your best interests at heart, they aren't going to claim all your deductions and credits for you.   Because of that you'll end up owing a higher tax bill – and increased penalties and fees for failure to file!   So not filing at all can increase your tax bill by 20% or even more!

So if you owe money but can't pay it all, your best bet is to still file, and pay as much as you possibly can in order to reduce any penalties or interest you might have to pay.

One thing to note – even if you file for an extension to file your taxes, you’ll still need to estimate and pay your taxes on April 18th.  An extension doesn't allow you to extend the time to pay as well unfortunately.

Other Options If You Can’t Pay Taxes Right Away

If the April 18th deadline is quickly approaching and you don't have enough capital to pay your bill, there are some options open to you:

  • Extension of time to pay: An extension from 30 to 120 days may be granted by the IRS. The penalties and interest you would receive through an extension are usually going to be lower than if you ask for an installment plan.  Form 1127
  • IRS Installment agreement: Ask the IRS for a payment plan or installment agreement that will allow you to pay your taxes in monthly payments. If you owe $25,000 or less in combined tax, penalties and interest, you can complete the Online Payment Agreement (OPA) on the IRS Web site.  If you owe more than $25,000, you may still qualify for an installment agreement, but you’ll be required to complete a Collection Information Statement (CIS) so the IRS can determine the amount you can pay based on your monthly expenses. Form 9465
  • Get A Loan Or Use Emergency Fund: Instead of doing an installment plan or asking for an extension, you might want to consider taking out a loan (from a place like Lending Club) or using your emergency fund if you have one in order to pay your taxes.   While you'll have to pay interest on any loans you take out, or any credit cards you use, the interest and penalties may end up being lower than the interest and penalties imposed by the IRS.   While I would hardly ever consider taking out new debt, one time I might consider doing it is to pay off the IRS.
  • Offer in compromise: An offer in compromise is an agreement between you and the IRS to settle your tax debt for less than you owe. In most cases an offer in compromise is only going to be accepted by the IRS if it thinks that it’s doubtful you’ll be able to pay the debt through other methods,  there is question about the tax assessed being correct, or if you have special circumstances or  extreme hardship.

Your tax bill isn't just going to go away, and the IRS never forgets.  You don't want to be on their bad side because they will take you for everything you own.   They'll file a Notice of Federal Tax Lien that can ruin your credit.  They can also seize assets and take funds from bank accounts and paychecks to satisfy the tax debt – without asking.  You don’t want to mess around with the IRS, so do your best to take care of your obligations, before they force you to.

Make Sure It Doesn't Happen Next Year. Plan Ahead

Finding out that you owe money at the end of the year is never a pleasant thing, but it is avoidable in most cases.  To make sure it doesn’t  happen again next year, remember to check these things:

  • Check your W-4 form and make sure that you  have picked enough exemptions.  Your employer won't always update your forms if changes happen in your life, so your withholding may not be correct.  Make sure that it is, and adjust your withholding if necessary.
  • If you make self employment income make sure your estimated tax payments are being sent in throughout the year – so enough taxes are paid before tax time.
  • Re-check the amount being withheld from your paychecks once or twice throughout the year and make sure that you aren't on track to owing a big chunk of money again next year.

Are you currently in a situation where you're coming up short to pay a tax bill? Are you going to file anyway, and try to figure out a way to pay?