Fidelity Investments vs. TD Ameritrade- Which One is Better?

Fidelity Investments vs. TD Ameritrade

Table of Contents

Fidelity Investments and TD Ameritrade are well-known online discount brokerages, and both consistently rank high in top broker rankings.

In fact, in the 2021 evaluation of major online brokers, Fidelity and TD Ameritrade both received the highest overall scores. Fidelity is a good pick because of its customer service, research, and no-fee fund choices. Still, TD Ameritrade stands out because of its trading platform, its vast assortment of tradable assets, and client service.

Fidelity Investments, created in 1943, is known for its mutual fund industry. It’s now a market behemoth with a rock-solid trading platform, top-notch research and asset screeners, and lightning-fast trade executions. TDA is another good player in the business. It was founded in 1975 and provided top-of-the-line instructional content, live events, and strong trading platforms.

While Fidelity and TDA have many similarities, we’ll go over some of the important distinctions to help you decide which is best for your investment and trading needs.

Trading and Usability: Fidelity Investments vs. TD Ameritrade-

Overall, we found Fidelity to be quite user-friendly. The web version, the downloaded Active Trader Pro, and the Fidelity Mobile App are the three platforms available. It’s simple to open an account, especially if you already have another Fidelity account (e.g., an IRA). To trade margin and options, you’ll need to fill out additional documentation, just like many other brokers.

Overall, Fidelity.com is simple to use once you’ve discovered the various sub-menus. If you’re having difficulties locating what you’re searching for, most pages feature a search box at the top.

There are four platforms supported by TD Ameritrade: a web version, an enhanced platform for active traders, and two mobile apps, TD Ameritrade Mobile Trader. It’s simple to get started, and you may do it either online or through the mobile app. TD Ameritrade, like most brokers, offers a variety of account kinds, making it difficult to choose the ideal one.

However, you can use the “Most Common” accounts list to narrow it down, or you can use the “Find an Account” tool. TDA’s website is clean, well-organized, and simple to use, with many instructional resources such as articles, videos, webinars, and a glossary.

Both brokers have worked hard to create well-designed and functioning mobile apps. Except for bonds, you can trade the same asset classes on Fidelity’s mobile platforms that you do on its desktop platforms. Likewise, all of TD Ameritrade’s platforms support the same asset classes. By default, both brokers’ quotes are delayed, but it’s simple to enable real-time quotes, so you don’t miss any market changes.

Cost and Investments: Fidelity Investments vs. TD Ameritrade-

Fidelity and TD Ameritrade are neck and neck in many cost-related areas. For example, stock and ETF trades are free of charge, whereas options trades are $0.65 per contract, the industry-standard today.

Both brokers charge no transaction fees on thousands of mutual funds. While TD Ameritrade has a more extensive assortment of these funds, Fidelity’s is large enough to find what you’re looking for. It’s like going to a buffet: the more options you have, the more likely you will use them.

Both brokers cater to the frugal by offering low account fees. However, you won’t notice any significant variations until it’s time to end your account when TD Ameritrade costs $75 for a transfer out and Fidelity doesn’t. As a result, Fidelity has a minor advantage in this area.

Trading Experiences: Fidelity Investments vs. TD Ameritrade-

Desktop Trading

The Fidelity web platform is really simple to use. You can specify a few defaults, such as whether to use a market or limit order, but you decide most of your decisions when placing a transaction. Active Trader Pro is more powerful and customized. Filters, charting tools, configurable alarms, and several order input tools are all available. Standard, time-delayed, and conditional staging are the three methods for staging orders for later entry.

Using TDA’s web platform, you can change the order type, amount, size, and tax-lot technique. In addition, of course, the trading platform is more robust and easier to navigate, and you can use different platforms to construct bespoke analysis tools. Trade orders, stage orders, submit multiple orders, and trade directly from charts are all simple to do.

Mobile Trading

The mobile app from Fidelity is simple to use. You can place trades, modify your orders, and check pending transactions. However, the app’s research and charting capabilities are severely limited. Overall, it appears that the program is geared toward investors rather than traders. Watchlists on mobile devices are synced with desktop and web applications. The order types you can use online or desktop are also available on the app, except conditional orders.

TD Ameritrade offers two mobile apps: TD Ameritrade Mobile for beginners and think or swim Mobile for active traders. Both are powerful and have various features, such as graphing and watchlists. Streaming real-time data is included, and you can trade the same asset classes on mobile as on the other platforms.

Tradable Securities and Offerings: Fidelity Investments vs. TD Ameritrade-

The types of assets that Fidelity and TD Ameritrade allow you to invest in are different, and the latter is the apparent winner in terms of sheer numbers.

While Fidelity focuses on the basics such as stocks, ETFs, bonds, mutual funds, and options, TD Ameritrade adds Forex, futures, and cryptocurrency trading to the mix. Those extra options may appeal to traders interested in venturing into more arcane market areas.

On the other hand, Fidelity’s pick will appeal to nearly all investors seeking attractive returns.

Types of Orders: Fidelity Investments vs. TD Ameritrade-

The usual order types (e.g., market, limit, stop limit) are supported by Fidelity and TDA, as well as conditional orders such as one-cancels-the-other (OCO) and one-triggers-the-other (OTO). On the other hand, TD Ameritrade has a tiny edge because it permits conditional orders on mobile, which Fidelity does not. In addition, both brokers allow you to put orders on hold for a later date.

Account Minimum Amount

There is nothing better than having no account minimum, and both TD Ameritrade and Fidelity let new investors start with nothing, making them top choices for novice investors.

Technology of Trading: Fidelity Investments vs. TD Ameritrade-

Fidelity’s smart order routing technology searches for the best price and can connect to various market venues, including dark pools, exchanges, and market makers. The company reported a net price increase of $2.64 per 100-share equity trade, significantly more than the $0.48 industry average. Fidelity’s average execution time is 0.04 seconds, and it does not charge for order flow for stocks or ETFs (but it does charge $0.2514 per options contract).

TD Ameritrade’s order routing system prioritizes speed and cost reduction. According to third-party data, execution times were 0.05 seconds, and the average net price improvement was $1.75 per 100 shares. In addition, TDA is compensated for order flow by receiving $0.0012 per equity share and $0.55 for every options contract.

TDA is the only platform that allows both backtesting and automated trading, both of which are appealing to active traders. Despite this, Fidelity has a modest advantage due to higher price improvement and execution times and the fact that it does not charge for order flow on equities trades.

Types of Accounts: Fidelity Investments vs. TD Ameritrade-

Fidelity and TD Ameritrade both provide a diverse range of account options, allowing you to expand your relationship with the broker as your needs evolve.

Individual and joint taxable accounts, both IRA, regular IRA, and rollovers), small company retirement accounts (SEP-IRA, SIMPLE IRA, and solo 401(k)), and 529 accounts are all available through both. In addition, each company provides managed portfolios as well as trust accounts. Fidelity also offers HSA accounts, which some people use to save for retirement.

Both brokers offer a wide range of account kinds, so it’ll be challenging to go wrong.

Amenities for Accounts and Research

In terms of research facilities, Fidelity and TDA are comparable. Both offer stock, ETF, mutual fund, fixed-income, and options screeners to aid in the search for trading and investment opportunities. Both brokers include the same tools, calculators, idea generators, news, and professional research that you’d expect from a large brokerage.

Overall, both brokers offer similar services, but TDA has the upper hand because of its advanced charting, backtesting, and trade automation tools. If you prioritize these qualities, TDA may be the best choice.

Education and Knowledge: Fidelity Investments vs. TD Ameritrade-

Articles, videos, webinars, and infographics on numerous investing subjects can be found in Fidelity’s online Learning Center. On the app, there are frequent webinars and online coaching sessions for advanced topics and learning programs for new investors.

TDA establishes a high standard for trading and investing education. Aside from an extensive library, the broker hosts around 100 webinars per month and in-person workshops and branch seminars. 

Artificial intelligence is used on the website to propose content and provide a tailored experience for customers. Overall, TDA has more instructional resources geared for a wider range of investor types and experience levels, making it a better broker for educational content.

Customer Support and Services

TD Ameritrade and Fidelity provide client service through three main channels: phone, chat or messaging, and in-branch. Both provide phone help 24 hours a day, seven days a week, while chat support is provided through a third party such as Facebook or Twitter. Both brokers also provide a similar number of locations where you can get in-person help if you need it.

Fidelity and TDA offer various customer service options, including live chat, a 24/7 phone line, and access to live brokers and physical branch offices for in-person assistance. In addition, either broker will provide you with dependable client service.

Trading Security

The security of Fidelity and TDA is up to industry standards. Both brokers protect against account losses due to illegal or fraudulent activity, and you can log into the applications using biometric (facial or fingerprint) authentication.

Fidelity has excess Securities Investor Protection Corporation (SIPC) insurance on cash awaiting investment with a per-customer limit of $1.9 million. There is no dollar limit on securities coverage per customer. However, the overall aggregate excess insurance is $1 billion. TDA’s excess SIPC insurance offers each client $149.5 million in securities protection and $2 million in cash protection, with a total limit of $500 million.

The Identity Theft Research Center found no severe data breaches for both brokerages through 2021. So, in general, investors may trust the security standards of both of these brokers.

Other Factors to Consider

Naturally, these brokers aren’t equivalent in every way. However, each has advantages that the other does not. For example, because TD Ameritrade primarily caters to expert traders, it provides simulated trading through a program called paperMoney.

You’ll start with $100,000 in virtual money and a margin account, and you’ll be able to polish your abilities or test your luck using the broker’s powerful trading tools, which is one of its best features.

Fans of mutual funds will like Fidelity’s ZERO collection of funds with no cost ratio. It’s the first brokerage to provide no-fee mutual funds. However, you don’t have to be a customer to purchase them. Our list of finest index funds includes a Fidelity ZERO fund.

Conclusion

Fidelity and TD Ameritrade are excellent brokers in practically every regard, with similar features and a focus on investors. So, what distinguishes one from the other is what you require in a broker. Fidelity, for example, is a better pick if you need fractional purchases, whereas TD Ameritrade is a better fit if you need a simulator and a powerful trading platform. However, there are some significant advantages to creating numerous brokerage accounts.

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FAQs

1. Which one is better for beginners among Fidelity or TD Ameritrade?

For new investors, TD Ameritrade is a better option than Fidelity. Investors can use TD Ameritrade’s Paper Trading, Videos, and Education services related to stocks, options, and mutual funds

2. How much pricing is the differentiation between Fidelity and TD Ameritrade?

For trading stocks (equities), Fidelity and TD Ameritrade charge the same $0 per trade cost. Fidelity and TD Ameritrade both have a $0 basic charge with options.

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