Recently, pricing wars between some of the largest US brokerages has driven commissions for trading stocks down to virtually $0. Robinhood started this new trend of commission free stock trading a few years ago, and now countless brokerages are following suit.
Investors are benefiting significantly from this competition in the form of decreased prices and lucrative signup incentives. As companies compete for investor dollars, we are able to take advantage of the platforms with the best offerings.
Charles Schwab is one of the longest standing and most trusted brokerages out there, now offering commission free trading.
Webull is a newcomer on the block, with a sleek app aimed at millennial investors.
In this article, we compare two commission-free brokerages; Webull vs Charles Schwab.
Webull Review 2020: Best Free Investing App?
Charles Schwab Review 2020: Best Brokerage?
||Invest With Charles Schwab|
Webull aims to merge the leading investing research tools and data with an easy to use trading platform. They have done a great job at this, and have overall created a very user-friendly platform. Many Robinhood investors comment on the fact that the platform itself is very limited in terms of research tools and data.
In fact, we often refer to Webull as a more sophisticated or advanced version of the popular commission-free trading app known as Robinhood.
The app is optimized for active traders, however, many long-term investors will also find their needs met on the platform.
Webull is known for its simple design and beginner-friendly features. The beginner-friendly design does not take away from the research and data objective of the platform. All of the data that most traders will need is available at your fingertips.
Despite everything that is packed into this app, it is still easy to use and navigate. Younger investors will likely prefer the interface of Webull to that of Charles Schwab.
One of our favorite Webull features is the ability to paper trade. Paper trading is essentially trading with "fake money" to test out your trading strategies without putting real money on the line.
Webull gives all users $1,000,000 of fake money to paper trade with. This can be an effective way to get a feel for how the platform works as well as hone your trading skills without any risk.
After signing up for a Webull brokerage account and fund with $100 on your initial deposit, you get a free stock valued between $2.50-$250.
They also have a free trading simulator that allows you to take the platform for a test drive before using real money. We find this sign up incentive to be very generous, and this is not something that Schwab offers.
On Webull, you can trade the following assets:
Are you interested in achieving financial freedom down the road and saving for retirement? Webull offers both Roth IRAs and Traditional IRAs to its clients that are 100% free. These retirement accounts also have a $0 minimum to get started.
By taking advantage of retirement accounts, investors can save on taxes and potentially pay no taxes on their investment gains.
When a company goes public and sells their shares to the public for the first time, they'll typically do so through an IPO. In the past, only institutional investors and the ultra-wealthy could participate in IPO investing.
On Webull, investors will now have the ability to participate in IPOs and get in on investments in brand-new companies as soon as they are listed.
However, it's important to note that IPOs tend to be quite volatile, especially in the first few days of trading.
Webull supports both pre-market and after-hours trading. On some other platforms, normal market hours (9:30 AM - 4:00 PM EST) are only supported.
This feature that Webull offers its clients allows them to take advantage of the 4:00 AM - 9:30 AM (EST) pre-market session and also the 4:00 PM - 8:00 PM (EST) after-hours session.
In the “Market” section of Webull’, clients will find real-time quotes of the major indices and also interesting facts such as the biggest winners and losers of the stock market. They also offer global market data, however, some market data is only available with a paid subscription. US market data is 100% free.
Access to data and research is one of the features Webull is most well-known for. Initially, Webull was just a research platform. It wasn't until later that the ability to trade was added to the platform.
One of the key areas where Robinhood and other free trading apps fall short is the technical data. On Webull, you will find advanced tools like candlestick charts as well as over 20 different technical indicators. This is useful for traders who make decisions based on technical stock analysis. They also have research tools for fundamental analysis as well.
To access the full suite of technical tools, traders should consider using the desktop version of Webull. While the app provides significant functionality, serious traders will want to take advantage of all of the tools Webull has to offer.
Webull is insured by the Securities Investor Protection Corporation (SIPC).
As a member of SIPC, investors are insured up to $500,000 in securities and up to $250,000 in cash. This is insurance for lost, misplaced, or misused securities, and not insurance against a capital loss in the securities themselves.
Webull places all trades through Apex Clearing which has an additional insurance policy in place.
According to their site, "Our clearing firm Apex Clearing Corp has purchased an additional insurance policy. The coverage limits provide protection for securities and cash up to an aggregate of $150 million, subject to maximum limits of $37.5 million for any one customer’s securities and $900,000 for any one customer’s cash. Similar to SIPC protection, this additional insurance does not protect against a loss in the market value of securities."
Webull’s dynamic help center offers many educational resources for its clients to utilize to learn more about the trades that they are making and services that Webull offers.
Simply navigate to the “Help” header on the webull.com website and you will find these high-quality educational resources.
Webull offers phone, email and live chat support. Most questions can be answered by visiting the help center of the app, but if you can't find your answer you can reach out to them directly for support.
Compared to other free investing apps, Webull's customer service definitely comes in a lot higher than many others.
Webull can be downloaded from the Google Play Store, App Store, Browser View Web App or applications can be downloaded directly for Windows and Mac users.
Many Webull users find the Desktop 4.0 platform is better for conducting technical research. This platform rolled out in mid-2020 and provides investors with an advanced interface for planning and executing trades.
Of all of the free desktop platforms we have seen for active traders, this one comes out ahead.
A very attractive part of Webull is its $0 commissions on stocks, options, and ETFs.
Webull does make money, but not through charging commissions to customers.
There is no minimum deposit required to open up a Webull brokerage account. This is especially important for the investor who is not ready to go in big on their investments and to begin learning small without a minimum requirement.
However, if you want to get your free stock, you do have to make an initial deposit of $100 or more.
There are zero fees on ACH deposit and withdrawals from US Bank Accounts. However, Webull charges fees that range from $8 to $45 on various non-US Bank Account deposits and withdrawals. These fees are charged by Apex, their clearing house.
Webull also charges for wire transfer deposits and withdrawals. They collect $8 per deposit and $25 per withdrawal. Again, this is charged by Apex.
Down the road, if you are looking to transfer your securities from Webull to another brokerage, they do charge a standard $75 transfer fee.
Webull provides up to 4x day-trade buying power and also 2x overnight buying power with margin accounts.
To qualify for margin, clients must have a minimum of $2,000 to apply.
It's important to keep in mind that while leverage can magnify gains, it can also magnify your losses. Investors should thoroughly research advanced strategies and trading on margin before putting their cash on the line.
Margin Rates on debit balance vary between 6.99% and 3.99%. This rate varies depending on the amount of margin taken out by the investor.
The more margin that a client takes on, the lesser rate they will pay on that debt.
This brings us to our final fee basis for Webull, short selling.
Webull’s short-selling fees, which are relatively small, are something to note for the investor who is more interested in shorting stocks.
Shorting is the act of borrowing shares at a high price hoping that the stock will decrease in value and then selling back to the market at a lower price.
While this is a more complicated process than described, the essential takeaway is that when an investor shorts a stock, they are betting on the price decreasing in value. Margin fees apply when short selling, since you are borrowing the securities.
Since 1973, Charles Schwab has been committed to putting its clients first. Through both the good and bad times, Charles Schwab has a track record of being persistent in its ability to provide award-winning service and expertise to its clients.
Achieving its clients' goals is Charles Schwab’s number one priority and it has remained committed to do that since it was created back in 1973.
With over $3.5 trillion in assets under management, Schwab has built an established base of investors on their platform. This land them squarely as the third largest asset manager in the world. How's that for social proof?
As a result of their size, it can be harder for larger firms like Schwab to adapt quickly to changes in the industry. While many investing apps are able to add features and move quickly, Schwab users should not expect many updates or additions to the platform.
Schwab offers competitive fees and offers a wide range of investment accounts to meet a wide array of clients' needs. We will explore these different features below.
Access to more than 10 investment products to achieve optimal portfolio diversification if desired.
Users can trade securities on the Schwab platform such as:
Clients will receive all of the Schwab One® features with the added benefit of support from highly dedicated specialists and employees with expertise at Charles Schwab.
Schwab provides some of the highest quality in-house research to its clients who want to gain an edge in the markets.
They offer a downloadable trading platform for desktop users who are looking to actively trade in the markets on both long and short time frames.
Offering both Roth IRA, Traditional IRA, and several other retirement accounts, Schwab offers a diverse number of options for investors who want to explore the different account type benefits.
Unsure of what account works best for you? Are all of these features overwhelming? No need to be uncomfortable, Schwab offers around-the-clock customer service to answer these pressing questions that you may have.
Competitive yield offered on clients’ savings account with FDIC-insured savings.
Lastly, on top of all the different account offerings, Schwab has introduced a robo-advising option as well.
Schwab offers an automated form of investing for its clients through a robo-advising portfolio automated service called Schwab Intelligent Portfolios®
How It Works: A Three-Step Process
They do not charge any fees for this service, but a $5,000 minimum is required.
$0 online stock and ETF fees on trading buying and selling transactions.
Schwab offers accounts with no minimum balances. As a beginner, this makes getting started opening a Schwab account even easier.
They charge $0.65 price per contract for options trades. This is pricier than Webull, which does not charge a commission, and something to note when comparing the two services.
Schwab charges a $49.95 commission on mutual funds that are not actively managed by Schwab.
Schwab charges $1.50 per contract for both broker-assisted and regular online futures contract trades.
The Schwab platform requires between a $5,000 minimum for the most basic robo-advisor, and a $25,000 minimum for their premium robo-advisor.
When using the premium robo-advisor, a one-time planning fee of $300, and a $30 per month advisory fee apply after that.
In our opinion, Charles Schwab offers a better overall platform for investors who are serious about accumulating wealth for the future. We feel that Webull offers a better offering for active traders with a superior desktop trading station and mobile app, and has a slight edge by offering no commissions on options trades.
Overall, Schwab offers a wider variety of assets including futures, mutual funds and more. Schwab also has a free robo-advisor called Schwab Intelligent Portfolio, however it has a minimum investment of $5,000.
Webull falls short by not offering fractional shares, dividend reinvestment or rebalancing tools. You will find all of these features with Schwab.
Lastly, Webull has somewhat of an edge with the sign up incentive. If you open a brokerage account with them and fund it with $100 or more on your initial deposit, you will get a free stock. Schwab currently does not have a sign up incentive for new users.
Both platforms are 100% free to sign up for though, so there's no harm in giving both of them a test drive and seeing which you prefer.