Schwab is great, and so far I’ve loved my trading/brokerage account experience with them. There’s no minimum required for deposit now, and the trades and fast and there’s liquidity and you don’t get screwed on slippage (large bid-ask spreads).
Unfortunately I’ve found that Charles Schwab’s trading platform is still overly complicated. I hate Robinhood, but there’s a reason they’ve been so successful. They have a simple, gamified and easy to use interface. Comparatively, Schwab’s website and app look like you’re in an airliner cockpit with all the buttons and text.
I still find that finance is overly complicated and still out of reach for most Americans, although that’s changing. There are too many acronyms I.e. “IRA” that get thrown around- why can’t we just say the words ‘retirement accounts’? Then there’s the complicated tax code, with short term and long term capital gains taxes, which you will have to worry about if you make money in your brokerage account and end up cashing out.
If you’re looking to day trade, or make frequent transactions, Schwab might not be the best option for you. But if you’re looking for a solid long-term investment platform with no trading fees, Schwab is hard to beat.
Charles Schwab is undoubtedly the strongest name in the brokerage space and offers several excellent features. Here they are:
- No trading fees
- Excellent customer support if you have questions
- Strong documentation that helps when tax season comes
The first [and most important] are no trading fees. This used to not be true, but Robinhood (the app, not the fictional character) came in and started offering fee-free trading, and other competitors like Charles Schwab and TD Ameritrade (which now owns Charles Schwab) had to abolish their fees to be able to compete. Small fees accumulate over time. As Warren Buffett once said “in investing, as motion increases, returns decrease.” The more you trade and move money around, the more you’ll end up paying in fees. At least with buy and sell orders on Schwab, you won’t have to worry about this.
Funding a Schwab account vs. funding a crypto trading account
Funding your account isn’t as quick as funding your Coinbase or KuCoin accounts- Schwab operates a little more traditionally. Your best bet for getting funds into your Schwab account without fees is going to be an ACH transaction. ACH stands for ‘Automated Clearing House’ and was first use by a bank in the UK in 1968. It usually takes a couple of days for your funds to process into your brokerage account.
You can fund your account in a few different ways. The quickest and easiest is to link a Schwab bank account to your brokerage account with ACH. Once the accounts are linked, you can transfer money between them quickly. If you don’t have a Schwab bank account, you can mail a check or wire the money from another financial institution.
So ACH is going to be your best, lowest cost bet.
Mailing a check is an option, but few use it and I won’t go over that here.
Last and least is going to be a wire transfer. Wire transfers are usually completed within 20 minutes or so, but carry the heaviest fees. The median cost of a wire transfer in the United States is between $15-$25. The only time I’d recommend this is if you need to get funds into your account right now because you think there’s an excellent trading opportunity, or you don’t have your money in a US-based bank.
How to deposit money into your Schwab account
- First, go to the transfers and payments button on the top right of the screen.
- You’re brought to the screen show below. To do an ACH transfer (recommended), select the online transfers button.
- On the next screen, keep the default selection of cash only. Under the from drop-down menu, select add external account.
- A prompt will warn you that you’re going to leave the page. Hit continue.
- On the next page, hit the green link external account button. Continue until you’re prompted to select your bank. Enter your bank’s name in the search bar if you don’t immediately see your bank (only the really big banks are shown at first). Select your bank’s name when you see it.
- Enter your login credentials for that bank when the ‘built-in’ login screen comes up and hit continue. Your other option is to enter your account number and confirm the transaction amounts Schwab sends you, but this process takes 2-4 days, which frankly is too slow. You’ll likely have to enter a code texted to you for multi-factor authentication. Select which account you’d like to connect to Schwab.
- Soon after, your account should be connected to Schwab. Now, back on the transfers and payments screen, you can click online transfers and your bank account should now appear on the ‘from’ select account dropdown. Select your bank account. For the ‘to’ account, select your brokerage account.
- Below, you’ll be able to enter the cash amount you’d like to transfer, the frequency for transfer, and the transfer date (now or in the future). After this is done, select continue and follow the rest of the steps for confirmation.
With ACH, it usually takes 1-2 business days for the funds to show up in your account- but then you’re ready to start trading!
Is it possible to ‘trade crypto’ on Schwab? Sort of. You can buy crypto funds like Grayscale’s Bitcoin or Ethereum trusts. The trusts have the drawback of higher fees, and often don’t exactly match the price of the underlying crypto assets due to supply and demand dynamics. The benefits here are you don’t have to deal with the copying and pasting of crypto addresses, or keeping ‘custody’ of the asset. The trust holds the crypto safely for you.
Can I trade options with Schwab?
Can you trade options in your Schwab brokerage account? Yes, but only after getting approved for doing so. The approval process involves going through an online questionnaire which basically tries to make sure that you’re informed of how dangerous and risky options trading is. Note that brokerage accounts need to have at least $2,000 to do options trading.
In summary, to fund your account you can:
-Link a Schwab bank account
-Mail a check
-Wire money from another financial institution.
So there you go- a quick and easy guide on how to deposit money into your Charles Schwab brokerage account. Now get out there and start trading!
*Note that this post is not sponsored by or affiliated with Charles Schwab in any way. This is simply a how-to guide for those looking to use their services. Please consult a financial adviser for actual financial advice.