We know that everyone’s financial needs and goals are unique, so we have selected a selection of brokers to help each client find the right one. Here are our top choices for online brokerages.
Fidelity
Best to: DIY investors
Fidelity provides solid brokerage for investors who seek a well-rounded broker, with exceptional customer service. Fidelity has one of the most extensive brokerages that offers fractional shares investing. There are also branches across the United States.
Robinhood
Best for: Mobile investing
Robinhood is a good option if you are looking to open a brokerage account with the ability to trade stocks and cryptocurrencies via Robinhood Crypto. It’s easy to use and offers a range of trading options. Robinhood makes it possible to buy fractional shares, and is also one of the few brokerages that offer no commission trading.
SoFi Active Investing
Best for: Membership ecosystem
Investors who need an easy-to–use stock trading platform that offers additional financial products and/or services can find SoFi to be a good option. SoFi features unique features like cryptocurrency trading, fractional investing and access to IPO investments for smaller investors. SoFi is the only platform to offer members free trading.
E*Trade
Best for: Mobile platform
E*Trade makes a solid choice if you are looking for an exceptional trading platform, great educational resources, as well as many investment options. E*Trade offers a range of account types. This brokerage is well-rounded and will fit most investors needs.
Merrill Edge r) Self-Directed
Best For: Managing finances under a single roof
Merrill Edge can be a great choice for Investors that want to have the option of stocks and bonds, mutual funds or ETFs. Merrill Edge provides access to financial advisors who are available in real time. Merrill Edge has advisors at many of Bank of America’s branches.
TD Ameritrade
Best for : Research
TD Ameritrade is a popular broker around the globe. The platform is ideal for investors who seek a complete brokerage experience, great customer care, and many investment options. TD Ameritrade’s educational resources are excellent for beginners. There are many trading platforms to suit investors of all levels.
Charles Schwab
Best to: Retirement investors
Charles Schwab, a top brokerage choice, is great for investors who need a wide range of investment and account types, excellent customer service, and great banking or cash management products. Schwab has many great features, including fractional share investments. They also have a fantastic robo-advisor platform to help passive investors.
Acorns
Best for : Rounding up spare money to invest
Acorns can be an option if you don’t want to select individual stocks or funds to invest in. Acorns’ platform is ideal for investors who are looking to automate all aspects of their investment process. Acorns makes investing simple with features such automatic rounding-up of purchases up to the nearest dollar and the possibility of investing the change.
Vanguard
Best for: Low-cost index investing
Vanguard is a good broker if you are looking for mutual funds and ETFs. Vanguard’s ETFs can be purchased through Vanguard. Vanguard’s low price ETFs/mutual funds aren’t on many brokers’ “no-transaction-fee” (NTF), lists. Investors can, however, buy them directly and avoid commissions.
Cash App Investing
Best: Mobile banking
Cash App may not be a fully-featured Broker, but it is a good option for beginners who need a simple way to invest in stocks, fractional shares and trade Bitcoin.
What is a stockbroker?
A stockbroker is a trading person or platform that facilitates buying and selling marketable securities like stocks, ETFs, and Exchange-Traded Funds (ETFs). A stock broker allows you to open a brokerage or specialized financial account. It is designed for cash and investments.
It is often used interchangeably as “brokerage,” which technically refers a business employing brokers or acting as a broker in order to facilitate trading.
You cannot call a company to buy shares. Or walk into a bank and invest. A brokerage account that is specialized in stock brokerage is necessary.
LEARN More:Â What does a brokerage account mean?
What are the types of brokerage account?
There are two types stockbrokers, full-service or discounted. Each has its own cost and service level.
Discount broker
A discount broker is a company that allows an investor to buy or sell securities online. You have the option to control the buying and selling process or register for a robot-advisor to automate your investments. You can choose how you want to direct your trades. However, many discount brokers don’t have human agents who take and fill your orders.
Full-service brokers tend to be more expensive than discount brokers. Many offer zero commission stock trading. Discount brokers are the best option for many investors, especially the novice investor. This is why we only choose discount brokers to be the best trading platform.
Full-service Broker
A full-service brokerage is similar to an old-school agent. This type of broker usually works from a physical office. Here, a real person (also called a stockbroker) takes and executes clients’ sell and buy orders. A full-service broker can also offer personalized services in investment planning, such as stock buying advice, tax guidance and retirement planning.
Given the overhead costs of human consultants and brick-and–mortar locations, full-service broker are often more expensive that discount brokers. However, they have seen their costs drop over the years as stock brokers and other brokerages compete for them.
Full-service broker are best suited for high-net worth investors who desire a personal level service and dedicated investment portfolio manager. Discount brokers work best for almost all investors.
How to choose the right online stock broker for beginners
There is no single broker that’s right for you. But here are some key points to keep in your mind as you search for a stockbroker for beginners.
Price structure:Â The best brokerages don’t charge commissions if you trade stock or ETF online. But, there are many that charge fees for complex moves such as options trading, mutual funds and other products.
Minimum account opening deposit: Several stock brokers require a minimum investment of $5 to $500 in order to open a new account. However, some do not charge any minimum deposit. We’ve narrowed down our choices to brokers without account minimums. It is important to note that not all brokers allow fractional share investment. To buy at least one shares of stock or ETF, you’ll need sufficient money. These low-barrier-to entry brokerages make it easy to invest even if you don’t have a lot of capital.
Many funds: Picking individual stock is not a good idea, especially for beginners. Low-cost mutual funds, as well as exchange-traded funds, are the best options for beginners. They will help you choose wisely and without much stock market knowledge.
Account options When dealing with stock brokers, you have the option of a cash or margin account.
Cash account – You can only spend what you have in your account.
Margin account. You can borrow money through your broker to invest. Margin trading can be risky, so it’s not a good idea to start investing. Margin interest charges are generally high, especially in a rising rate environment.
Features. To simply put money in low-cost ETFs to grow your portfolio, an investing app with no frills could suffice. If you are looking to learn more about investing, including how to choose stocks, manage your portfolio and make informed decisions, then a platform that offers education, research, news, support and customer support is the best option.
Research: A lot of the best stock brokers are available to do research. This allows you to learn more about different market sectors, individual stocks, ETFs, or mutual funds.
News: There are some stock trading platforms for beginners that offer news updates. You can monitor companies and the happenings in general.
Customer support: You should have the ability to pick up the telephone and talk to someone who can assist you in any way you need.
Learn more about investing It’s possible to be unfamiliar with the terms necessary to manage an account when you start investing. It’s best to avoid buying a mutual fund if it’s not something you are familiar with. Many stock brokers provide educational resources to help novice investors.
What’s the best place to invest in stocks?
You will need to consider your specific needs when deciding where to buy stocks. There are three basic options for investors when they need to choose where to purchase stocks.
Stock brokers online
Investing apps
Robo-advisors
First-time investors will find it a huge advantage that most brokers are able to offer all three avenues of buying stocks.
Stock brokers via the internet
A web-based stockbroker is the best option to buy stocks. These accounts can be a good option for beginner investors looking for an easy investing platform with $0 commissions for stocks or ETFs.
Check out our Beginner Guide on How to Buy Stocks Before you start investing.
Apps for Investing
The market is flooded with options to buy stock via mobile apps. Many of these apps can also be used for other financial needs such as budgeting or banking. Acorns is an investment and banking app that allows you to trade stocks using microinvestments. Cash App also lets you manage a wide range of money needs from one location.
Robo-advisors
Many online brokerages also offer an automated advisor service.
Instead of working directly with a stock broker or directing your own stock trading account, you can use a robotic advisor to control your portfolio. By entering your financial goals, algorithms mimic dedicated brokers to handle the buying and selling. Robo advisers are a low cost solution for new investors.
Do beginner investors need to purchase fractional shares?
Many of today’s best trading platforms offer the ability for beginners to buy or sell fractional stock. The share is basically a slice of the stock. This opens up a world of possibilities for novice investors who would not have access to as many investments if they had a small portfolio. For example, popular stocks can have a price tag of more than $1,000 per piece. A $500 investment would not be sufficient to purchase these stocks.
Investors can also buy fractional shares in fractional investment. This allows them to purchase small amounts of stocks. The best part? Many of the best brokerage accounts are free to invest in fractional stock.
How do I open a brokerage accounts?
The process to open a brokerage or savings account is very similar to that of opening a checking/savings account. If you use a broker to help you open your brokerage account, it will only take a few steps and require you to complete a few forms.
Opening brokerage account
This information is necessary to expedite the process.
The Social Safety Number (SSN). For identity verification purposes and to prepare year end tax forms, your broker will need your SSN. You must report on your tax return if your account earns interest or receives dividend payments.
Driver’s licensing or other government-issued ID. For verification of your identity, you can use an ID from another state or passport issued by the United States.
Funding method ACH transfers to your bank account from your account are the best way for a new brokerage account to be funded. Remember to keep your bank routing information, account numbers and passwords for online banking on hand. A second option is to send money by check or wire money. Your broker may also offer additional funding options.
Opening IRA accounts
Opening a Roth IRA or traditional IRA is the same. An IRA account is essentially a standard brokerage account but taxed in a different way. This is because new investors should consider investing in a tax advantageous account. IRAs provide protection for investors by avoiding the burden of paying taxes.
Minimums for accounts and commissions in trading
Most stock brokers are no longer charging trading commissions or imposing minimum account openings. The majority of investing apps and stock brokers do not charge commission fees for basic trading. They will allow you to open an accounts with $0 deposit or a few dollars.
However, some require minimal funds to use more complex features like margin-investing. ETF and stock trades are free of charge. However, brokers can charge commissions for trading options as well as mutual money. Check out the complete fee schedule before you open a brokerage account. It will help you decide if it is right for you.
Noting that ETFs, mutual and other funds you may invest in come with fees, the expenses ratio. This is an outside cost of your broker’s reach, but your broker should be able to tell you what the expense ratios are for the funds they allow you to invest.
Why commissions and charges matter
Here’s the reason why trading commissions matter: Let’s assume your broker charges $6.99 for online stocks trades, and that you have $0 to invest. You’d like to spread your money across five stocks.
Nearly $35 in trading fees will be required to make your initial investments. With a $1,000 investment you will experience a 3.5% drop in your portfolio.
You will also be charged $6.99 each time you increase one of your stock positions. If you have a plan to build your portfolio over time it is not difficult to see how this will cost you thousands.
Remember the minimum account amount
Most stock brokers offer a free account minimum. This is not the case in the past. I had to make $2,000 deposit to get my brokerage account started over 20-years ago.
A minimum-minimum or low-minimum-deposit requirement allows investors with little capital to start investing early. This will allow them to gradually build their first investment portfolio, and then reap the benefits of long-term growth.
What stock trading platform would be best for beginners?
For beginners, you may only have limited funds. Therefore, you might need to be more knowledgeable in order for you to succeed. It is possible to benefit from a broker that does not require an account minimum, has zero commissions, or offers additional education. Here are some stock-trading platforms for beginners.
Charles Schwab is a great stock broker who offers many investment options. There are also many investing platforms that you can choose from
Acorns. Round up your purchases to put your spare change to good use
Money App Investing : Simple, easy-to-use mobile investment and banking in one
SoFi is a user-friendly trading system, fractional shares, as well as a wealth of educational resources.
