8 Best Online Stock Brokerages for Beginners (Reviews Compared)

Investing
June 23, 2020
Written by Drew Cheneler
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8 Best Online Stock Brokerages for Beginners (Reviews Compared)
Blooom Review: Manage Your 401k Like a Pro
Investing
June 23, 2020
Written by Drew Cheneler
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In this action-oriented comparison, we are going to provide a list of the best online stock brokerages for beginners. Believe me, as a beginner it may be overwhelming choosing the best online stock broker, but fret not. We did the research and narrowed the top brokerages, so you can start investing today.

Below is a quick glance into our selection of the best online stock brokeragefor Beginners. Read along for in-depth analysis, where we highlight the ins-and-outs of each brokerage firm. Our analysis focuses on opening account balances, transparent fees, benefits and potential drawbacks.

Best Online Stock Brokerages – Start Investing Today

  • TD Ameritrade: Best for Beginners + Financial Education
  • Merrill Edge: Best for Bank of America Members + $0 Account Minimum
  • Vanguard Brokerage: Best for Long-Term Investors, Mutual Funds, Lowest – Expense Ratio
  • E – Trade: Best for Active Traders + Financial Education
  • Fidelity Investments: Best for Zero Expense Index Mutual Funds
  • Ally Invest: Cheapest Online Brokerage Firm
  • Betterment: Best for Passive Investors + Robo-Advisor
  • Charles Schwab: Best for Low fees

8 Top Online Stock Brokerages for Beginners

We present you the best of the best. From low fees to phenomenal benefits, and everything in between, these top stock brokerages earned their spot on our list.

1. Ally Invest

With a $0 account minimum, $9.95 per mutual fund trade, and commission-free stocks, ETFs, and option trades, Ally Invest is one of the cheapest options for investors. Even better, Ally Invest will assist you in vehicle financing & protection, dealing with mortgages, and if you are inclined, they will manage your investment portfolio for you.

Ally Invest is the Cheapest Online Brokerage

Source: Ally.com

Sign – up Bonus: 90 Days of Commission-Free Trades & earn up to $3,500 in cash with a qualifying deposit.

Account Minimum: $0

Associated Fees:

  • Trade stocks, options, and ETFs commission-free
  • $9.95 per trade for Mutual Funds

Standout Benefits:

  • Suite of educational resources to help you plan for retirement, refinance loans, and grow your net worth
  • Commission-free stocks, ETFs, and Options Trades
  • A user-friendly Investment Platform (web-based & mobile), which easily allows you to make trades.
  • Automate Investment Strategy

Potential Drawbacks:

  • Mutual Fund Trading is not commission-free
  • No branches currently available for in-person visits

Final Thoughts

Aside from the low-costs and available educational resources, Ally Invest is committed to leaving an everlasting social impact, which is great. Ally Invest is the best option for individuals who want a low-cost yet enriching investing experience.

2. Betterment

As one of the newest online brokerages, Betterment continues to make a name for themselves as they help shape the digital financial service sector. Betterment is the best option for passive investors, who want to rely on robo-advisors to rebalance their portfolio. Fret not, Betterment employs a robust slew of tools to help you accomplish your investment goals, make sure to check them out once you open an account.

Betterment is a Top Online Stock Broker for beginners

Source: Betterment.com

Sign – up Bonus: 1 Month – 12 Month for free (with qualifying deposits)

Account Minimum: $0 (However, $10 minimum deposit is required to open an account)

Associated Fees:

  • Betterment Digital: 0.25% Annual Fee ($0 Account Minimum)
  • Betterment Premium: 0.40% Annual Fee ($100,000 Account Minimum)  .

Standout Benefits:

  • Betterment is more than just an online brokerage firm. They also allow members to open up checking accounts, Roth IRA’s, and more.
  • Employs advance technology to automatically implement tax-loss harvesting, so you get the most out of your account
  • Deeply committed to helping you save for retirement, create an emergency fund, education, or even a major purchase, such as a home.
  • You can create individual, joint, and trust accounts.
  • Sync external accounts to get a holistic view of your finances.
  • Socially Responsible Investing – Dedicated to helping out local communities and charitable activities.

Potential Drawbacks:

  • Betterment has no physical locations; they are entirely online.
  • No platform to actively trade or conduct market research

Final Thoughts:

If you want a hands-off investment strategy, then Betterment is the best option for you. Easily set up automatic monthly investment deposits, and let Betterment take care of the rest. This online brokerage firm is clearly designed for passive investors, who want to increase their net-worth over the long-term.

3. TD Ameritrade

As they self-describe, “Investing Built Around you,” TD Ameritrade is an award-winning online brokerage firm tailored for all investors. Regardless, if you are new investor or a seasoned trader, TD Ameritrade offers multiple investment products. With low-fees and a wide variety of investment tools, TD Ameritrade is ready to elevate your investing journey.

TD - Ameritrade is one of the best Online Stock Brokerages

Source: Tdameritrade.com

Sign – up Bonus:  Get up to $600 (with qualifying deposits) when you open and fund an account today.

Account Minimum: $0

Commissions: Free Online Trades (no fee when you buy & Sell)

Standout Benefits:

  • $0 (Commission-Free) on Online Stock, ETF, & Option Trades.
  • 24-Hour Account Support & Exclusive Access to Stock Trading Specialist
  • Access to Thinkorswim – A professional-level trading platform
  • User friendly Web Application – Provides third- party investment research, a slew of educational resources, and the most up-to-date financial news.
  • Wide variety of Investment Opportunities
  • Mobile Trading Application – Trade on your terms with this powerful application that allows you to easily execute a trade

Potential Drawbacks:

  • Investment Tools & Platforms are dispersed across the Website, making it difficult to locate.
  • High Broker-Assisted Trading Fees ($25)
  • $0.65 contract Fee for Options
  • Active Trading Platform implements a minimum account balance

Final Thoughts

TD Ameritrade has numerous educational resources at your disposable. Want to tinker around with trading options? Or purchase ETF’s, then this online brokerage is for you. TD Ameritrade has the best trading platforms for both beginner and advanced traders. More importantly, TD Ameritrade is deeply committed to your success, and values customer interaction.

4. Merrill Edge

With a $0 minimum initial investment, Bank of America’s Merrill Edge is a great option for any investor. As a Merrill Edge member, you will have access to Financial Advisors, who are conveniently located at over 2,500 Bank of America regional locations. Enjoy the in-person advice as you begin to invest. Their team of advisors will ensure you make sound financial decisions. Merrill Edge employs a robust website and mobile application, which allows you track performance, execute trades, and digest daily investment research.

Best Online Stock Brokerage for Bank of America Clients

Source: Merrilledge.com

Sign – up Bonus: Get up to $600 (with qualifying deposits) when you open and fund an account. Get 300 $0 Online Stock & Option Trades for free.

Account Minimum: $0

Commissions: $2.95

Standout Benefits:

  • Over 2,500 Bank of America locations provide easy access to a Financial Advisor
  • Premium Investment Research: Action-oriented research designed to help you decide whither you should buy, sell, or hold onto a current investment
  • Certain Bank of America Members are eligible for Commission-Free Trades
  • Great educational resources for you to tap into and reference.
  • Get a professionally managed portfolio through Merrill Guided Investing (additional fees may apply)
  • Work one-on-one with a dedicated advisor through Merrill Lynch Wealth Management (additional fees may apply)

Potential Drawbacks:

  • $2.95 per Trade
  • To qualify for commission free trades, you need to maintain a large account balance
  • Merrill Guided Investing requires a minimum account balance of $5,000

Final Thoughts

Comparatively, Merrill Edge has relatively high associated fees. However, if you are a Bank of America member, then this is the best online stock broker for you. Bank of America, the parent company of Merrill Edge, has made it incredibly easy to manage both accounts. In fact, you can manage both accounts with just one single login. Take advantage of Merrill Edge’s cutting technology to learn more about investing, create financial goals, and explore investment opportunities.

5. Vanguard Brokerage

Founded on May 1st, 1975, by Jack Bogle, Vanguard is a world-renowned brokerage firm that offers some of the lowest expense ratios and a healthy selection of index funds for you to invest in. After all, Vanguard prides themselves on offering some of the lowest fees in the investing industry. With 1,800 commission-free ETFs and over 140 no transaction fee mutual funds, Vanguard is the best online stock broker for long-term investors.

Vanguard - An Online Stock Brokerage designed for all investors

Source: Vanguard.com

Sign – up bonus: Vanguard is not offering a promotion currently

Account Minimum:  $0 for the most part; but mutual funds traditionally have a $1,000 minimum

Associated Fees:

  • $20 Annual Fee for Servicing Account (fee does not apply to accounts with $10,000 or more).

Standout Benefits:

  • 1,800 commission-free ETFs to choose from
  • 140 Vanguard Mutual Funds – Pay $0 in Transaction Fees
  • Pioneered low-cost Index Funds
  • Transfer investments from one Brokerage to Vanguard (they handle majority of the workload)
  • Partner with a Trusted Advisor who will help guide and facilitate your investing journey.
  • Best online brokerage for long-term buy & hold investors

Potential Drawbacks:

  • Trade commissions are high, unless you have a large account balance.
  • Vanguard lacks a robust trading platform – day traders are advised to look elsewhere.
  • Lacks investment research and real-time market data. This may leave you (the investor) to conduct majority of the research on your own.

Final Thoughts

Although, Vanguard’s platform lacks trading tools, they thrive in low-cost index investing. If you are a classic buy & hold investor, then Vanguard is the best bet. After all, the founder, Jack Bogle, pioneered index funds. Vanguard has the most diverse selection of index funds and renowned mutual funds. As you can, see Vanguard is one of the best online stock brokerages for beginners.

6. E-Trade

E-Trade has certainly carved out a niche amongst active traders, who utilize there advanced trading platform, educational resources, and research tools to craft a well-balanced, risk-averse portfolio. Investors alike would agree E-Trade is one of the best online stock brokers. Enjoy trading stocks, index funds, and options with a $0 commission. Regardless if you are an active trader or just starting, E-Trade provides well-rounded financial education content to help you make smart investment decisions.

E - Trade Online Brokerage: Best For Active Traders + Financial Education

Source: us.Etrade.com

Sign-up Bonus: For a limited time, E-Trade will offer $100 for a deposit or transfer greater than $5,000.

Account Minimum: $0

Associated fees: Enjoy Commission-Free on all Stock, ETFs, and Options Trades

Standout Benefits:

  • Real-time, extensive market and investment research
  • Advanced Trading Platform’s: E-Trade Pro, E-Trade Power, & E-Trade Web
  • E-Trade Platforms allow you to track individual stocks, view market trends & data, premium stock scanner, watch Bloomberg TV, and even partake in stock position back-testing.
  • Detailed Educational Resources which help you craft strategies, easily navigate between the various platforms, and prepare for retirement.
  • Invest in roughly 4,400 commission-free mutual funds.
  • Easily automate your Investing with E-Trade Core Portfolios.

Potential Drawbacks:

  • Though E-Trade has one of the most advanced trading platforms on the market, it is not the most user-friendly. As a beginner investor you may get boggled down by all of the noise; however, after you review their educational ‘how-to’ videos, you will be trading stocks in no time.

Finals Thoughts

If you are looking to become more actively involved with your investment strategy, then E-Trade is a safe bet, as it is the best online stock broker for active traders. With E-Trade, you will be able trade commission-free, and will have direct access to a slew of technological and financial resources. Undeniably, E-Trade has carved out a niche amongst active traders and investors alike, rightfully so.

7. Fidelity Investments

Fidelity Investments certainly doesn’t shy away from low-fees and low-expense ratios. As an investor with Fidelity, you will enjoy commission-free trades for U.S. Stocks, ETFs, and option trades. Even better, when you open a brokerage account, Fidelity will automatically place your cash into a money market mutual fund. This neat feature allows your money to earn a higher-rate of return. Fidelity offers second-to-none market research. With 19 strategic partnerships, Fidelity is constantly intertwining cutting edge technology and market research to offer sound investment advice.

Fidelity Investments - Another Great Online Stock Brokerage for Passive Investors

Source: Fidelity.com

Sign – up Bonus: Fidelity is not offering a promotion currently.

Account Minimum: $0

Associated Fees: Enjoy Commission-Free on all Stock, ETFs, and Options Trades.

Standout Benefits:

  • Access to Fidelity Viewpoints® – Plethora of Articles & Financial Commentary all sharing one common mission: Help you make informed investing decisions.
  • Varied & Diverse selection of research providers
  • Excellent Customer Service – 190 Branch Locations & available 24-hour by phone.
  • Use Active Trader Pro® – At the intersection of Technology & Finance, this trading platform is ready to fuel your investment strategy.
  • Industry leader in providing zero expense ratio index mutual funds.

Potential Drawbacks:

  • Though they have a wide selection of resources, it is dispersed across numerous platforms.
  • Fidelity® Personalized Planning & Advice, Wealth Management, & Private Wealth Management require a high account balance.
  • Fidelity Go® – Fidelity’s Robo Advisor – charges a 0.35% Gross Advisory Fee
  • Broker-Assisted Trades are costly

Final Thoughts

As you can see, Fidelity Investments meet the needs for both beginner and experienced investors. With their superior customer service, lost-cost fees, low-cost expense ratios, and premium investment research, Fidelity has a lot to offer. Above all, Fidelity Investments is deeply committed to your success as an investor. They are the best for Zero Expense Index & Mutual Funds.

8. Charles Schwab

Founded in 1971, by Charles R. Schwab, this brokerage firm has risen to be the 13th largest bank in the United States. With low-costs, advanced trading resources, and transparent fees, Charles Schwab is one of the best online brokers for any investors. Enjoy a large selection of no transaction-fee mutual funds, and commission-free stock, ETFs, and options trades.

Charles Scwab - One of the Most Reliable Online Firms

Source: Schwab.com

Sign – up Bonus: No promotion is currently offered

Account Minimum: $0

Associated Fees:

  • $0 commission-free for Online Stock, ETFs, and Option Trades
  • 4,000 no transaction- fee mutual funds (when traded online)
  • No Account Maintenance Fee’s

Standout Benefits:

  • 24-Hour Customer Support
  • Over 300 local branches willing and ready to take in-person visits to help you reach your financial goals
  • Wide Variety of Tradable Securities: Stocks, Bonds, Mutual Funds, Futures, Option Contracts, & ETFs
  • Extensive Market Research
  • Automate your investing with their robo-advisor
  • Robust selection of educational research, market data, and investment tools to help you make the best financial decisions

Potential Drawbacks:

  • High-Account Balance & High Fees when you work with one-on-one with a Charles Schwab Financial Advisor
  • Schwab heavily markets their financial advisor service

Final Thoughts

As you can see, Charles Schwab is a great option for both beginner and advanced investors. With a robust selection of tools, platforms, and educational resources, this online brokerage is ready to help you make the best financial decisions. Paired with low-cost fees on stocks, ETFs, mutual funds, and option trades, Charles Schwab is one of the best online stock brokerages for beginners.

How to choose the Best Online Stock Brokerage?

As a new investor, it may seem daunting choosing one of the best online stock brokerages for beginners; however, it is not as tedious as it may seem. You want to choose an online stock brokerage that will support your financial goals, low-fees, minimal account balance requirements, encourages you to invest, and has top-notch customer service.

What is an Online Stock Broker?

An online stock brokerage is a licensed firm, who buy and sell securities. For years, the only way to buy or sell a stock was from a licensed stockbroker who placed the trades on your behalf. Fortunately, we are in a new era, one that is dominated by the world wide web and digital transactions. What was once a costly and lengthy transaction period, can now be done in the fraction of a second due to online brokerage firms.

An online stock brokerage firm automates your investment strategy (such as Dollar Cost Averaging) and allows you to place stock trades at any time. These online brokerages act as an intermediary between you and the global stock market. All that is required is for you to log-in to your account and place a trade.

Comparing the best online stock brokerages for beginners

Our comprehensive review of the best online brokers focused on a few key aspects, which are crucial for each beginner investor to understand.

Account Minimums

We value online brokerages that offer a $0 account minimum. Why? This allows any investor, beginner or experienced, to open an account and immediately begin to invest in the stock market.

Associated Fees

Majority of new investors believe banks and Brokerages charge high-fees and commissions. While some do, we narrowed down the brokerages that offer the most competitive and affordable fees. In fact, almost all of them allow you to buy and sell stocks, ETFs, and trade options for free. However, as a new investor, you need to recognize and discern between some common fees that exist within the industry:

Advisory Fees – This fee only applies if you elect to have your money managed by a licensed professional. Though this fee may vary between brokerages, it is generally expensive. However, if you want a little more hand holding then the advisory fee is justified. This fee is traditionally charged as a set percentage.

Transaction (commissions) Fees – Today, majority of online brokerages do not charge you a commission (small fee) for buying or selling an individual stock, ETF, or Option Trade. However, some firms will still charge a transaction fee for buying or selling a mutual fund.

Example: Ally Invest charges a $9.95 fee when you buy or sell a mutual fund.

Annual Account FeeWhile not common, some online brokerages still charge an annual fee for operating an active account.

Monthly Maintenance FeesThis is a recurring monthly fee for ‘having an account.’ for Online brokerage firms across this industry have shied away from this fee. However, as you choose the best online brokerage account, it is still important to know what it is and ask if the brokerage account employs one.

Variety of Investments

Make sure to pick a brokerage account that offers a robust set of investments. You want to ensure your brokerage account allows you to trade stocks, ETFs, mutual funds, bonds, index funds, and options.

Available investor tools & educational resources

Majority of the best online stock brokerage firms will allow you to open a Roth IRA, manage trust funds, provide extensive market research, and offer educational services to help you plan for retirement and generate a monthly financial budget. As a new investor, it is paramount you find a brokerage account that focuses on education, so you can routinely make the best financial decisions.

What documents do you need to open an online stock brokerage account?

Fortunately, it has never been easier to open up an online brokerage account. Today, you can open an account on your mobile device or on the brokerage’s website. However, there are a few key documents that you will need.

  • Social Security Number (SSN) – This is to make sure you complete your year-end tax forms.
  • Government Issued Identification (State Drivers License) – The brokerage account needs to verify your identity. This allows them to fully protect and defend your account from fraudulent activities.
  • Bank Account – This will allow you to link your accounts so you can easily transfer money and begin investing. After all, you need money to make money. This allows you to fund your account with ease.

Summary: Best online stock brokerages for beginners

As a new investor, it may seem daunting leaping into the realm of investing and the stock market; however, we are confident you have the tools and resources you need to succeed and hopefully, make money. Remember, you want a brokerage account that emphasizes education, customer service, low-fees, and one that prioritizes your needs.

Drew Cheneler
Drew Cheneler
Drew is a recognized Credit, Small Business, and Personal Finance Expert. He has been quoted in CNBC, The Huffington Post, Business.com, Moneyunder30, and more. He is known for breaking down complex personal finance topics into action-oriented advice, so you can make the most of your hard-earned money.