We recognize that each person has their own financial goals and financial situation. That’s why we selected a number of brokers to help us find the one that best suits your needs. Here is a review of the top online brokerages suitable for beginners.
Fidelity
Best to: DIY investors
Fidelity can be a reliable broker for investors who are looking for an experienced broker that provides excellent customer support and low fees. Fidelity offers fractional investment and has branches all over the United States.
Robinhood
Best for: Mobile investing
Robinhood can be a great choice for investors who need a standard brokerage account. They can use Robinhood Crypto to buy and/or sell stocks and/or cryptocurrency (via Robinhood Crypto) via an easy-to-use mobile app. Robinhood lets users buy fractional shares and offers commission-free options for trading.
SoFi Active Investing
Best for: Membership ecosystem
SoFi could be a good option for investors looking to use an easy-touse stock trading app, as well as other financial products. SoFi’s unique features include cryptocurrency trading, fractional shares investing, and accessing IPO investing for smaller investors. SoFi also offers members commission-free trading.
E*Trade
Best for: Mobile platform
E*Trade can be a solid choice for investors that want an outstanding trading platform, great educational materials, and many investment choices. E*Trade provides a broad range of account types and is a highly-integrated brokerage that will fulfill most investors’ needs.
Merrill Edge (r.) Self-Directed
Best – Managing finances under one roof
Merrill Edge offers investors the opportunity to choose from stocks, bonds, mutual fund, ETFs, CDs, or other options. Merrill Edge can be a great choice for investors who want to connect with real-live financial advisers. Merrill Edge, which is owned by Bank of America, has advisors in many of its branches throughout the country.
TD Ameritrade
Best for : Research
TD Ameritrade ranks as one of the top brokers worldwide. This platform is perfect for investors who seek a complete brokerage experience, great customer service, and plenty of investment and account options. TD Ameritrade is a great place to start, with many trading platforms available for all levels of investors. It also offers almost every type and kind of brokerage account that you could imagine.
Charles Schwab
Best to: Retirement investors
Charles Schwab is a solid brokerage choice for investors that want a wide range of investment and account types, great customer service, and excellent banking and cash management products. Schwab is a great brokerage that offers fractional share investing and a great robo adviser platform for investors who prefer to be more passive in their strategy.
Acorns
Best: Rounding up spare cash to invest
Acorns could be the right choice for you if your goal is to avoid having to choose stocks and funds. Acorns is ideal for investors who want complete automation of their investment strategy. Acorns allows investors to automate their investing process by using features like automatic rounding of purchases to a dollar and investing the change.
Vanguard
Best for: Low-cost index investing
Vanguard is a reliable broker for investors wanting to put money into mutual funds or ETFs, Vanguard being the most popular. Vanguard’s low-cost mutual funds and ETFs don’t often appear on brokerage’s no-transaction fees (NTFs) lists. Investors can however buy them directly and avoid any commissions.
Cash App Investing
Best to: Mobile investing, banking
Cash App may not be a full-featured platform, but it is a good option for beginners who are looking for a simple way to invest in stocks, fractional shares and trade Bitcoin.
What does it mean to be a stockbroker?
A stock broker can be described as a trading platform that allows you to buy and sell marketable securities (e.g. stocks) and exchange traded funds (ETFs). A stock broker will help you open a brokerage accounts, which are specialized financial accounts that can hold cash and investments.
This term is often used interchangeably in the same way as “brokerage”, which technically refers a business employing brokers or acting as a broker to facilitate trades.
To buy stock in a business, you need to call the company. A brokerage account that is specialized in stock brokerage is necessary.
LEARN more:Â What is a brokerage?
What are the different types and benefits of brokerage accounts
There are two types of stockbrokers: full-service and discounted. Each comes with different costs and levels.
Brokerage at a discount
A discount broker is an online brokerage that allows investors to purchase and sell securities. You have the option to direct the purchase or sell of stocks. Or, you can register for a account with a robot-advisor which will automate your investments. Although many discount brokers provide features that enable you to decide how to manage your trades, there are rarely any human brokers who will take or fill your orders.
As their name suggests, discount brokers are more affordable than full-service broker and most offer zero commission stock trading. A discount broker is the best choice for investors, especially beginners. We only recommend discount brokers as the best platform to trade on for beginners.
Full-service broker
A full-service broker can be compared to an old-school brokerage. It is a brokerage that typically operates out of a physical office. This person, also known as a stockbroker, executes clients’ sell and buy orders. A full-service broker can also provide personalized services in investment planning, such as stock buying advice, tax guidance or retirement planning aid.
Full-service brokers tend to be more expensive that discount brokers due to the higher costs of human advisers and physical locations. However, their costs have been falling over the years as they compete with stock brokers.
Full-service brokerages are ideal for investors with high net worth who need a personal touch and dedicated portfolio management. Most investors are best served by discount brokers.
How to select the best online broker for beginners
There is no single broker that’s right for you. However, these are the most important considerations to consider when searching for a stock broker.
Cost structure The top brokerages for beginners don’t charge commissions for ETF and stock trades online (which is what most people will focus on as they are newbies). However, some charge commissions or fees to handle more complex moves like options trading and mutual fund investments.
Minimum deposit requirements for opening an account: Some brokerages require a minimum of $5-$500 to open an accounts. Others do not charge any fees. We have narrowed our choices to brokers who don’t have minimum account requirements. A few brokers won’t allow fractional-share investing. Therefore, you will need enough money for at least one stock or ETF share. These brokerages are low-barrier to entry, meaning anyone can invest even if they don’t have a lot of capital.
There are many funds available: Picking individual stocks may not be the right choice for everyone, particularly beginners. Low-cost mutual funds, as well as exchange-traded funds, are the best options for beginners. They will allow you to choose wisely and without any stock market knowledge.
Account options In the world of stock brokers, there are two types of accounts: A cash account or a marg account.
Cash account: You are limited to spending the money you have in your cash account.
Margin account – You can borrow money directly from your broker to make investments. Trading margin is risky, so it’s not a good idea to start investing. Margin interest rates are generally high. This is especially true in an environment of rising rates.
Features, support and assistance: You don’t need to be an expert in investing. A simple investing app can help you put a small amount of money into low cost ETFs and grow your money. If you want to take your investing skills to the next level, learn how to choose stocks and control your portfolio, then a platform that offers educational resources, news, support, and customer support can be of great help.
Research: Many of today’s top stock brokers provide research to help you learn more about the market, as well as specific stocks, ETFs or mutual funds.
News: You can follow the news on stock trading platforms designed for beginners.
Customer support: If you need assistance, you should be able call customer service and talk to someone who can assist you.
Learning resources: If investing is new, you might not be familiar enough with the terms and phrases that you will need to manage it. A mutual fund is something you should not buy if your aren’t familiar with it. Many stock brokers that are beginners offer an educational resource section. This section contains information that can help investors gain confidence and learn more.
Which place is best to invest in stocks?
It will depend on what you need to find the best place for beginners to buy stocks. There are three main options for investors when they need to choose where to purchase stocks.
Stock brokers online
Investing applications
Robo-advisors
Brokers of stocks online
A web-based broker is the best way to buy stocks. These accounts provide a great solution for novice investors who are looking for a simple investment platform and $0 commissions for stocks/ETFs.
Make sure you read our beginners guide before you invest.
Apps for investing
There are plenty of options for buying stocks using mobile apps. They also offer financial support such as budgeting, banking, cash transfers, and banking. Acorns, an investing and banking app as well as Cash App are free stock trading apps. These apps allow you buy stocks with microinvestments and manage your money in one place.
Robo-advisors
A number of online brokerages offer a robot-advisor service, although some only do this.
You can now set your portfolio on cruise command by using a robo adviser instead of working with a broker or manually directing your stock trading accounts. A robo-advisor works like a dedicated broker to help you buy and sell. Robo advisors are an affordable solution for investors who don’t want to be involved.
Should novice investors buy fractional stock?
Many of the most popular stock trading platforms now allow users to buy and sell fractional share. The investor buys a fraction of a share. This opens up a world of possibilities for novice investors who would not otherwise have access to such a vast array of investments. Popular stocks can go up to $1,000 per share, for example. If you start with $500, buying these stocks is impossible.
Fractional share investing allows investors to buy smaller pieces of stock in lower dollar amounts. The best part? Many of the best brokerage accounts are free to invest in fractional share and only a few dollars.
What information do I need in order to open an account with a brokerage?
The procedure for opening a brokerage account is the same as that for opening a savings, checking, or checking account. It will take you a few seconds to open a stock brokerage account.
Opening brokerage accounts
This information is important to speed up the process.
Social Security number: For identity verification purposes and to prepare year end tax forms, your broker requires your SSN. If your account earns interest or receives dividends, or makes a profit (or lose) through the sale of investments, you will have to report them on your tax return.
Drivers license or any other government-issued ID. If you don’t have a driver’s license, you can usually use a U.S. passport or another state-issued ID to verify that you are who you say you are.
Funding: ACH transfers to your bank account from your account are the best way of funding a new brokerage account. Make sure you have your bank routing numbers, account numbers, and password for online banking handy. Alternative options include sending a check or wiring money, which can be costly. Your broker might also have other funding options.
Opening IRA Accounts
There are no special steps to opening a traditional IRA, or a Roth IRA account. All an IRA account consists of a standard brokerage account but is taxed in a different way. Because it is one the most important steps that new investors can make to start investing in a tax-advantaged portfolio, we mention this. Just as commissions, taxes can eat at investment gains. IRAs help investors avoid paying these taxes.
Commissions on trading and minimum account requirements
For most stock brokers, trading commissions and minimum account amounts are almost non-existent. Nearly all stock brokers or investing apps don’t charge commission fees for basic trading. A majority allow you open an account starting with $0 or a few hundred dollars.
To use more advanced features like margin investments, however, many require a minimum sum of money. A stock or ETF trade usually requires a $0 commission. Some brokers charge commissions to traders and mutual fund among other products. You should review the entire fee schedule for a broker before you open an investment account. This will ensure that it suits your needs.
Note that ETFs, mutual and other fund types you invest in often have additional fees. This is the expense percentage. This cost is beyond the control of your broker, but your broker should be able to tell you what expense ratios are for funds it allows you access.
Why commissions and charges matter
Here’s what trading commissions mean: If your broker charges $6.99 to trade online stock stocks, and you have $1,000 available to invest. You wish to spread your money between five stocks.
In trading commissions, you’ll be paying nearly $35 to make your first investments. If you invest $1,000, your portfolio will suffer a 3.5% loss.
In addition, $6.99 will be added to each stock position. It is easy to see how this can add up over time and cost you thousands of dollar.
Be aware of the minimum account size
Major stock brokers require no minimum account. This hasn’t always been true. In order to open my first brokerage account more than 20 years back, I had to deposit $2,000 in order to get started.
Investors without a lot of capital can get started early by having a minimum or high-minimum deposit. This will allow them to start investing and gain long-term returns.
What stock trading platform is best?
If you are a beginner investor, it is possible that you have limited funds. This means you might need to receive more guidance in getting started. A broker offering no minimum account requirements, $0 commissions, or more educational resources might be a good option. Here is a list of stock trading platforms suitable for beginners.
Charles Schwab Great stock broker with lots of investment options and platforms
Acorns: Make your purchases, and then invest the rest of your spare change
App Investing – Mobile Banking and Simple-to Use Mobile Investing in One
WebFi: An easy-to-use trading platform, fractional stocks, and lots more educational resources.
