Best Brokerages for Beginners
BY: Courtney Johnston | December 17, 2020
Investing is a great way to build wealth, diversify your portfolio, and make important financial decisions for your future. If you’re new to investing, you might feel overwhelmed with where to even start. There are so many ways to invest now, from full trading platforms to simple, automated apps. Which one is right for you?
This guide of 10 of the best online stock brokers for beginners will explain what is offered, robo-advisor tools, what sets them apart from competitors, and highlight the fees and benefits so you can make a qualified decision for your financial future.
Overview of the 10 best brokerage firms for beginners
| Brokerage | Who’s it for? |
|---|---|
| TD Ameritrade | Best overall |
| E*TRADE | Mobile trading |
| Fidelity | Retirement investing |
| Charles Schwab | Research and educational tools |
| Merrill Edge | Bank of America customers |
| Robinhood | Basic investing |
| Stash | New investors looking for financial guidance |
| Ally Invest | Digital investing with low fees |
| Betterment | Automatic rebalancing |
| Acorns | Mindless investing |
| Public | Social investing |
TD Ameritrade
TD Ameritrade is one of the best online brokers. It offers educational resources that beginning investors will find extremely helpful and has a $0 initial deposit requirement to get started. TD Ameritrade allows you to buy commission-free stocks, exchange-traded funds (ETFs), and investment options trades, but does not offer fractional shares.
Tradable securities available:
- Stocks
- Bonds
- ETFs
- Mutual funds
- Options
- Futures
- Foreign ADRs
- IPOs
- forex *TD Ameritrade was purchased by Charles Schwab in October 2020 and plans to merge are anticipated to occur within the next 8 months.
E*TRADE
Well known as one of the first online stock trading platforms, E*TRADE still has a lot of features to offer beginner investors. While their website isn’t the most intuitive, once you get a feel for this platform, you’ll find many powerful tools at your disposal, including stock market trackers, an easy ordering process, and many educational resources, including live learning sessions. E*TRADE also offers two mobile platforms on Android and iOS: the E*TRADE mobile app for stocks and ETF trades and the more advanced Power E*TRADE for more complex orders for active traders.
Tradable securities available:
- Stocks
- Bonds
- ETFs
- Mutual funds
- Options
- Futures
Fidelity
Fidelity Investments is best known for its retirement accounts and is well known for its accurate stock selections, helping to build better retirement portfolios than competitors. Fidelity provides commission-free access to stocks, ETFs, and options, offers a wide selection of no-fee index funds, and grants you quick access to reputable customer service. Fidelity’s trading platform is simple enough for beginners to grasp, but also offers customizations for more advanced investors.
Tradable securities available:
- Stocks
- Bonds
- Fractional shares
- ETFs
- Mutual funds
- Options
Charles Schwab
While most of the top investing brokerage platforms offer helpful resources and tools, Charles Schwab blows everyone out of the water with their robust educational library, designed to help beginners quickly learn the ins-and-outs of the investment world. This brokerage platform also offers commission-free stock, options, and ETFs and offers over 4,000 no-transaction-fee mutual funds.
Tradable securities available:
- Stocks
- Bonds
- Fractional shares
- ETFs
- Mutual funds
- CDs
- Options
- Futures
Merrill Edge
Merrill Edge is another top investing platform that provides users with a large selection of third-party resources and research. One of the key benefits Merrill Edge offers is integration with Bank of America, allowing current banking customers to view bank and investment accounts with one login and transfer money seamlessly. Merrill Edge customers with a Bank of America account are also eligible to apply for Merrill’s Preferred Rewards program, which offers benefits including higher rate savings accounts, discounted loan rates, and lower mortgage origination fees. They also offer a mobile app that mirrors its desktop website and in-person customer service through Bank of America.
Tradable securities available:
- Stocks
- Bonds
- ETFs
- Mutual funds
- Options
Robinhood
Robinhood is a trading tool designed to make investing as easy as possible. It was one of the first investing apps to hit the marketplace and is still one of the few offering access to buy and trade cryptocurrencies. This app is designed for basic investing and can be a great starting point for new investors looking to trade by smartphone. This app does not allow you to invest in bonds or mutual funds.
Tradable securities available:
- Stocks
- Fractional shares
- ETFs
- Options
- Cryptocurrencies
Stash
Another popular investing app, Stash, offers access to investing tools and resources for a flat monthly fee. Stash will actually help you choose investments and offer detailed resources to help you make the best financial decisions. Signing up also grants you access to their online bank, where you’ll receive a free account and debit card. Stash also offers access to fractional investing and a Roth or traditional IRA account. On the downside, Stash offers fewer options than competitors when it comes to trading.
Tradable securities available:
- Stocks
- ETFs
Ally Invest
Ally is a leading name in online banking and also a top contender for online brokerage platforms. Ally Invest offers an intuitive web platform that’s perfect for beginners or seasoned investors, commission-free trades on stocks and ETFs in the United States, and access to penny stocks. Ally Invest also provides automatic portfolio management and diversification options. This brokerage also offers an easy-to-use mobile app with access to the same features as their desktop platform.
Tradable securities available:
- Stocks
- Bonds
- ETFs
- Mutual funds
- Options
- Penny stocks
- Forex
Betterment
If you’re looking for an investment brokerage to automate your trading and balance your portfolio while you concentrate on other things, Betterment is worth exploring. Betterment is ideal for hands-off investing, offers fractional shares, and has helpful rebalancing automation. Betterment offers two plans, a basic plan with no monthly fee and a 0.25% annual management fee and a premium plan with no monthly fee, a 0.40% management fee, and an account minimum balance of $100,000.
Tradable securities available:
Betterment will diversify your portfolio for you and does not allow you to select individual securities to invest in.
Acorns
If you’re struggling to find the money to start investing, Acorns can help you automate savings without significantly impacting your bank account. I love how easy Acorns makes investing, by rounding up your spare change after purchases and automatically depositing it into the app. While the monthly fee seems low-cost, if your account balance remains low with Acorns, you might find this fee a bit too steep for the services you’re receiving.
Tradable securities available:
Like Betterment, Acorns will diversify your portfolio for you and does not allow you to select individual securities to invest in.
Public
Public is one new investors should watch, as well. This social platform helps you learn by connecting you with other traders. You'll see what they are investing in and why, and you can share your findings. The app allows you to buy stock and ETFs with as little as $5, with no commission fee. The app allows for group messaging, searching stocks by subjects, and opportunities to earn free stock through referrals. However, there are no day trades. This is meant to be a safe place and risky stocks are not featured.
Tradable securities available:
- Stocks
- ETFs
Best online national brokerages summary
| Brokerage | Monthly Fees | Fees per trade | Initial Investment Requirement | Mobile Trading Platform | Account Opening Promotion |
|---|---|---|---|---|---|
| TD Ameritrade | $0 | $0 | $0 | Yes | No |
| E*TRADE | $0 | $0 | $0 | Yes, two mobile apps | Get $2,500 by opening an account before 1/31/2021 using code WINTER21 |
| Fidelity | $0 | $0 | $0 | Yes | No |
| Charles Schwab | $0 | $0 | $0 | Yes | No |
| Merrill Edge | $0 | $0 | $0 | Yes | Preferred Members through Merrill Edge or Bank of America can earn up to $900 |
| Robinhood | $0 | $0 | $0 | Mostly mobile w/web capabilities | Receive one free share of stock upon signup |
| Stash | $1 - $9 | $0 | $0 | Yes | Stash offers $20 signup bonuses that can be found across the web |
| Ally Invest | $0 | $0 | $0 | Yes | Earn up to $3,500 in bonus cash |
| Betterment | $0 | 0.25% - 0.40% management fee | $0 ($100,000 for premium plan) | Yes | Receive one year of free management services and additional referral bonuses |
| Acorns | $1 - $5 | $0 | $0 | Yes | $5 - $50 sign up bonuses that can be found across the web |
| Public | $0 | $0 | $0 | Yes | No |
What to consider before choosing a brokerage
Investing strategies
It’s important to decide on your investment strategy before committing to a brokerage platform. Do you want to play an active role in choosing your investments? If so, you might want to opt for platforms like TD Ameritrade, E*TRADE, Merrill Edge, or Charles Schwab. If you’re still learning or would like to take a more hands-off approach, you might consider an automated brokerage account, like Betterment or Acorns.
Tradable security offerings
Each brokerage offers different tradable securities that you can invest in. While TD Ameritrade, Ally Invest, and E*TRADE offer many of the most popular offerings, it’s important to ensure the broker you choose has the tradable security you’re looking for. TD Ameritrade, for example, does not offer fractional shares, while Charles Schwab and Fidelity do.
Digital experience
Almost all online brokers have some form of digital experience, but that doesn’t mean they offer an intuitive user experience. Ally Invest has one of the best online and mobile experiences of all investing platforms, while E*TRADE’s website can be a bit complicated to navigate.
Monthly account fees
You don’t have to pay a monthly account fee to open a brokerage account, but if you want automated portfolio diversification and rebalancing, you might have to. Decide which features are most important to you and if they require a fee, look for low-cost options like Acorns.
Management fees
When you have a brokerage account, some brokers charge management fees once a year. It’s important to know the rates charged upfront and decide if this platform is right for you before committing. Some may take this fee out of your bank account while others allow you to pay with your investment account. You can also find discount brokers who do not charge this annual maintenance fee.
Investing resources
When you’re just starting out in investing, education is everything. I was pleased to find that most brokers offer comprehensive resources and tools to help you better understand investing basics. Some brokers, however, offer a little more guidance. Charles Schwab and Merrill Edge both offer robust resources and tools designed to help you become financially savvy and make smart investing decisions.
FAQs
Is it smart to have more than one brokerage account?
Having multiple brokerage accounts can offer more protection. However, if you’re just starting out in your investing journey, it might be easier and less confusing to choose one broker to start with.
What is the best brokerage account for beginners?
Finding the best broker for your investment journey will depend on your specific finances and goals. I personally recommend TD Ameritrade as the best overall for beginners. Their platform is easy-to-understand, offers custom features, and has no monthly fees. However, exploring more automated services or retirement-focused brokerages are also encouraged.
How do I begin investing with a broker?
Every broker has a slightly different process for signup. In general, you’ll visit the broker’s website, fill out an application, sign up for an account, link your bank account or deposit funds, and then begin researching potential investments.
How do I buy my first stock?
To purchase your first stock, you’ll first need a brokerage account. Once you sign up for one and fund your account, you’ll be ready to purchase your first stock. I recommend researching stock options before pulling the trigger, then deciding how many shares you’d like to purchase.
The next step will vary depending on your brokerage platform, but typically, you can search for the company on your platform, select a “buy” or “trade” button, and input your share information to complete your purchase.
Can I lose money in a brokerage account?
Yes, you can lose money when investing with a broker. When you open a brokerage account, your money is protected in a brokerage account by the SIPC (Securities Investor Protection Corporation), but this insurance cannot protect you against bad investments and losses.
The bottom line
If you’re interested in investing, there are many top-rated brokerages worth exploring. Some of the best brokerages for beginners will provide top-notch resources, easy-to-navigate platforms, and automated portfolio services. Not all of these brokers offer free accounts though, so it’s important to compare your top options before making a decision.