We understand that everyone has different financial goals and circumstances. Therefore, we have selected a range of brokers to help you choose the right broker for you. Below is a list of our top picks for online brokerages that are best for beginners.
Fidelity
Best for DIY investors
Fidelity is an excellent broker for investors looking for a comprehensive broker that offers great customer service and low fees. Fidelity is one the few big brokers that offers fractional share investing. It also has a network of branches throughout the United States.
Robinhood
Best for: Mobile investing
Robinhood is an excellent option for investors looking for a standard brokerage account that allows them to buy and sell stocks as well as cryptocurrencies (via Robinhood Crypto). This app makes it easy to use. Robinhood offers fractional stock purchase and is one of few brokers that allows for commission-free trading.
SoFi Active Investing
Best for: Membership ecosystem
Investors who are looking for an easy-to use stock trading app with other financial products or services may find SoFi a good choice. SoFi offers unique features such as cryptocurrency trading and fractional share investing. It also allows smaller investors to access IPO investing. SoFi is one of few platforms that offers commission-free trading options to its members.
E*Trade
Best for: Mobile platform
E*Trade is an excellent choice for investors looking for a high-quality trading platform, educational resources, and many investment options. E*Trade has a variety of account types, and it is a well-rounded brokerage that will satisfy most investors’ needs.
Merrill Edge (r), Self-Directed
The best for managing finances under one roof
Merrill Edge is an excellent choice for Investors who are looking to have a variety of stocks, bonds and mutual funds. Merrill Edge is a great option for those who need to have access to live financial advisors. Merrill is owned and managed by Bank of America. There are advisors in many of the Bank of America branches.
TD Ameritrade
Best for: Search
TD Ameritrade is a well-known broker worldwide. Investors who are looking for a comprehensive brokerage experience, excellent customer service, and many investment and account options will love the platform. TD Ameritrade offers excellent education resources for beginners, multiple trading platforms for investors with all levels of skill, and almost every type of brokerage account.
Charles Schwab
Best for: Retirement Investors
Charles Schwab is an excellent brokerage option for investors looking for a variety of account types and investment options. They also offer great customer service and banking products. Schwab has great features like fractional share investment, as well as an excellent robo advisor platform for those who wish to play a passive role in their strategies.
Acorns
Best for: Saving money to invest
Acorns is a great option for those who don’t want the hassle of selecting stocks or funds. Acorns is the best platform for investors who want to automate their investment strategy. Acorns is a robot-advisor that simplifies investing. It features automatic rounding up of purchases to the nearest dollar, and the ability to invest the change.
Vanguard
Best for: Low-cost index investing
Vanguard is a great broker for investors looking to invest in ETFs and mutual funds. Vanguard’s ETFs are particularly good. Vanguard’s low cost ETFs or mutual funds are not often on brokers’ no-transaction fee (NTF) lists. However, investors can still buy them directly without paying commissions.
Cash App Investing
Best for Mobile Banking and Investing
Although Cash App isn’t a fully-featured broker it can still be a great investment account for beginners looking to buy and sell stocks and invest in fractional shares.
What does a stock broker do?
A stock broker is a trading platform or person that facilitates the purchase and sale of marketable securities such as stocks and ETFs. A stock broker can help you open a brokerage account. This is a financial account that allows you to invest and keep cash.
This term is frequently used interchangeably with brokerage, which technically refers to a business that employs brokers or acts in the role of a broker to facilitate trades.
You can’t call the company to purchase shares. You can’t walk into your bank to invest if you want stock in a company. Stock brokers are the best choice for a brokerage account.
What are the various types of brokerage accounts?
Two main types of stockbrokers are full-service and discount. Each type comes with its own costs and service levels.
Brokerage discount
A discount broker allows investors to buy and sell securities online. You can either direct the buying and selling of stocks, or you can sign up for a robo-advisor account that will automate your investments. There are many discount brokers that offer features that allow you to control how your trades are directed, but there is usually no human broker who takes and fills your orders.
Discount brokers can be as cheap as full-service brokers and offer stock trading at zero commission. A discount broker is the best option for the majority of investors, especially the beginner investor. Our picks for best trading platform are exclusive discount brokers.
Full-service broker
A full-service broker is like an old-school broker. A full-service broker is one that operates from a physical location where a person (also known as a stock broker) executes client’s buy and sell orders. Full-service brokers might also offer personalized investment planning services such as stock-buying advice and retirement planning assistance.
Due to the high costs of human advisors, brick-and-mortar offices, full-service brokers can be more expensive than discount brokerages. However, costs have fallen over the last few decades due to competition from stock brokers. They aim to make investing easier and provide tools that automate their work.
Full-service brokers work best for high-net-worth investors looking for personalized service and dedicated portfolio management. For almost all investors, discount brokers are the best.
How to choose the best stock broker online for beginners
While there is no one perfect stock broker, here are some important things to remember when you start looking for a broker.
Cost structure The best brokerages are free to trade online stocks and ETFs. This is what you should be focusing on as a beginner. However, many charge fees or commissions for more complicated moves such as options trading and mutual funds.
Minimum account deposit: Some stock brokers require a minimum deposit of $5 to $500 to open an account. Others don’t charge any fees at all. We have narrowed down our selections to brokers who don’t require account minimums. Some brokers do not allow fractional shares investing. You will need enough money to purchase at least one share in a stock or ETF. These brokerages have low barriers to entry, so anyone can start investing.
A variety of funds: Individual stock selection is not for everyone, especially for beginners. The best platform to invest for beginners is one that offers low-cost mutual funds and exchange-traded funds. This will help you to make smart investments without having to have a lot of knowledge about stock markets.
Account Options: Stock brokers can offer you two options for your account: a cash account or a margin account.
Cash account: You cannot spend money that is not in your cash account.
Margin account: To invest, you can borrow money from your broker. Margin trading is risky and not recommended for beginners. Margin interest rates can be high in rising rates, which is why they are so common.
Support and features:
Research: Many of our top stock brokers offer research access so that you can learn more about individual stocks, ETFs and mutual funds.
News: Stock trading platforms that are beginner-friendly offer news updates. This allows you to keep up with the latest happenings and companies in the stock market.
Customer service: A live person should be able help you with any problems you have.
Education resources: If you are new to investing, it is possible that you don’t know the key terms you need to manage your account. You shouldn’t invest in a mutual fund if you don’t understand what it is. A lot of stock brokers offer educational resources that will help you gain confidence and learn more about investing.
Where is the best place for stocks to be bought?
Depending on your needs, the best place to start investing in stocks will differ. Investors have three options when it comes to where to buy stocks.
Stock brokers that can be accessed online
Investing Apps
Robo-advisors
For first-time investors, the great thing is that most of the top brokers offer all three avenues for buying stocks under one roof.
Stock brokers that can be accessed online
A web-based stock broker is the best place to purchase stocks. These accounts are the best for beginners who want a simple platform for investing and $0 in commissions on stocks and ETFs.
Our beginner guide will show you how to invest before you begin investing.
Apps for investing
There are many options available to purchase stocks via mobile apps. These apps also provide financial services such as budgeting, banking and cash transfers. Acorns and Cash App are excellent stock trading apps that allow you to manage multiple money needs and buy stocks with microinvestments.
Robo-advisors
A lot of online brokerages offer a robo advisor service. Some even operate exclusively in this manner.
Instead of having a broker to guide you through stock trading, a robot-advisor can help you set up your portfolio in cruise control. The algorithms will work as dedicated brokers and buy and sell for you. Robo-advisors can be a cost-effective solution for novice and inexperienced investors.
Can beginner investors purchase fractional shares
Many trading platforms that are best for beginners offer the option to purchase and sell fractional stocks. The investor buys a piece of a share. This allows them to access a wider range of investment options that are not available for beginners if they have a small portfolio. Some stocks, such as the popular ones, can be more than $1,000 per share. These stocks are not possible for someone who has a $500 investment.
Investors can purchase fractional shares of these stocks with smaller amounts by investing in fractional share. The best part is that beginners can invest in fractional shares with very little money.
Opening brokerage accounts
This information will make the process easier.
Social security number (SSN), Your broker will need your SSN to verify identity and prepare tax returns for the year. You will need to report any income earned, dividends received, or profits (or losses) from sold investments on your tax return.
Driver’s licence or another government-issued ID. To verify your identity, you can usually use another state-issued ID (or a U.S. passport).
Funding method An ACH transfer from your bank account is the best way to fund a brokerage account. Keep your bank routing number, account numbers and online banking password handy. You can also send a check, wire money or pay a fee to your broker.
Opening an IRA account
It is the same process to open a traditional IRA or Roth IRA account. An IRA account can be considered a standard brokerage account, but it’s taxed differently. This is important because it’s one of the most beneficial steps for new investors to make when investing in tax-advantaged accounts. Just as commissions can eat away investment gains, IRAs protect investors from these taxes.
Minimum account balances and trading commissions
Most stock brokers have ceased to charge trading commissions or set minimum account balances. A majority of stock brokers and investing apps do not charge commissions for basic trading. Most allow you to open accounts with just $0 or a few dollars.
Most still require minimum funds to access more complicated features like margin investing. A $0 commission is typically applicable to stock and ETF trades. However, some brokers charge commissions for trading options or mutual funds. Before you open an account, make sure you review the full fee schedule of the broker to ensure it is appropriate for your investment goals.
Also, remember that mutual funds, ETFs and other types funds can have fees, which is called an expense rate. Although this is an expense that your broker cannot control, your broker will often inform you of the expense ratios for any funds you are allowed to invest in.
Why fees and commissions are important
Here’s why trading fees are important. Let’s say your broker charges $6.99 for online stock trades. You have $1,000 to invest. Spread your money among five stocks.
You’ll need to pay $35 in trading commissions for your initial investment. A $1,000 investment will result in a 3.5% loss to your portfolio.
You’ll also pay $6.99 for each stock position you add. It’s easy to see how this could cost you thousands over the years if you plan to grow your portfolio.
Remember to keep your account minimum
Major stock brokers do not require a minimum account. This has not been the case historically. My first brokerage account was opened over 20 years ago. I had to deposit $2,000 to get started.
Investors who do not have much capital can start investing quickly by setting a low or zero minimum deposit requirement. This allows them to build a portfolio of investments and reap the long-term benefits.
Which stock trading platform is best for beginners?
You may have limited funds and need some guidance to get started as a beginner investor. You might find it beneficial to have a broker that has no minimum account, $0 commissions and provides more education resources. Here is a list with a few stock trading platforms that beginners might like.
Charles Schwab – A great stock broker that offers many investment options and platforms.
Acorns – Round up your purchases and invest your spare cash
Cash App Investment: Mobile banking and mobile investing in one
SoFi – A user-friendly trading platform with fractional shares and lots of educational resources.
