The Best Brokers for Beginners in 2021

The Best Brokers for Beginners

The best brokerage account for beginners will have low fees and a robust education portal to teach investing concepts. Fortunately, nearly all brokerage accounts offer commission-free stock and exchange-traded fund, or ETF, investing. Other deciding factors to consider when choosing the best brokerage account for beginners are how much money you intend to invest, the mobile app’s rating and the financial assets you expect to trade. Ultimately, figure out what you’re looking for and make sure that your investment criteria are satisfied by the investment brokerage account. For more information on how we choose the Best Brokers, see our methodology.

Our Top 10 Brokers

Fidelity

As one of the largest brokers in the U.S., Fidelity is designed to serve the vast majority of retail investors, and it does it well. The company boasts a strong reputation for its mutual funds but is also well-known for its brokerage services, providing no commissions on stock, exchange-traded fund and options trades.

TD Ameritrade

TD Ameritrade, which is merging its platform with that of Charles Schwab, offers commission-free stock and exchange-traded funds in addition to no account management fees or minimums. It created a highly regarded trading platform called Thinkorswim, which is well loved by new investors and experienced traders alike. The research and educational tools are exceptional, and the TD Ameritrade Network adds top-level investment content on a regular basis.

Merrill Edge

The Bank of America Merrill Lynch effort is a solid addition to the discount brokerage market. Customers are generally happy with the platform, mobile app and MarketPro trading offer. The research and available assets are robust enough to serve the majority of beginning to advanced investors, although professional traders might look elsewhere. Merrill Lynch’s integration with Bank of America opens the door to a wealth of products and services.

Charles Schwab

Charles Schwab is a discount broker with service, education, trading tools and research that puts it in the top tier of investment firms. With the ongoing integration of TD Ameritrade, including that firm’s highly recognized Thinkorswim platform, Schwab has established itself as a broker to beat.

E-Trade

E-Trade was the first completely online trading platform and continues to innovate. The firm remains competitive with access to a range of investment assets, zero-commission trades on stocks and exchange-traded funds, and the Power E-Trade platform. Its educational resources, research, videos and webinars are among the highlights of the E-Trade website, while the Android mobile apps leave room for improvement.

Interactive Brokers

Interactive Brokers, a great choice for sophisticated traders, participates in more than 135 global markets. The firm’s broker-dealer agency business, IBKR, offers online trade execution and clearing services to institutional and professional investors and executes more than 2 million trades per day.

Vanguard

Vanguard is a major financial marketplace offering a vast array of investment products and services, including managed accounts and robo-advisor platforms. The firm isn’t considered a platform for active traders, but it’s a solid choice for buy-and-hold investors and those seeking commission-free mutual funds.

Wells Trade

WellsTrade is a sound investment platform appropriate for buy-and-hold investors seeking basic investment assets. The integration with Wells Fargo is ideal for those who want all their financial and investment transactions under one roof. The highly ranked integrated Wells Fargo app and proprietary research will benefit beginning to seasoned investors, though professionals and active traders should look elsewhere.

Sofi Invest

SoFi Invest is a versatile platform where members can buy and sell stocks, including fractional shares and initial public offerings, and trade cryptocurrency. SoFi distinguishes itself with access to financial advisors. In addition to commission-free investing, there are no account minimums or maintenance fees.

Ally Invest

Ally Invest offers stocks, exchange-traded funds and bonds, plus foreign exchange, six levels of options trading and low-commission mutual funds. The fees are competitive, and Ally Live provides web-based research, analysis and trading on a streaming platform. Access to Ally Bank high-yield cash investments and lending is an advantage.

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What Is a Brokerage Account and How Does It Work?

Before purchasing a stock or ETF, you’ll need to set up a brokerage account. There are a variety of account types, including taxable brokerage accounts, traditional IRA and Roth IRA accounts. A brokerage account typically refers to a taxable account that has either one or two owners. These accounts are called either single or joint taxable brokerage accounts. Unlike some types of retirement accounts, money earned by the investments in the brokerage account is taxable once those gains are realized and there is no tax deduction for your contributions to the account.

After the account is opened, investors transfer cash in from a checking or savings account. You can also transfer financial assets like stocks, bonds and funds from another brokerage firm to the newly opened account.

Once the account is funded, you are authorized to invest the money. You can buy stocks, bonds, exchange-traded funds, mutual funds and more within your brokerage account. Most brokerage firms for beginners offer educational resources to help you learn how to invest.

What Fees Come With a Brokerage Account?

Each brokerage firm has a menu of fees for various services. Today, most brokerage firms do not charge commissions or fees to buy and sell stocks and ETFs. But there might be commissions to buy and sell mutual funds, bonds and other types of investments.

Typical brokerage account fees:

Factors to Consider When Choosing an Online Broker

The best brokerage account for beginners fits your financial and lifestyle needs. If you expect to trade with your phone, then scrutinize the mobile app. If you’re starting with a small amount of money, check out the account minimums and whether the broker offers fractional shares.

Financial Assets Offered

Financial assets are types of investments, like stocks, bonds, ETFs and mutual funds. More advanced types of assets include options, futures, cryptocurrency and foreign exchange. In general, beginning investors will be content with stocks and ETFs, but if you expect to progress to more complex financial assets, factor that into your choice of the best online brokerage for beginners.

Fees and Minimums

Some online trading platforms cater to beginners, like SoFi Invest, Robinhood, Webull and M1 Finance. These brokerage accounts for beginners charge no fees to open an account and require low or no investment minimums.

Most of the well-known investment brokers, like Schwab, Fidelity and TD Ameritrade, do not charge account management fees or require a specific minimum investment amount.

Most of the best online stockbrokers for beginners will charge fees for services such as receiving paper statements, wire transfers and making phone-assisted trades.

Mobile Apps

Mobile app information is readily available. Read the reviews and check out the services and ratings on Google Play for android users or the Apple App Store for iOS users. Services available on the trading app will vary greatly. For example, when seeking various research tools on the Fidelity app, you might be transferred to the web-based platform. Consider how much you’ll use the app and whether you’ll be trading more on desktop browser, downloadable or mobile platforms.

Tools and Educational Features

For most beginning investors, tools and educational features are important. Although you can learn about investing online, it’s convenient if your investment brokerage firm offers robust educational resources like webinars, videos, articles and courses.

Tools include customizable screeners to help choose investments and calculators. How much you’ll need to invest to become a millionaire is just one of the many uses for online calculators.

Account Types

All beginner investment firms offer individual brokerage accounts. The majority also offer joint and retirement accounts like traditional, Roth and rollover IRAs.

The larger firms also provide custodial, trust, business or other specialty accounts. If you need a specific account type now or expect to use one in the future, it is wise to examine its availability before opening your brokerage account.

Customer Service

Customer service matters, including the ability to reach a representative during or after normal business hours. Typical customer service options include phone, email, chat bots and human chat representatives. Many larger investment firms offer 24/7 phone access to customer service professionals. It’s customary for some firms to staff these positions with well-trained personnel, many of whom also possess securities licenses like Series 7 certification.

Before selecting your best online broker, spend a few minutes reviewing both the service hours and ways to contact customer service. A lack of phone customer service might be a negative if you’re just learning to invest. Customer service reviews are helpful and frequently found in mobile app reviews.

FAQ

What Is an Online Stockbroker?

An online stockbroker provides a platform for you to buy and sell stocks on your phone or computer. Technology enables online stock and investment trading facilitated by the brokerage company’s software. Today, most online stockbrokers offer commission-free stock and fund trading.

What Do You Need to Open an Online Brokerage Account?

The Securities and Exchange Commission, the main federal regulator of investable assets, provides a list of information new customers may need to provide when opening an online brokerage account:<

How Much Does It Cost to Open an Online Brokerage Account?

It is typically free to open an online brokerage account. On rare occasions, you might encounter an annual account maintenance or low balance fee.

How Do You Buy Stocks Online?

You can buy stocks online yourself or with the assistance of a licensed broker. The steps to buy stocks online without a broker are so simple that in most cases you won’t need to pay the fee to place a trade with a broker.

If you’re purchasing an individual bond or would like help with a purchase, then you might consider paying the fee to invest with a human broker.

Are All Brokers the Same?

No. Investment brokers vary substantially.

One distinction is the difference between a discount broker and full-service broker. As their names imply, discount brokers offer services for lower fees than full-service brokers. Yet full-service brokers typically offer a wider range of services that encompass retirement, estate and tax planning, along with more personalized investment management options.

The lines are blurring between discount and full-service brokers as many discount brokers also offer managed accounts and planning, while full-service brokers offer commission-free stock and ETF trading.

Differentiating features of brokers include:

Can I Withdraw My Money From an Online Broker?

You can withdraw your money from an online stock broker, but it might take several days to receive the proceeds from your account. If you withdraw all of your money or transfer all of it out to another brokerage firm, there may be a fee.

Because brokerage customers have different needs, please consider our other "Best for" brokers lists: