The best online brokerages for beginners

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Best brokerages for beginners (2022)

The best online brokerages for beginners offer low or no fees, an intuitive interface, and a variety of account types to serve your needs. To make our selections, we considered pricing and fees, investment options, account types, investment platforms, investment research, and education resources.

Best for most users: Charles Schwab

Editor’s rating4.79 out of 5FeesTrade fees: $0 for stocks and ETFsAccount fees: NoneRobo-adviser fee: $0Account minimumNoneConsider it if…You want a wide range of account types; easy-to-use apps and web interfaceApp store rating4.8 iOS/3.7 AndroidCharles Schwab

Why Charles Schwab made our list:

Charles Schwab is our choice for best overall brokerage for beginners because it offers something for investors with virtually any investment need. Not only does it give you the ability to manage all of your banking and investments with one login, but its investment tools are also designed in a way that they can grow with you as you learn more and level up your investing style.

For investors who want to manage everything themselves, you can choose self-directed traditional brokerage and retirement accounts where you pick all of your investments with no commissions for stock or ETF trades. These accounts have no fees and no minimum balance requirements. Schwab also offers a robo-adviser, Schwab Intelligent Portfolios, that can manage all of your investments for you for no added charge.

Schwab is best for investors who want every potential investment need covered at a very low cost. Whatever your needs are in the future, odds are Schwab will have a solution that works for you.

What to look out for: Schwab’s robo-advisor, Schwab Intelligent Portfolios charges no advisory fees, but it has a higher account minimum requirement ($5,000) than most automated accounts. 

Best overall runner-up: SoFi

Editor’s rating4.54 out of 5FeesTrade fees: $0 for stocks and ETFsAccount fees: NoneRobo-adviser fee: $0Account minimumNoneConsider it if…You want a beginner-friendly investment appApp store rating
4.8 iOS/4.3 AndroidSoFi Invest

Why SoFi made our list:

SoFi is best for investors looking for a simple and straightforward investing experience. It has a slimmer lineup of accounts than some bigger competitors, but it covers the most common needs for managing your investments. It also offers a great bank account, lending products, and other financial tools to help you get an understanding of your investments.

SoFi offers active investing accounts and managed robo-adviser accounts with no recurring fees and a $1 minimum to get started. Those include both taxable investment accounts and IRA or Roth IRA retirement accounts. The only big downside of these accounts is that you can only trade stocks and ETFs. There are no mutual funds available through SoFi. Stock and ETF trades are commission-free. SoFi offers automated investing for $0.

While it doesn’t have quite as robust an offering, SoFi comes with several very valuable perks at no extra charge. That includes free financial planning sessions, career coaching, and other perks for SoFi members. SoFi is best for inventors who are comfortable with technology.

What to look out for: While SoFi is generally a great choice for investors who value low costs, it has a fairly limited investment selection. It primarily offers stocks, ETFs, and cryptocurrencies.

Best for retirement: Fidelity

Editor’s rating4.79 out of 5FeesTrade fees: $0 for stocks and ETFsAccount fees: NoneRobo-adviser fee: $0 for balances under $10,000; $3/month for balances between $10,000 and $49,999; 0.35% for balances over $50,000Account minimum$0Consider it if…You’re focused on long-term investing and retirementApp store rating4.8 iOS/4.3 AndroidFidelity

Why Fidelity made our list:

Fidelity is a top choice if your main goal is investing for retirement. Fidelity offers a wide range of accounts with no fees or minimum balance requirements, as well as a suite of investor tools and resources focused on helping customers reach their retirement goals.

In addition to free stock and ETF trades, Fidelity customers have access to nearly 3,500 mutual funds with no transaction fees. Among those are four funds from Fidelity that charge no expense ratio (that means no fund fees). 

Fidelity also offers a handful of useful tools and calculators. One favorite is the Retirement Score, which helps you assess your retirement preparation and includes guidance to help you reach your goals. Fidelity Go is Fidelity’s robo-adviser offering; it’s a solid product, though fees are slightly higher on some balances than competitors such as Betterment.

Fidelity is a large brokerage that can handle just about anything. But retirement is definitely a specialty.

What to look out for: The brokerage offers a long list of tradeable assets, but it isn’t the best option for those who want to invest in cryptocurrencies.

Best for active trading: TD Ameritrade

Editor’s rating4.80 out of 5FeesTrade fees: $0 for stocks and ETFsAccount fees: NoneRobo-adviser fee: 0.60-0.90%Account minimumNone for DIY accounts, $500 for Essential PortfoliosConsider it if…You want multiple apps for different trading experiences and goalsApp store rating4.5 iOS/3.4 AndroidTD Ameritrade investment account

Why TD Ameritrade made our list:

If you have plans to manage your account actively and are interested in the fast-moving world of options trading, TD Ameritrade could be the best choice for your needs. 

TD Ameritrade offers similar low fees to other large investment brokerages, with many account types available with no recurring fees and no minimum balance requirements. As with most other brokerages on this list, there are no fees for stock or ETF trades as well as no base fee for options trades.

TD Ameritrade stands out for active traders due to its suite of investment platforms. Brand new investors will probably be most comfortable on the TD Ameritrade website and using the standard TD Ameritrade mobile app. As your investment chops improve, you can upgrade to the professional-quality thinkorswim mobile and desktop platforms.

One downside to TD Ameritrade currently is its pending acquisition by Charles Schwab. However, as Schwab is our top brokerage on this list and plans to keep beloved trading tools from thinkorswim post-acquisition, it’s still worth considering as your new brokerage when starting out. Another thing to note is that TD Ameritrade’s robo-adviser, Essential Portfolios, is no longer available to new clients. However, you can still use its Selective Portfolios or Personalized Portfolios managed accounts.

What to look out for: TD Ameritrade doesn’t allow customers to invest in fractional shares.

Best for no commissions: Webull

Editor’s rating3.67 out of 5FeesTrade fees: $0 for stocks and ETFsAccount fees: NoneAccount minimumNoneConsider it if…You’re after something that’s free to use (for most people) and friendly to active tradersApp store rating
4.7 iOS/4.5 AndroidWebull

Why Webull made our list:

Webull is a newer brokerage to join the scene, but just because it’s new doesn’t mean it’s not packed with features. Webull is also almost completely free to use. There are no account fees or trading commissions. There are paid upgrades and products available, but most newer investors won’t need those when starting out.

Webull doesn’t support every type of investment or account, but it covers the most commonly needed types. Those include taxable investment accounts and IRAs. You can trade stocks, options, and ETFs in those accounts with cryptocurrencies announced for the future.

This is a high-tech brokerage that releases regular updates to its online trading platforms and is best for investors who are comfortable with computers and mobile apps and can handle most of their account needs on their own.

What to look out for: Webull doesn’t currently offer joint brokerage accounts, education savings accounts, or automated investing options.

Best for robo-advising: Betterment

Editor’s rating4.80 out of 5FeesAccount fees: 0.25% – 0.40% per yearAccount minimumNoneConsider it if…You want the original robo-adviser with multiple service levelsApp store rating
4.7 iOS/4.4 AndroidBetterment mobile app

Why Betterment made our list:

If you are looking for an investment experience where you explain your investment goals, hand over your money, and someone else takes care of everything for you, Betterment could be your best choice. Betterment is the oldest and best-known robo-adviser, an automated investment solution that’s quickly growing in popularity.

The term “robo-adviser” is a bit intimidating to some people, but rest assured an actual robot isn’t sitting there picking stocks for you. Instead, you answer some basic questions about your age and investment goals when signing up. Based on your answers, Betterment will assign you to a professionally designed portfolio where your assets are automatically kept in balance, among other computer-driven features.

Betterment is good for both taxable and retirement accounts. Pricing starts at 0.25% of your portfolio balance per year, though you can pay more for a plan that includes access to a human financial adviser as well. For most beginners, the basic plan covers your needs.

What to look out for: You’ll have to pay extra to take advantage of human advisor guidance if you can’t meet the $100,000 minimum attached to Betterment’s premium account.

Best for banking-brokerage combo: Ally Invest

Editor’s rating4.08 out of 5FeesTrade Fees: $0 for stocks and ETFsAccount fees: NoneRobo-adviser fee: NoneAccount minimumNone for DIY portfolios, $100 for robo-adviserConsider it if…You want easy-to-use apps paired with excellent checking and savings accountsApp store rating
4.7 iOS/4.0 AndroidAlly Invest

Why Ally made our list:

Most of the brokerages above offer some type of integrated bank account, but if you are looking for the best bank account and brokerage combo, Ally Invest may be the best option for your needs. Ally Bank offers some of the highest-rated checking and savings options out there, and it also offers a low-fee investment platform that works well for beginners.

The investment side of Ally can handle your taxable or retirement accounts. It features commission-free stock and ETF trades and no base fee for options. Most mutual fund trades are $9.95, which is more than you would pay for mutual fund trades on the no-transaction-fee (NTF) lists at competitors, but less than most charge for funds off of their NTF lists. Managed portfolios are available, too, with no advisory fees and a $100 minimum balance.

It doesn’t have the flashiest or fullest-featured trading platform, but it gets the job done and makes it easy for beginners to manage their banking and investments with one login.

What to look out for: Ally doesn’t offer any cryptocurrencies or no-transaction-fee mutual funds.

Other brokerages we considered

Firstrade: Firstrade isn’t as well known as some others on this list, but it’s been around for decades and offers commission-free trades for most assets including no per-contract fee for options and no commissions for any mutual fund trades. The trading platform doesn’t feel as modern and polished as some competitors, but the price is right.E*Trade: E-Trade is a major brokerage with a long history of serving online traders. It has a great web platform and works well for beginner to experienced traders. E-Trade is currently in the process of being acquired by Morgan Stanley.Interactive Brokers: Interactive Brokers is best for investors who are looking to become more active traders. It may be good for beginners looking to invest time to learn the markets and how higher-powered trading tools work.Merrill Edge investment account: Merrill Edge is part of Bank of America. It does a good job of rewarding very loyal customers with high balances across Bank of America and Merill accounts. It’s less ideal for traders who don’t have a strong relationship with Bank of America.Vanguard: Vanguard is well-known for its own brand of mutual funds and ETFs. If you’re planning to invest heavily in those products, particularly mutual funds, you may want to cut out the middleman and open an account at Vanguard directly.

Frequently asked questions

How did we choose the best online brokerages for beginners?

To pick the best online brokerages for beginners, we considered a long list of brokerages and zeroed in on options that offered competitive pricing and features most important to beginner investors and traders.

To make it onto this list, brokerages must offer commission-free stock and ETF trades and no recurring account fees (not including robo-advisers). Other important focus areas include available investments, types of accounts, and high-quality investment platforms. Strong investment research and education resources were another plus, but carried less weight in the decision process.

What are brokerage accounts?

A brokerage account is like a checking account for your investments. Where a checking account holds your cash, a brokerage account holds your stocks, bonds, funds, and other investments. When you open and fund a brokerage account, you can buy and sell investments. Unlike the cash in a bank account, however, the value of the investments in your brokerage account can go up and down.

How do brokerage accounts work?

It’s easiest to manage a brokerage account online using a website or mobile app. Online brokerages allow you to transfer funds, enter trade orders, monitor your positions, research current and future investments, and handle any other transactions you need to make in a brokerage account.

In the US, brokerage accounts are insured by the Securities Investor Protection Corporation (SIPC). If your brokerage goes out of business, you are guaranteed to get your money and other assets back, up to SIPC limits.

Brokerage firms are regulated by the Securities and Exchange Commission and Financial Industry Regulatory Authority (FINRA), among other government agencies and industry groups.

Who should use a brokerage account?

If you want to invest, you need a brokerage account. That goes for long-term investing for retirement, short-term gains, or anything in between. Make sure you’re covering your bills before adding investments to your budget.

How much should a brokerage account cost?

Most modern brokerage accounts are free to open and keep. You shouldn’t be paying any recurring fees or minimum charges if you’re looking for the best brokerage account for most investors.

You should also look for brokerage accounts with no commissions for stock, ETF, and options trades. You may see some fees for phone or broker-assisted trades, as well as commissions for some mutual funds and other investments.

You should not have to pay any fees to keep an account open and store your cash and investments there. 

How do I choose an online brokerage?

The best brokerage for you will reflect your investing style and what you want from a brokerage (for example, robo-advising or active trading, or access to a human financial adviser). Everyone’s investment goals and preferences are unique, so there is no perfect brokerage for everyone. 

Once you know what features you’re looking for, look at costs, platforms, available account types, and investment options to lock in the decision on what’s best for you.

Read the original article on Business Insider

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