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Best Online Stock Broker for Beginners

Featured Promotion

Trade commission-free for 60 days with E*TRADE and get up to $2,500 in cash. This E*TRADE promotion is only available to new customers who open an account with at least $10,000. The commission-free trades can be used for stock or option trades. Your trades must be executed within 60 days of the deposit.

Stocks, bonds, mutual funds, IPOs: What a dizzying array of confusing possibilities, right? The sheer diversity of so many options leads me to completely sympathize with people who are too intimidated to invest.

Quick Look – Our Favorite Brokers for Beginners:

I firmly believe that self-education is key to gaining confidence—just like with anything else. If you seek knowledge, if you take an active role in your own finances and manage as much as you possibly can on your own (instead of passively letting an investment professional do everything for you) you should give yourself a pat on the back. If you want to learn, your possibilities are literally limitless.

Choosing an Online Broker

Before you even get into the nitty-gritty of choosing the stocks, bonds or mutual funds (or Forex or ETFs) that will work best for your portfolio, you’re going to need to choose a broker. These days, an online brokerage firm is a way most people choose to go—it’s quick, it’s easy, there are a whole bunch of techy educational options at your fingertips, and often, this is the cheapest way to build your portfolio.

But which online broker? E-TradeTD Ameritrade? Fidelity? Vanguard? Etrade

Good question. I want you to answer one more question before that, though:

What is Your Investing Strategy?

What are your goals? Without goals, how do you know what your plan is and what type of investment to dive into? Different brokers offer different products, and your ultimate goals should end up guiding the products you end up choosing in the end.

What do you want your money to do for you? Do you want to build up a secure retirement? Save some money for a vacation to Japan? Save money for your kids’ college education? Make sure you have enough for an addition for your home? All of the above?

I would really recommend writing down your goals because those will be what fuels your drive and inner fire. And if you do have some money socked away for something really fun, like for real, a trip to Japan, boy, won’t it be exciting to watch that grow? Rewarding yourself with something tangible at the end of all that hard work is so incredibly, incredibly amazing. It also makes you want to invest more, and more, and more, because finally, you can see what all the fuss is about.

Here are some quick tips on choosing an online broker:

  1. Full-service brokers (not a discount broker) are sometimes a good thing for brand new investors. If you want to go with a discount broker right off the bat, go for it! Beware, you will pay more with a full-service broker. Note: this is just a suggestion. However, once you do become a savvy investor, it’s a possibility to then spend more time looking into discount brokerages.
  2. Do your research on the broker. What do other people say about it in forums? Have they had problems with the broker’s platforms? Frustrations with customer service? Take that to heart, and maybe even a grain of salt. Oftentimes, these online brokers serve millions of customers. If there are fifty complaints and that’s it, well, in the grand scheme of things, that’s not so bad.
  3. Check on commissions and minimums. Those will sometimes really eat away at your money—sometimes before you even start investing!
  4. Are there some promotions going on with certain brokerage firms? 200 free trades if you invest a certain amount of money? A cash bonus? Something along those lines? Obviously, that should not be the be-all, end-all for your decision, but if you qualify, that could be a very good thing.
  5. Different brokers offer diverse products. Along with all of the different online brokers out there, they also all offer different products, which can add to the confusion. Again, read definitions of all investment vehicles out there, read the broker’s website, do your homework! 

And, we’re here for you if you need some more help setting up a brokerage account.

Best Overall Online Stock Broker for Beginners

Best For
  • Mobile traders
  • Traders looking for research and data
  • Investors looking for retirement planning guidance

1. E-Trade

E-Trade has the tools and platforms to help beginners invest like professionals. You will be connected on all platforms as E-Trade also has an excellent mobile app, and you can count on their customer service to always be there when you need it.

E-Trade gives you access to courses and other educational materials that can really bring you up to speed and help you learn quickly.

This is crucial if you really want to gain the knowledge quickly. Having your brokerage account with access to learning materials all in one place can really help you make smarter investment decisions.

Read our full review of E-Trade here.

 

Best For
  • Active traders
  • Beginners looking to start trading
  • Low fees
  • Penny stocks

2. Ally Invest

Ally Invest, which was formerly TradeKing has really made a name for itself in the brokerage space. They have competitively prices commissions that are some of the lowest in the industry.

Ally also provides some of the best promotions available for new customers.

Beginners may also be interested in Ally’s managed portfolio product. This allows you to easily invest with a robo advisor. These are designed to see growth automatically and are managed with very low fees.

Ally has also been a popular choice for Benzinga readers this year.

Read our full review of Ally Invest here.

 

 

Best For
  • Beginner investors
  • Advanced traders
  • Investors who want portfolio-building advice.

3. TD Ameritrade

Another best overall happens to be TD Ameritrade for its beginner-friendly platforms. I mean, TD Ameritrade’s IT people are geniuses.

TD Ameritrade has two amazing platforms that’ll make it easy for beginners to start trading:

In addition to that, their website is an amazing platform as well, which allows you to have a range of tools at your disposal. Beginner-friendly, too!

TD has made Benzinga’s list for best overall brokerage. You can read the full review of TD Ameritrade here.

 

Best Options for Low Broker Fees

I like Fidelity and Ally Invest for low fees. Check out a side-by-side comparison of both:

Fidelity

Investment Commissions
Stocks and ETFs   $4.95 per trade
Stocks and ETFs, broker assisted $29.95 per trade
Options $4.95 per trade + $0.65 per contract
Mutual funds $49.95 ($75 for some)
Fidelity family funds Commission free
Bonds and primary market CDs On a net-yield basis
Bonds (maturing in one year) $1 per bond ($250 max; $50 max if maturing in one year)
Commercial Paper $50 per transaction

Minimum Deposit for Fidelity:

Stocks, bonds, mutual funds, options, commercial paper, UITs, ETFs: The minimum deposit to open an account is $2,500, though it’s $0 for a rollover IRA. $2,500 (or $200 per month) for Roth or Traditional IRA.

Ally Invest

Investment Commissions
Stocks and ETFs   $4.95 per trade
Options $4.95 per trade + $0.65 per contract
Mutual funds $9.95
Treasuries Commission free
Bonds $1 per bond with $10 minimum, $250 maximum

Minimum Deposit for Ally Invest:

$0 for cash account, $2,000 for a margin account.

Next Steps – Opening an Account

Now, actually opening an account is kind of fun. Some online brokers allow new clients to open an account without an initial cash deposit. Opening a few accounts with these companies will allow you to choose the one or two you like the most. That way, you can make a more educated decision about where to invest your money. (However, many brokers do charge an IRA closing fee, so that can set you back if you do open accounts at more than one location.) Again, it’s all about doing your homework.

Final Thoughts on Choosing an Online Broker

Just remember, investing doesn’t have to be confusing and difficult, and also, nobody was born knowing everything about investing. Even Warren Buffett had to learn and teach himself along the way.

Also, ultimately, don’t spend tons of time agonizing over the merits of TD Ameritrade vs. Charles Schwab. The most important thing is that you’re actually investing and making your money work for you. That’s really something to celebrate.

Broker Best For Commissions Account Minimum Choose your platform
eTrade
  • Mobile traders
  • Traders looking for research and data
  • Investors looking for retirement planning guidance
$6.95 for fewer than 30 trades/quarter. $0
Get started securely through eTrade's website
1 Minute Review

E-Trade is best known for its user-friendly browser, desktop and mobile trading platforms and its extensive research and educational information. E-Trade may not have the lowest commissions compared to discount online brokers, but customers certainly get their money’s worth from E-Trade’s comprehensive offerings.

Pros
  • Extensive resources
  • Full banking services
  • Easy-to-use platforms
Cons
  • Limited access to ETrade Pro
  • Higher commissions than discount brokers
Current Promotion

60 days of commission-free trades with deposit of $10,000 or more

TD Ameritrade
  • Beginner investors
  • Advanced traders
  • Investors who want portfolio-building advice.
$6.95 $0
Get started securely through TD Ameritrade's website
1 Minute Review

This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.

Pros
  • Superior technology
  • No account minimum balance
  • Excellent customer support
  • Premier data and news partnerships
Cons
  • Slightly higher commissions
  • Can be for more advanced users
Current Promotion

Trade commission–free for 90 days & get up to $2500

Ally Investment
  • Active traders
  • Beginners looking to start trading
  • Low fees
  • Penny stocks
$4.95 volume discount available $0
Get started securely through Ally Investment's website
1 Minute Review

If investors are on the hunt for a bargain broker, Ally Invest could be the one. With low commissions across the board, Ally Invest (formerly TradeKing) stops potential investors in their tracks with its especially low mutual fund commissions. Commissions on stocks and ETFs are notoriously inexpensive as well, and for more active traders or those with larger account balances, commissions can dip as low as $3.95 per trade.

Pros
  • Volume discounts available
  • Among the lowest fees in industry
  • Good for every experience level
  • Excellent customer service
Cons
  • No commission free ETFs
  • Lacks physical locations
Current Promotion

$3.95 per stock trade for Active Traders at Ally Invest

Fidelity Investments
  • Retirement investors
  • Active traders
  • Premium research
  • Low fees
  • No-transaction-fee mutual funds
$4.95 $0 for IRAs. Some accounts may require a minimum opening balance of $2,500
Get started securely through Fidelity Investments's website
1 Minute Review

Fidelity's customized market research for individual investors is unmatched. Fidelity is best for experienced traders willing to make a minimum 36 trades per quarter. Not only does Fidelity offer 24/7 customer support, there are branches nationwide that offer in-person seminars and webinars to ensure that customers are always informed on the latest market research and technologies.

Pros
  • Low cost trade commissions
  • Commission free ETFs
  • Excellent customer support
Cons
  • Platform can be complex
  • Minimum investment balance of $2,500
Current Promotion

Commission-free trades good for 2 years