Thanks to the Internet, there has been a massive wave of discount online brokerage firms and new investment opportunities.
Investors are no longer required to walk into a brokerage firm, or even use a stock broker, to make investment trades or open up investing accounts.
Each online brokerage site is different, so which one is the best?
Because each person has different preferences and different preferences on how much to invest whether that be the best way to invest 100 dollars or the best way to invest 1000 dollars, each person is going to have a different “best brokerage” for them.
Best Online Brokerage Firms
When deciding which online brokerage firm to choose, you need to consider what will work best for you. In some cases, a slightly higher fee is worth it, if the brokerage meets your needs and helps you reach your goals.
The Top 10 Online Brokerage Accounts:
All of the online firms listed above have accounts that are easy to set up, offer cheap investing opportunities, and many have awesome customer service that makes you feel as if you’re meeting with somebody in real life.
We also highlight online discount brokers that encourage investor education by offering deep knowledge bases, webinars, or even online courses for their investors.
Ally Invest – Best All-Around Online Brokerage
Ally Invest is an online discount brokerage firm with some of the least expensive trade fees available.
$4.95 for stock and ETF trades is crazy talk. Plus no-load mutual funds are reasonable at $9.95 per trade.
If you want to get funky with your investing you can trade options with Ally for just $0.65 per contract (plus the $4.95 base). Ally Invest also offers Forex services for the truly adventurous.
Ally has a number of free tools, including market and company snapshots, research, quotes, screeners, and more. Read our full Ally Invest Review.
Betterment – Best Brokerage for Beginners
Betterment’s philosophy is this: investing is so complicated that many people get analysis paralysis. Instead of making any decision, they freeze and make no decision. By studying over a Betterment Investing review, which is designed to help you understand that investing can be incredibly simple.
You have very few choices to make:
- how much money to invest
- how often you want to invest it
- what asset allocations do you want between stock and bond investments
That’s it. Betterment takes care of the rest.
It’s dead simple, which is why it is a great place for beginners to start.
M1 Finance – Best for Free Trades
If you like the idea of automated account management but like to choose where to invest, M1 Finance could be the ideal broker for you. In addition to streamlining the investment process and ensuring your funds are allocated where they’ll benefit you the most, M1 Finance is free. It doesn’t get more affordable than that.
M1 comes preloaded with 60 targeted investment portfolios, known as pies, with expertly chosen slices.
If those pies don’t suit your palette, you can create your own, choosing from M1’s robust offering of ETFs and stocks. M1 also uses an algorithm to reduce your capital gains tax any time securities are sold.
If you aren’t sold yet, you can take a look at our M1 Finance Review. In the meantime, here’s a rundown of some of M1’s best features:
- Tax exporting: Your M1 investment records can be exported straight to H&R Block and TurboTax
- Retirement: M1 allows you to open traditional, SEP, and Roth IRAs, as well as rollover plans.
- SIPC Protection: Your money is protected for up to $250,000 in cash and $500,000 in cash and securities.
- No fees: No trading fees, no advisory fees, and no account management fees, period.
TD Ameritrade – Best for ETFs and Easy to Use
If you’re looking for a solid industry leader that makes investing easy for new investors, TD Ameritrade is a great option.
Unlike Betterment and Capital One ShareBuilder, TD Ameritrade isn’t designed solely for new investors. You get a set of robust tools whether you are new to investing or have been investing for decades. It’s an opportunity to access something approaching full-service without the full-service price.
As a leader in the industry, TD Ameritrade offers a vast array of investments that are suitable for new and experienced investors alike:
- 100+ Commission-free ETFs
- 13,000+ mutual funds
- Fixed income products like bonds and CDs
- Trade stocks, options, forex and futures
- Multitude of account options: Traditional IRA, Roth IRA, SEP IRA, Simple IRA, 401k rollovers, normal taxable investment accounts
Trades cost just $9.99 to start, and if you choose some of the fee-free funds, you can avoid transaction fees. Want to learn more about TD Ameritrade? Check out our TD Ameritrade Review for more information!
Signup BONUS: Trade for free for 60 days plus get up to $600 when you signup using the link below.
E*TRADE – Great Tools and Good for Beginners
If you’re looking for an industry leader in the online trading space that can help you learn more about investing, E*TRADE is a great option. The company has more than 20 years of experience.
But E*TRADE isn’t designed solely for new investors. You have access to robust tools including research, screeners, and more.
As a leader in the industry, E*TRADE offers one of the largest inventories of potential investments available:
- Every ETF sold
- 8,000+ mutual funds and 30,000+ bonds
- Trade stocks, options, and forex
- Multitude of account options: Traditional IRA, Roth IRA, 401k rollovers, normal taxable investment accounts
And the trading tools for mobile devices ranging from iPhone to Android to Blackberry and iPad is quite robust. Trades cost are competitive with the rest of the industry, and you can get a discount ($4.95 per trade) for frequent trading. However, frequent trading can be one way to lose money, and it’s not recommended for beginner investors.
Learn more in our E*TRADE review about how this may be the right brokerage for your needs.
Signup BONUS: Trade for free for 60 days plus get up to $600 of commission-free trades when you signup using the link below.
ZacksTrade- Best for Active Investors
ZacksTrade is the active and experienced investor’s dream come true. If you’re looking for a platform that allows you to direct your own investments and trade actively at an affordable rate, you may want to look into what ZacksTrade has to offer.
ZacksTrade offers low trading fees on stocks, ETFs, mutual funds, and options, and comes with an interface for experienced traders and one for novices. Beyond trading fees, you can expect a fee-free experience, with no account or inactivity fees to worry about.
The platform also gives users access to a whole host of trading tools, reservoirs of research, and continuously updating global market data. With these tools in hand, you can make well-informed trades to keep you on pace with your investment goals. Even more, you’ll get live chat access to ZacksTrade’s team of brokers if you need assistance.
With ZacksTrade, you can open either a margin or cash account and need a $2500 minimum account balance. Take a look at our ZacksTrade review for more details.
Acorns – Invest with Pocket Change
One of the newest players in the online trading game is Acorns. With Acorns, you can set up an investing account that allows you to round up your transaction amounts and invest your pocket change. There is no account minimum, and you can start with as little as $5.
Your investment goes into a diversified portfolio with a monthly fee of $1 per month for accounts of less than $5,000. Once your account balance grows to $5,000, you pay a flat annual fee of 0.25%.
If you feel like you don’t have enough money to get started, this can be a great solution. Once you have built up your account, you can move your account to another brokerage that might have lower fees or provide different options. Learn more in our Acorns review.
USAA – Best for Military Personnel and their Families
While not everyone will qualify to open a USAA account, anyone that is actively serving in a military branch, retired from the military, or has a family member that has served in the military will be approved to open a USAA account. USAA has been offering insurance and financial products for military personnel and families for over 80 years.
USAA doesn’t charge any annual fees or have any account minimums for their IRA, and you also have plenty of investments options; mutual funds, CDs, annuities, etc. While their trading fees might be a little higher than other online brokerage fees, they still have competitive rates, especially once you house more investments in the account.
Advantages to a USAA account:
- Easy and quick to set up
- Ability to hold several accounts and insurance policies in one place
- Easy to read and understand website with clear navigation
- Huge variety of investment opportunities and options
Firstrade – Easy Interface
Aside from the low trading costs, one of the best things about Firstrade is how easy the website and interface is to use. Some of the other Internet brokerage firm’s websites are cluttered and difficult to navigate. The Firstrade website is simple and clean.
The online dashboard of Firstrade is extremely easy two read, it’s separate into two accounts. One column will display your account information, while the other column helps you track the market.
While they don’t offer the same fancy tools that some of the other sites have, they make investing easy. Even for people that are confused by the charts and graphs. If you are a person that only wants the bare-bones essentials, with low fees, Firstrade is the website for you.
Want to learn more about Firestrade? Check out our Firstrade Review for your reference!
Capital One Investing – Best for Easy Automated Investing
We all get inspiration to invest occasionally (usually when we get an emotional high from seeing the stock charts going up), but that isn’t an investing strategy that will pay off in the long run.
You are much better off setting up an automatic savings plan that allows your brokerage firm to automatically take money from your bank account and put it into designated investments on a set schedule.
That concept is the main methodology behind Capital One Investing.
How does Capital One ShareBuilder help you do this?
- Simply pick your automatic investment schedule
- Pick the individual stocks or ETFs you want to invest in (ETFs recommended for diversification reasons)
- Ignore until you’re a millionaire
If you use the automatic investing plan (which is still branded as ShareBuilder, even though Capital One changed the name of the investing division a few years ago), your cost starts at $3.95 per trade.
Easy Online Brokerage Alternative – Lending Club
If you are a beginning investor looking for an easy investing alternative to stocks, and want a great short term investment, Lending Club can be a good choice.
With Lending Club, you don’t invest by purchasing stocks. Instead, you help your peers finance various items. You’re investing in debt and hoping to see a return.
With as little as $25 you can start investing in notes that can provide you with potentially higher returns than stocks. However, you do run the risk that a borrower will default. Be aware of this before you start.
It’s easy to get started, and Lending Club also offers managed note portfolios for relatively small fees if you have a high enough account balance. There are no transaction fees; borrowers pay fees for their loans, reducing your costs.
The Rise of Online Trading
Online discount brokers existed back when I made my first stock trade, but they were few and far between. Today, though, beginning investors have many more options than I had.
With all of the tools available today, it’s possible for you to screen stocks and funds, and trade for a fraction of the cost a full-service broker will charge.
Not only that, but you can set up an automatic investment plan that regularly moves money from your checking account into an investment account, and buys what you want each month.
This is known as dollar cost averaging, and it’s one of the best ways to start investing when you don’t have a lot of money.
Low-cost investments like exchange-traded funds (ETFs) allow you to get the benefit of a large swath of the market without the need for stock picking. If you regularly invest, you can save money on transaction costs and fees, and even invest with as little as $50 per month, depending on the brokerage and type of account you have.
Online trading makes it easier than ever to create an appropriately diversified portfolio, with a little less risk, and without the need for a large amount of capital. You can save on commissions, reduce your overall fees, and build your portfolio for the long term with the help of dollar cost averaging while you learn the ins and outs of investing.
Start Online Investing Today
With any of the above online discount brokers, you can start online investing almost immediately. All it takes is a little money and the will to make a change.
However, you do need to be careful as you start investing. I often discourage young investors to start off by buying individual stocks.
As you begin your investing journey, start with a mutual fund or an ETF that tracks a larger index – think the S&P 500. Starting with funds and ETFs builds your foundation before you start taking unnecessary risk trading individual stocks.
Even if the market drops this year, the reality is that the market as a whole hasn’t ever lost in any given 25-year period. If you’re investing for the long-term you are likely to come out ahead of you index because you don’t have to worry about one bad pick destroying your portfolio.
Beginning investing online is more about starting a good habit while you learn more about investing. You can start with as little as $5 and start growing your portfolio.
As you build your investment account through dollar cost averaging and automatic investing plans, you can create a solid foundation for financial freedom, then begin branching out. But none of it will matter if you don’t start investing today.
Beginners Investing with an Online Brokerage
I wish I had known more about the best online brokerage accounts when I made my first stock trade. I was an intern at the investment firm that eventually hired me. It was right around when the tech bubble burst, and tech stocks were trading at extreme discounts.
I didn’t have a lot of money; actually, I had really almost no money, yet I felt compelled that I needed to buy one of these tech stocks. The stock that I had in my sight was Lucent. a telecommunication company that once was trading in the $60 to $80 range but had significantly dropped well below $10.
If I recall correctly, I bought it within the $6 to $8 range. I remember thinking that I landed a good buy. Ha! If I had known any better,
- I wouldn’t have bought Lucent, and
- I definitely wouldn’t have bought it through a full-service brokerage firm.
I paid $42 for a commission just to buy the stock. If I had sold it, I would have had to pay an additional $42. My other issue is that I was a beginner involved in stock picking. Putting your investable assets into one thing that could completely implode is a good way to lose money.
While you do have to deal with stock market drops when you invest in mutual funds and ETFs, you have a better chance of recovery when the whole market rises later. With individual stocks, you run the risk of being left behind.
Had I know better, I would have gone with an online brokerage and paid next to nothing to make the exact same trade.
Better yet, as a beginner, I would have looked into index mutual funds and saved the individual stock picking until I had more knowledge and experience.
That is why the list above really has a focus on the best online brokers for beginners. I hope it helps you get started with your investing future.