If you are a new or small investor, online investing can seem complicated and even intimidating.
That’s because there are hundreds of online investment platforms, and even different types. Some are true do-it-yourself type investment platforms, while others offer complete investment management.
Which online investing platform should you choose? We’ll jump right into our top online investment brokers that we have reviewed and feel comfortable recommending. A little bit later on, we’ll cover the basic types of online investing platforms.
Our top online investing brokers by category
- Betterment – Fully Hands-off Platform
- Fundrise – Best Real Estate Investment
- LendingClub – Best Alternative Investment
- E*TRADE – Top for Active Traders
- TD Ameritrade – Top IRA Provider
- Ally Invest – Top Full Featured Brokerage
- Acorns – Automatic Savings and Investing
- Motif Investing – Most Creative Platform
- Types of Online Investments
- Online Investing Summary
Our picks for the top online investment brokers:
Betterment: Best Fully Hands-off Online Investment Platform
This award goes to Betterment, the heavyweight champion of the robo-advisor world. It’s a very low cost way to obtain professional investment management, and you can open an account with no money whatsoever. It’s a completely hands-off online investing platform, which means that you complete an application, answer a few investment related questions, fund your account, and Betterment handles everything for you from there forever more.
Betterment charges an annual fee equal to just 0.25% of your account balance. That means you can have $10,000 managed for $25 per year, or $100,000 managed for just $250. That includes portfolio selection, rebalancing, and even tax loss harvesting. That’s a lot of management for a very low fee.
Fundrise: Best Real Estate Investment
You may be thinking, “Jeff, how can I invest in real estate online, when real estates is a real product.” The way to do this is through an REIT.
REIT stands for “Real Estate Investment Trust”. The short explanation is that you put your money into the trust and someone else invests it for you.
These types of accounts used to only be available to accredited investors (people with more than $1 million in investments), but Fundrise has come out and made REITs available to people with as little as $500 to invest.
LendingClub: Best Alternative Investment
LendingClub is a peer-to-peer platform that allows you to invest in ventures that interest you, with low minimum investments and high rewards between 3-8% historically. As an investor, you need $1000 to open an account and a $25 minimum on your first investment.
You also have the option to choose between manual investments, where you peruse the available loan requests to invest in and choose for yourself, or automated investing, where loans are chosen based on the investing goals and parameters you establish.
You can open an individual investment account, a retirement account, a joint account, trust, corporate account, or custodial account for a minor.
E*TRADE: Best Online Broker for Active Traders
E*TRADE’s fee structure is right about at the middle of the discount broker range. But they offer a full-service platform, that allows you to invest in just about anything you can imagine, including stocks, bonds and more than 8,000 mutual funds and ETF’s. They also offer the benefit that you can either be a complete do-it-yourself trader, or get whatever assistance level that you need to help you in your investing activities.
The platform also provides you with an incredible range of trading tools, including free independent research, streaming real-time quotes, customizable planning tools, and everything that you need to manage do-it-yourself investing.
TD Ameritrade: Top IRA Provider
TD Ameritrade has some superior retirement tools. For example, their IRA Selection tool helps you to determine whether you should make a traditional IRA contribution or a Roth IRA contribution. They also offer a Retirement Calculator tool, that analyzes your information, goals, income, assets and risk tolerance, and then shows you your progress in meeting all of those goals.
They also give you the option to participate either in self-directed investing or to default to their managed portfolios, Advisor Direct and the Amerivest Portfolios. It’s a good combination if you want a little bit of both kinds of investing – self-directed and broker assisted.
For more information, check out our full TD Ameritrade review.
Ally Invest – Best Full Featured Brokerage
Ally Invest has it all, offering low commissions, a $0 minimum balance, financial management tools, and the option to choose between robo-advising and a do-it-yourself approach. With Ally’s managed portfolios, you can modify your risk tolerance as your financial goals change, which readjusts your portfolio.
Ally Invest manages over $4.7 billion of assets with more than 4 million customers. In addition to its low fees and expansive investing options, Ally Invest should be on your list because of its connection to Ally Bank.
With Ally, you can manage all of your investments and finances in one spot, with access to some of the highest interest rates on the market.
Acorns: Automatic Savings and Investing
To grab the college-aged crowd, Acorns, has built a simple, easy to use, mobile platform that gives millennials some knowledge on portfolio styles and the ability to invest money without shelling a lot out of pocket to get started.
With over 3M users and $100M in startup money, Acorns key selling point is investing spare-change through a function called Round-Ups.
Once you link your bank account, Acorns will take the difference of any purchase and round up to the nearest dollar and invest that into your selected profile. There is also a feature where you can multiply that round-up from double all the way to 5 times.
Your portfolio, conservative to aggressive, is decided on by the algorithm after you’ve answered several questions about your current financial profile and your financial goals. In the end ,you’ll be placed into one of 5 portfolio’s. However, you can change this at any time.
Recently, Acorns has added two new features.
The first is Acorns LATER, which is a retirement account, or Roth IRA that you can set up and make recurring contributions. The great thing about this account is the minimum requirement to start is only $5.
The second is Acorns SPEND, and this is a new checking account program, with a debit card, that works wonderfully with the other Acorn functions we’ve mentioned earlier.
Now the knock on Acorns is the fees. For the amount the average user is investing the fee of $1 a month is high, especially if you just use the round-up feature.
Speaking of fees, for accounts under $5,000 the fee is $1 per month, and if you have over $5,000 in your account they take .25% of the ending balance.
If you are a college student or someone just wanting to get started and use some of the educational videos that Acorns provides, then we do suggest setting up an account to get a handle on how investing with a robo-lite investor works!
Motif Investing: Most Creative Online Investment Platform
If you ever had a fantasy of running your own mutual fund, then Motif Investing maybe just the online investment platform for you. When you invest through Motif, you create mini mutual funds, which are referred to as motifs. You can either invest in existing motifs created by others, or you can create your own.
Some examples of existing motifs include Tablet Takeover, Shale Oil, Rising Interest Rates, and Battling Cancer. If you want to create your own motif, you need at least $300, and then you can invest in as many as 30 different stocks for one low price of $9.95, regardless of the actual amount invested in the motif. It’s an opportunity to mix creativity with your online investing activities.
Online Investing Platform Types
Discount Brokers (Best for active traders)
Discount brokers are actually some of the largest online investing platforms available. Some of them hold many hundreds of billions of dollars for millions of individual investors. They provide you with an opportunity to invest in the widest range of assets, including stocks, bonds, mutual funds, exchange traded funds (ETFs), foreign securities, real estate investment trusts, and futures and options.
The basic idea behind discount brokers is to create the most comprehensive investment environment for self-directed investing. That includes not only a low commission structure, but also a wide selection of investment tools.
These can include tools designed to provide basic online investing education, as well as much more sophisticated ones that actually assist you in your investing activities, including high activity trading and options investing.
There is a good bit of variation within the group, and while historically the least expensive platforms have provided the fewest tools, that gap is closing.
Now, it’s mostly a matter of choosing the fee structure that you’re most comfortable with, as well as the most important investing tools.
In most cases, these online investing platforms will work best for active and very active traders, which is actually the target market of discount brokers. For this reason, discount brokers are best suited for experienced investors who want to do their own investing, and generally want only certain types of broker assistance, but nothing approaching full-on investment management.
Examples of discount brokers include:
Full Service Brokers (Best for larger investors)
Full-service brokers come at a higher cost than discount brokers, however they essentially manage your investment portfolio for you. They also usually require higher account minimums – typically $50,000 or more – than discount brokers, who often have no minimum account balance at all.
When you turn your portfolio over to a full-service broker, they determine your portfolio allocation, rebalance periodically, and handle all purchases and sales of securities in the process. But because they’re full-service brokers, there is a good deal of customer contact.
You will generally be apprised of the investment process at all times. You are also usually assigned a financial advisor who mostly acts as a point person between you and the full-service broker.
They may design a custom portfolio for you, or they may place your portfolio into a predetermined managed portfolio that is available to other investors. They may also provide wealth management services to clients who have very large portfolios.
Management fees for full-service brokers are at the very high end of the online investment platform range, typically being well in excess of 1% of the value of your portfolio each year.
Full-service brokers usually work best for larger investors who prefer professional management, complete with a generous amount of advisory contact.
Examples of full service investment brokers include:
Mutual Fund Families (Best for less active trading)
Mutual fund families are companies that manage their own group of mutual funds or ETF’s. They can offer anywhere from a dozen to several hundred funds, covering every conceivable market sector and market index.
Since each fund within the family is effectively its own managed portfolio, it represents an opportunity to have professional investment management.
Mutual fund families work well for both hands-off investors, and self-directed investors, who want to have at least some of their money professionally managed.
A major factor to consider with mutual fund families is their fee structure. Mutual funds often come with “loads” (ETFs typically don’t charge these fees), that can range from 1% to 3% of your investment in a particular fund. These fees can have an impact on your investment return, and are not suitable for high activity trading. You should also favor no-load funds in order to improve this situation.
Examples of mutual fund families include
Robo Advisors (Best for new and small investors)
This is the most recent group of online investment brokers, having only come up in about the last seven or eight years. But they offer professional investment management at very low fees.
They have either very low or nonexistent account minimums, which makes them a perfect way for new and small investors to take advantage of professional investment management, without the high fees that usually come with it.
For the most part, they provide similar services to full-service online investment brokers, but they do so at only a fraction of the cost. Annual fees charged by robo-advisors typically range between 0.25% and 0.50% per year, compared to 1.0% to 1.5% by traditional full-service brokers.
The entire robo-advisor process is fully automated and completely online.
You complete a few questions that determine your investment goals and risk tolerance, and then the investment platform creates a portfolio for you that is based on Modern Portfolio Theory (MPT), which is concerned primarily with proper asset allocation, rather than individual security selection.
They will create your portfolio using a very small number of low-cost, index based ETF’s, that represent the entire broad market. Once the portfolio has been created, they will provide rebalancing and even dividend reinvesting, and some will even provide tax loss harvesting in order to keep your tax liability from capital gains to an absolute minimum.
Examples of robo-advisors include:
Best Online Investments Summary
We’ve prepared a table summarizing some of the most important features of the following online investing platforms:
|Broker||Type||Minimum||Annual Fee||Commissions||Best For||Current Promotions|
|Betterment||Robo-advisor||None||0.25%||N/A||Fully managed account||N/A|
|E*TRADE||Discount||$500||N/A||$7.99||Self-directed||$200 – $2,500 cash bonus for new accounts $25,000 to $1 million+|
|TradeStation||Discount||$5,000||$99.95 per month, can be waived with high trading activity||$4.99 per trade, or 1 cent per share||Self-directed, especially options||$500 – $1,500 commission rebates on new accounts 0 to $250,000+|
|Firstrade||Discount||None||N/A||$6.95||Self-directed||$100 – $1,000 in free trading commissions|
|TD Ameritrade||Discount||None||N/A||$9.99||Self-directed||$100 – $600 when you open an account of $25,000 – $250,000|
|OptionsHouse||Discount||None||N/A||$4.95||Self-directed, especially options||$1,000 commission free trades|
|Ally Invest||Discount||None||$50 inactivity fee||$4.95||Self-directed||$500 – $1,000 free trades when you open a new account with $500 – $5,000|
|Motif Investing||Custom investment platform||$300||N/A||$9.95 per 30-stock “motif”||Self-directed/Create your own funds||
$150 if you open an account with at least $2,000
|Acorns||Robo-investor||$0||N/A||$1/Month under $5k. 0.25% over $5k||Mobile Use & Simple Investing||N/A|
|Wealthfront||Robo-advisor||$500||0.25%||N/A||Fully Managed Account||First $10,000 managed free|
|T. Rowe Price||Discount & mutual funds||$2,500||None||$9.95||Self-directed||N/A|