Best Online Stock Brokers for Beginners of February 2024 – Newsweek Vault (2024)

The Best Brokerage Accounts for Beginners Offer Low Fees, Intuitive Trading Platforms and Good Educational Resources for New Investors.

If you’re looking to dip your toe into the world of investing, you will need to find a brokerage firm. While you can buy stock directly or seek out an individual stock broker, an online brokerage account will give you access to various investments, often with minimal commissions.

But the best brokerage accounts for beginners provide more than commission-free trades. They offer an intuitive platform, transparent pricing and access to advice and resources to help you learn about the world of investing.

Whether trying to understand, “What is a brokerage account? or learn more about the world of stock brokers and brokerage firms, our guide to the best online brokerages and trading platforms for beginners can help.

Best Online Stock Brokers for Beginners of 2024

Best Robo-Advisor Onboarding: Fidelity Go

Fidelity

Fidelity

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Vault Verified

Fees

$0*

Account minimum

$10*

Promotion

None

Pricing

Free*

Why We Chose It

Why we chose it: Fidelity offers beginner investors a wealth of education and research. Plus its Fidelity Go robo-advisor platform is easy to use and can get you started investing without the complexity of picking individual stocks. As your investment grows, you’ll gain access to advisors who can help you tweak your strategy.

Pros

• No advisory fee if you invest less than $25,000
• No trading fees, transaction fees or rebalancing fees
• Fidelity offers brokerage accounts that let you pick individual stocks

Cons

• No ability to pick individual stocks in Fidelity Go account
• Limited options to customize your actual investments
• Coaching calls are more geared toward financial planning than investment advice

Additional Information*

Fees

• Trading fees: $0
• Transaction fees: $0
• Rebalancing fees: $0

Account minimum

• $10 to open the account
• $25,000 to access coaching services

Pricing

• Robo-advised accounts under $25,000: $0;
• Accounts over $25,000: 0.35% annually. Includes unlimited coaching calls.

Best In-Depth Educational Content: Interactive Brokers

Interactive Brokers

Interactive Brokers

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Fees

$0*

Account minimum

$0

Promotion

None

Pricing

Free*

Why We Chose It

Why we chose it: Interactive Brokers is well-known for its feature-rich platform, large selection of investment choices and low-cost pricing. It also has one of the deepest libraries of content, with offerings for beginning investors and financial educators.

Pros

• Large library of educational content
• Global platform allows funding in 27 currencies
• Analytical tools for investors who want to do quantitative analysis

Cons

• Platform isn’t as beginner-friendly as other top competitors
• Potential mutual fund commission for preferred mutual fund

Additional Information*

Fees

• For IBKR Lite: Commission for U.S. stocks and ETFs: $0
• Mutual fund commissions for no transaction fee mutual funds: $0
• Mutual fund commissions for other mutual funds: 3%, up to $14.95
• Bond commissions: 0.10%

Pricing

• $0 for IBKR Lite management fees and no inactivity fees

Best for Initial Investing Education: Charles Schwab

Charles Schwab

Charles Schwab

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Fees

$0*

Account minimum

$0

Promotion

$101*

Pricing

Free*

Why We Chose It

Why we chose it: Schwab offers beginning investors a deep catalog of learning resources. This includes a Schwab Starter Kit, with $101 of Schwab Stock Slices and a series of videos and step-by-step tutorials to help you get started investing.

Pros

• $0 commission trades on stocks and ETFs
• $101 of Schwab Stock Slices to get started
• Investing education resources to help new investors

Cons

• Limited selection of OneSource mutual funds with no loads or transaction fees
• Website usability lags competitors
• High-priced optional advisory services

Additional Information*

Fees

• Listed stocks and ETFs: $0 commission
• Schwab mutual fund OneSource: $0
• Other mutual funds: Up to $74.95 per trade
• Treasuries: $0
• Secondary-market Bonds: $1 per bond. $10 minimum, $250 maximum.

Promotion

• $101 of Schwab Stock Slices when you fund your account with a minimum of $50 within 30 days.

Pricing

• Self-directed: $0 management fees
• Schwab intelligent portfolios: No advisory fee + no commissions. (Schwab Intelligent portfolio Premium is
• Schwab managed portfolios: Starting at 0.90% with a $25,000 investment

Best Robo-Advising: Ally Invest

Ally

Ally

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Vault Verified

Fees

$0*

Account minimum

$0*

Promotion

None

Pricing

Free*

Why We Chose It

Why we chose it: With $100, you can get started with Ally robo investing and select from one of four portfolio types. And Ally promises that the portfolios are designed by a team of human specialists.

Pros

• Easy option to start investing with a managed portfolio
• Fee-free daily rebalancing with robo portfolios
• 24/7 support and access to portfolio specialists during business hours

Cons

• Robo investing requires 30% investment in cash or a 0.30% annual advisory fee
• Limited robo investing choices
• High fees to work with an advisor

Additional Information*

Fees

• Eligible U.S stocks and ETFs: $0 commission
• Load mutual funds: Varies
• No load mutual funds: $0 purchases. $0 sales.
• Bonds and Treasuries: $1 per bond. $10 minimum and $250 maximum per transaction.

Account minimum

• $0 to open account
• $100 to invest in robo portfolios

Pricing

• Self-directed: $0 management fees
• Robo portfolios: 0% advisory fee if invested in a 30% cash portfolio. 0.30% annual fee if invested in a market-focused portfolio.
• Personal advice: 0.75%-0.85% blended annual advisory fee

Best Mobile App Experience: Robinhood

Robinhood

Robinhood

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Fees

$0*

Account minimum

$0

Promotion

3%*

Pricing

Free*

Why We Chose It

Why we chose it: Robinhood has a reputation for a mobile app experience that’s simple and intuitive compared to what’s found with traditional brokerage houses.

Pros

• Easy-to-use mobile app experience
• Very low fees to trade stocks and ETFs
• Offers fractional shares on a selection of large stocks

Cons

• Does not offer investment in bonds or mutual funds
• Per-share fees for stock and ETF sales
• Has used gamification features in the past, which can entice investors to trade more frequently

Additional Information*

Fees

• Commission for U.S. stocks and ETFs: $0
• A trading activity fee of $0.000166 per share applies when selling equities.

Promotion

• Get a 3% balance boost on IRA transfers and 401k transfers made by 4/30/2024

Pricing

• Standard account: $0
• Robinhood Gold: $5/month
• Includes higher interest on cash sweep accounts, additional research data and better rates on margin trading.

Best for Community Engagement: SoFi Invest

SoFi

SoFi

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Fees

$0*

Account minimum

$0*

Promotion

Up to $1,000*

Pricing

Free*

Why We Chose It

Why we chose it: When you open an investing account with SoFi, you gain access to online and community events. Previous events have included sessions on “Investing 101,” growing your career and even yoga. There are also local networking opportunities that can get you connected to like-minded beginning investors or help you advance your career.

Pros

• $0 commissions on stocks and ETFs
• Financial advisors available at no additional cost
• Community-minded investment platform with educational events and networking

Cons

• No mutual funds or bonds
• Promotes margin trading, which may be inappropriate for new investors
• Offers only financial planning advisors, not investment advisors

Additional Information*

Fees

• Commission for stocks and ETFs: $0

Account minimum

• $0 for SoFi Active; $1 for SoFi Automated;$10 to qualify for new account promotion

Promotion

• Get up to $1,000 in stock when you fund a new account with at least $10. (85% of new investors will receive $5 in stock.)

Pricing

• Self-directed: $0 management fees
• Robo-advisor fees: $0 advisory fees
• Financial planning fees: $0 advisory fees

Best Low-Cost Personal Advice: Vanguard Brokerage

Vanguard

Vanguard

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Vault Verified

Fees

$0*

Account minimum

$0*

Promotion

No digital advisory fees for first 90 days.

Pricing

Free*

Why We Chose It

Why we chose it: Vanguard offers low-cost investing. You can get started with an inexpensive mutual fund or ETF, or invest with a robo advisor with a low minimum and half the fees of competing offerings.

Pros

• Low-cost robo-investing and advisory fees
• Access to Vanguard and other mutual funds with no transaction fees
• Extensive library of educational content about investing

Cons

• Basic online interface
• High investment minimums

Additional Information*

Fees

• Commission for stocks: $0
• Commission for ETFs: $0
• Mutual fund commissions for Vanguard mutual funds: $0
• Mutual fund commissions for other mutual funds: $0
• Commission for U.S. treasuries: $0
• CDs, U.S. government securities and corporate bonds: $1 per $1,000 with a $250 maximum for secondary-market trades

Account minimum

• $0 to open the account
• Some investment products have minimum investment amounts.
• $3,000 for robo-advisory services
• $50,000 for personal advisory services

Pricing

• Self-directed: $0 management fees
• Robo-advisor fees: Approximately 0.15% annually.
• $3,000 minimum to qualify.
• Working with an advisor: Approximately 0.15% annually.
• $50,000 minimum to qualify.

Best for a Total Banking Relationship: Merrill Edge

Merril

Merril

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Vault Verified

Fees

$0*

Account minimum

$0*

Promotion

$0 program fee*

Pricing

Free*

Why We Chose It

Why we chose it: Bank of America offers self-directed brokerage accounts through its Merrill Edge division. You can put your money into a mutual fund or ETF, a beginner-friendly investment approach. The real value is in combining your Merrill account with your Bank of America relationship with Preferred Rewards, which offers more rewards and lower fees across many Bank of America products.

Pros

• Offers no transaction fees on stocks and ETFs
• Select mutual funds available with no transaction fees
• Preferred Rewards members can increase rewards and decrease fees

Cons

• Limited educational content for beginning investors
• Limited number of mutual funds available with no transaction fees
• Website usability lags competitors

Additional Information*

Fees

• Stock commissions: $0
• ETF commissions: $0
• Mutual fund commissions for load-waived funds: $0
• Mutual fund commissions for no load, no transaction fee funds: $0; $39.95 short-term redemption fee applies if fund is held less than 90 days.
• Mutual fund commissions for no load, transaction fee funds: $19.95 per transaction
• Treasuries commission: $0
• Exchange-traded bonds commission: $1 per bond. $10 minimum, $250 maximum.

Account minimum

• No minimums to open the account.
• $1,000 minimum for Merrill Guided Investing

Promotion

• Merrill Guided Investing $0 program fee for six months with new enrollment. Must apply offer code 6FREE when enrolling.

Pricing

• Self-directed: $0 annual fees
• Merrill Guided Investing: 0.45% annually, with a minimum of $1,000

Best for Simple Stock Trades: FirstTrade

FirstTrade

FirstTrade

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Vault Verified

Fees

$0*

Account minimum

$0

Promotion

Up to $5,000*

Pricing

Free*

Why We Chose It

Why we chose it: If you’re looking to invest in stocks, ETFs or mutual funds, FirstTrade lets you trade with no commissions, no minimums and no ongoing management fees. It also makes it easy to see the fees you’re charged.

Pros

• Simple pricing structure
• Does not charge additional fees for no-load mutual funds.
• Educational resources for the beginning investor

Cons

• Fees are baked into the price of the security (Net Yield Basis)
• Limited range of investment products
• Broker-assisted transaction costs not transparently displayed on fee page

Additional Information*

Fees

• Commission for Stocks and ETFs: $0
• Mutual fund commissions: $0
• Treasuries and bonds: Sold on a net yield basis.

Promotion

• Get up to $5,000 when you deposit or transfer new funds to FirstTrade, plus $250 in transfer fee rebates.
• $5,000 for a $1.5M transfer
• $100 for a $10,000 transfer

Pricing

• Self-directed: $0 management fees

What Are the Risks of Online Stock Brokers?

Since investment products other than U.S. treasury bonds aren’t backed by the United States government, there is a possibility that you will lose money. Individual stocks and corporate bonds can be somewhat risky.

Buying a mutual fund or ETF can reduce investment risk. These investment vehicles often have hundreds or thousands of underlying investments selected according to a specific strategy, so your investment isn’t tied to a single company.

On the other hand, speculative assets such as cryptocurrency, which have no underlying assets backing them, can be extremely volatile and risky. You should only invest in these assets after you’ve taken the time to research them and only use money you can afford to lose.

Is My Money Safe?

In the United States, the Securities Investor Protection Act requires most brokerages to be members of the Securities Investor Protection Corporation (SIPC), a nonprofit organization that oversees liquidation when brokerage firms close. The SIPC protects up to $500,000 of assets held with each stock broker.

In the event of broker insolvency, the SIPC will work to return your assets and cash to you. The SIPC is not a federal government entity, so it isn’t as secure as the FDIC insurance protecting your bank account, but it does provide a backstop against brokerage failure.

How Do Online Stock Brokers Work?

When you make a trade on your online stock broker’s web portal or mobile app, you’re requesting that a trade be placed on your behalf. When your broker receives your trade request, it sends the request to an exchange or a market-maker firm where it’s matched up with a buyer or seller of the same security.

When requesting to trade a stock, you can choose to have your order fulfilled at the current market clearing price or put a limit on the price at which your security is bought or sold at. Once your trade is executed, your broker will provide you with a confirmation.

Why Would You Need an Online Stock Broker?

While you can invest money in almost any asset class without an online stock broker, using an online broker is almost universally simpler, faster and easier. Here are the biggest reasons why you would need an online stock broker.

• You want to trade stocks, bonds, mutual funds and other securities. While you can buy some stocks directly from companies and you can purchase certain fixed-income securities like savings bonds and Treasury Inflation Protected Securities from the U.S. treasury directly, using an online stock broker makes the process less complicated and offers access to more investment options.
• Simplifying taxes. If you are investing, in most cases you need to pay taxes on your gains. When you work with an online stock broker, your broker will keep track of your cost basis, dividend reinvestments, capital gains distributions and other transactions that have tax implications. Your broker will provide you with the appropriate tax forms come tax time, which can be much simpler than figuring out your investing taxes on your own.
• Cost. Before the advent of online stock brokers, investing in securities often involved calling your broker to make a trade or visiting an office. Either way, humans processing transactions was a cost that computers have largely eliminated. Today, you can make most trades with most online stock brokers without any human involvement beyond you selecting investments on a website.

How To Choose the Best Online Stock Broker for Beginners

Choosing the best online stock broker for you involves weighing the tradeoffs of the many options available. Here are the top factors to consider when looking for the best trading platform for beginners.

Broker Has Investments You Want

Not every broker offers every type of investment. A broker may offer only U.S.-listed stocks and ETFs or it may offer mutual funds and fixed-income securities as well. Some brokers offer additional options like real estate investment trusts (REITs), securities listed on non-U.S. markets, currency trading and more. Before you start investing, research what types of investments you plan to make and be sure your broker offers those types of investments.

Fee Structure

You can’t control the whims of the market, but you can control what fees you pay. Be wary of brokers that put you into an account with an ongoing management fee or active advisors who charge a percentage of your portfolio.

While an advisor can help you with features like tax planning and asset allocation, they’re unlikely to earn you more on your investments than a low-cost index fund. Also be on the lookout for fees on mutual fund transactions. Many online brokers charge fees to buy and sell most no-load mutual funds.

Educational Resources

Most online stock brokers offer educational resources to help you learn about investing, though the content can vary. Interactive Brokers online courses will probably feel most familiar to younger investors. Fidelity’s content seems geared toward budgeting, paying off debt and working investing into your day-to-day personal finances. Charles Schwab offers a news site-like take on investing.

Ease of Online Management

If your existing bank offers a brokerage account that you can manage with your existing banking login, ease of management could factor into your decision. Having a single website, mobile app, and login for your credit cards, consumer banking and investment accounts might trump a slightly better product with another brokerage.

For example, Charles Schwab Bank isn’t known for having the most attractive website, but if you bank with Charles Schwab Bank and invest with Charles Schwab you can manage your deposit accounts and investing account in one place.

Relationship Banking Perks

Many banks offer preferred services to clients who hold a large amount of assets with a bank and its related brokerage house. In some cases, holding your investment assets with a bank’s online brokerage can increase the level of service or decrease the fees you pay with that bank.

For example, the Bank of America Preferred Rewards program offers perks like fee reductions and increased credit card rewards when you hold assets with Merrill, which is owned by Bank of America.

Online Stock Brokers vs. Traditional Stock Brokers

Online stock brokers offer convenience, lower costs, wide-ranging investment options and often a library of online resources to help you learn about investing. In contrast, traditional stock brokers today often market themselves as financial advisors and offer bespoke investment advice and personalized assistance, usually at a much higher cost.

Merrill Edge vs. Merrill Self-Directed

Bank of America’s Merrill investment division offers both online self-directed brokerage services and a traditional investment advisory service under the Merrill Lynch brand. A self-directed Merrill Edge account can be opened with no initial investment and lets you trade stocks for $0 commission. You can even have a broker place your trades for $29.95 per transaction. The bank’s traditional brokerage and advisory services require a minimum investment of $5 million.

Fidelity vs. Fidelity Wealth Management

Fidelity offers a lost-cost online brokerage service that features $0 commissions and lets you buy stocks for as little as $1. If you have over $500,000, you can qualify to work with Fidelity Wealth Management. Fidelity Wealth Management offers a dedicated Fidelity advisor who can make trades on your behalf, for an advisory fee of between 0.50% and 1.50% of your portfolio value annually.

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