Best stock broker for beginners
Best stock broker for beginners
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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?
best way to invest 100 dollarsbest way to invest 1000 dollars
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.
Of all the online firms listed below 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.
Scottrade – Best Customer Service
Scottrade also offers some of the least expensive trades available, starting just per trade for stocks and ETFs. They have a no-fee IRA, providing you access to 3,100+ no-transaction fee mutual funds, and 14,500+ other (load and no-load) mutual funds. As expected you can trade stocks, ETFs, and options as well.
You can open an account with as little as 0. Scottrade will also pay up to 0 of your account transfer fees if you’re coming from another broker, but you have to transfer ,000 or more to qualify for that. Another bonus is that it’s possible to set up an interest-bearing checking account through Scottrade.
While a little more expensive than some of the other options, Scottrade is one of our best picks for investors who want to be able to invest in individual stocks and enjoy an online discount experience that is close to what you’d see with a full-service broker.
Open an account with Scottrade today.
Betterment – Best Online Brokerage for Beginners
Roth IRA rulesBetterment
Betterment Investing review
You have very few choices to make:
- how much money to invest (there is a minimum requirement of 0 per month or a lump sum deposit of ,000)
- how often you want to invest it (one time or automatically invest on a schedule)
- what asset allocation you want between stock and bond investments
That’s it. Betterment takes care of the rest. No having to look through a bunch of mutual fund tables to decide which funds to go with. The firm automatically invests in a basket of ETFs in two categories: stocks and bonds. You answer simple questions that help Betterment determine your risk profile. If you go with the most risk (100% stock allocation), all of your money goes into the stock ETF basket. If you want to split it down the middle, 50% goes to the stock basket and 50% to the Treasury bond basket. Other allocations are available, based on your risk profile. You can also tweak your allocation to reflect your preferences.
As another bonus, as your account balance grows, your fee decreases. Many traditional accounts charge 1% or more in annual fees. With Betterment, you start by paying 0.35% annually, and that reduces to 0.25% and then to 0.15% as you reach different milestones. There are no hidden fees associated with a Betterment account.
It’s dead simple, which is why it is a great place for beginners to start. Building the habit of investing regularly is critically important and Betterment helps you do this without overwhelming you with complicated investment decisions.
Open a free account with Betterment Today.
Tradeking – Cheapest Trades and Good for Beginners
OptionsHouse – Best Investment Tools
OptionsHouse has a whole toolbox of amazing kits that you can utilize to make the most of your online trading. They offer automatic alerts which can pre=populate orders and then send notifications once they happen. Another interesting tool is strategySEEK, which can scan market data based on criteria set by the investors.
- Low flat rate trading fees
- No account minimum
- 60 days of communion-free trading with promotion
- Excellent mobile app platform
Open an account with OptionsHouse today
TD Ameritrade – Solid and Easy to Use
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. Like Scottrade, 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
One of our favorite things about TD Ameritrade is how they offer exclusive webinars and investing classes to help new investors get up to speed.
TD Ameritrade Review
open an account todaytrade free for 60 days plus get up to 0
Unlike Betterment and Capital One Investing, 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
- 30,000+ bonds
- Trade stocks, options, and forex
- Multitude of account options: Traditional IRA, Roth IRA, 401k rollovers, normal taxable investment accounts
Some other firms have limited mobile or tablet options. I’m sure you’ve seen E*TRADE’s commercials, but the trading tools for mobile devices ranging from iPhone to Android to Blackberry and iPad is quite robust.
Trade Free for 60 Days & Get Up to 0. Join E*TRADE Today!
Motif Investing – Investing with Experts
Motif Investing review
Motifs are essential a whole group of stocks that are centered around one idea. When you select a motif to invest in, you get 30 stocks that revolve around one idea. The best part about this is, you don’t need to know every detail about every single business inside of the motif; you only need to know what you want to invest in. For example, let’s say you want to invest into Medical Applications or Industrial Solutions, but you don’t know any of the businesses inside of these industries, with motifs, that’s okay. You can invest into 30 organizations by investing into one motif.
While Motif Investing allows you to pick from the more than 150 expertly designed motifs, you can also build your own, or you can even invest into a motif another investor has created.
One of the best things about trading with Motif Investing, you can trade a whole motif of stocks for .95, which translates to
1. Invest Through a Company's Direct Stock Purchase Plan
Ordinarily, the plan administrators batch the cash from those participating in the direct stock purchase plan and use it to buy shares of the company, either on the open market or freshly issued from the business itself, on predetermined dates.
2. Take Advantage of the Dividend Reinvestment Program.33 per stock. You aren’t going to beat that kind of price.
Open an account with USAA today
USAA – Best for Military Personnel and their Families
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
Open an account with USAA today
Firstrade – Easy Interface
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.
Capital One Investing
One of the most difficult parts of investing is getting out of your own way and setting up a habit of investing regularly. 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.
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
The cost per trade for Capital One Investing starts at .95 per trade. However, 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 .95 per trade.
There are also options trading opportunities with Capital One Investing, but the strength of this account is in its automatic investment plan that gives you more control than what you receive with Betterment.
Acorns – Invest with Pocket Change
Your investment goes into a diversified portfolio with a monthly fee of per month for accounts of less than ,000. Once your account balance grows to ,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.
Lending Club – Easy Investing Alternative
short term investment Lending Club
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. There are several online discount brokers to choose from, many of them offering great deals and opportunities for beginners looking to start investing.
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 per month, depending on the brokerage and type of account you have. Online trading makes it easier than ever to create an appropriately diversified, with a little less risk, and without the need for a large amount of capital.
With an automatic investment plan using index mutual funds or ETFs, 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. Remember my Lucent stock? I never made a dime off of it and ended up selling at a loss.
As you begin your investing journey, start with a mutual fund or an ETF that tracks a larger index – think the S&P 500. Some of the online brokers, like Betterment, will help you automatically reinvest your dividends, providing you with an additional way to build your portfolio at a faster rate. An index mutual fund or index ETF that pays dividends provides you with a little extra to reinvest on a regular basis, and can super-charge your efforts.
Starting with funds and ETFs builds your foundation before you start taking unnecessary risk trading individual stocks. Trading individual stocks adds to your risk. Indexing provides some protection because it represents instant diversification. 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 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. As you learn more, you can begin branching out.
But none of it will matter if you don’t start investing today.
Beginners Investing with an Online Brokerage
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.
Lucent was a telecommunication company that once was trading in the to range but had significantly dropped well below .
If I recall correctly, I bought it within the to range. I remember thinking that I landed a good buy. Ha!
I opened my account, deposited my money, and made my first trade.
Reflecting back, I was such a beginner, it wasn’t funny.
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.
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, I 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.
Find the Best Stock Broker
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