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11 Best Online Stock Brokers for Beginners of June 2020

Kevin VoigtMay 21, 2020

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When you’re a beginner investor, the right brokerage account can be so much more than simply a platform for placing trades. It can help you build a solid investing foundation — functioning as a teacher, advisor and investment analyst — and serve as a lifelong portfolio co-pilot as your skills and strategy mature.

What are stock brokers?

Stock brokers are people or firms licensed to buy and sell stocks and other securities via the stock market exchanges. Back in the day, the only way for individuals to invest directly in stocks was to hire stock brokers to place trades on their behalf. But what was once a clunky, costly transaction conducted via landline telephones now takes place online in seconds, for a fraction of what full-service brokers used to charge for the service. Today, most investors place their trades through an online brokerage account. (A little lost? Check out our explainers on brokerage accounts and buying stocks.)

Summary of Best Online Stock Brokers for Beginners of June 2020

BrokerNerdWallet Rating CommissionsPromotionAccount MinimumLearn More
Interactive Brokers IBKR Lite

Interactive Brokers IBKR Lite

on Interactive Brokers's website

$0

per trade

None

No promotion available at this time

$0

on Interactive Brokers's website

You Invest by J.P.Morgan

You Invest by J.P.Morgan

on You Invest by J.P.Morgan's website

$0

per trade

Up to $725

when you open and fund a new account with $25,000 or more in new money

$0

on You Invest by J.P.Morgan's website

SoFi Active Investing

SoFi Active Investing

on SoFi Invest's website

$0

per trade

Free

career counseling plus loan discounts with qualifying deposit

$0

on SoFi Invest's website

E*TRADE

E*TRADE

on E*TRADE's website

$0

per trade

Up to $600

when you open an account

$0

on E*TRADE's website

TD Ameritrade

TD Ameritrade

$0

per trade

None

no promotion at this time

$0

Read review
Interactive Brokers IBKR Lite

on Interactive Brokers's website

Interactive Brokers IBKR Lite

Interactive Brokers IBKR Lite

Fees

$0

per trade

Account Minimum

$0

Promotion

None

No promotion available at this time

on Interactive Brokers's website


Promotion

None

No promotion available at this time

Why we like it

Interactive Brokers' IBKR Lite is a strong option for frequent traders: The broker offers international trade capabilities, no stock-trading commission and a quality trading platform.

Pros

  • Large investment selection.

  • Strong research and tools.

  • Over 4,300 no-transaction-fee mutual funds.

  • NerdWallet users who sign up for IBKR Pro get a 0.25 percentage point discount on margin rates.

Cons

  • Website is difficult to navigate.

  • Inactivity fees on IBKR Pro.

Read Full Review
You Invest by J.P.Morgan

on You Invest by J.P.Morgan's website

You Invest by J.P.Morgan

You Invest by J.P.Morgan

Fees

$0

per trade

Account Minimum

$0

Promotion

Up to $725

when you open and fund a new account with $25,000 or more in new money

on You Invest by J.P.Morgan's website


Promotion

Up to $725

when you open and fund a new account with $25,000 or more in new money

Why we like it

You Invest Trade is a clear-cut investment platform that is great for beginners looking to learn how to buy and sell investments. More advanced investors, however, may find it lacking in terms of available assets, tools and research. INVESTMENT PRODUCTS: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

Pros

  • Easy-to-use platform.

  • $0 commissions.

  • App connects all Chase accounts.

  • No account minimum.

Cons

  • Limited tools and research.

  • Portfolio Builder tool requires $2,500 balance.

Read Full Review
SoFi Active Investing

on SoFi Invest's website

SoFi Active Investing

SoFi Active Investing

Fees

$0

per trade

Account Minimum

$0

Promotion

Free

career counseling plus loan discounts with qualifying deposit

on SoFi Invest's website


Promotion

Free

career counseling plus loan discounts with qualifying deposit

Why we like it

SoFi Active Investing's $0 trading commission and $0 account minimum is attractive to new investors, but a lack of investment choices such as mutual funds and bonds is a drawback for those saving for retirement.

Pros

  • Commission-free stock and ETF trades.

  • Cryptocurrency trading.

  • Fractional shares available.

  • No account minimum.

  • Free financial counseling.

Cons

  • Small selection of tradable securities.

  • Limited track record.

Read Full Review
E*TRADE

on E*TRADE's website

E*TRADE

E*TRADE

Fees

$0

per trade

Account Minimum

$0

Promotion

Up to $600

when you open an account

on E*TRADE's website


Promotion

Up to $600

when you open an account

Why we like it

E*TRADE has long been one of the most popular online brokers. The company's $0 commissions and strong trading platforms appeal to active traders, while beginner investors benefit from a large library of educational resources.

Pros

  • Easy-to-use tools.

  • Large investment selection.

  • Excellent customer support.

  • Access to extensive research.

  • Advanced mobile app.

  • Commission-free stock, options and ETF trades.

Cons

  • Website can be difficult to navigate.

Read Full Review

Want to compare more options? Here are our other top picks:

More resources for new investors

Last updated on May 22, 2020

Methodology

NerdWallet's ratings for brokers and robo-advisors are weighted averages of several categories, including investment selection, customer support, account fees, account minimum, trading costs and more. Our survey of brokers and robo-advisors includes the largest U.S. providers by assets under management, plus notable and/or emerging players in the industry. Factors we consider, depending on the category, include advisory fees, branch access, user-facing technology, customer service and mobile features. The stars represent ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.

Frequently asked questions

It doesn’t take a lot of money to get started; many stockbrokers allow you to open an account for $0. Many brokers also will waive any minimum investment requirements if you sign up for regular monthly contributions of $100 or more. If you don’t have a lot of cash but want to try your hand at do-it-yourself investing, using commission-free exchange-traded funds can be a cost-effective way to begin building your portfolio. (Have $500? Learn how to invest it.)

To buy and sell assets like stocks, bonds and mutual funds, you need to open an investment account through a stockbroker. That account is called a brokerage account, and it holds the cash you’ll use to buy and sell investments, as well as the investments themselves once you own them. (Learn more about how brokerage accounts work.)

If you have a 401(k) or other employer-sponsored retirement account, you already have one kind of investment account. Many investors find it beneficial to open additional stock brokerage accounts when:

Saving for retirement. If you want or need to save for retirement in an account separate from your employer, you can open an IRA. These come in two flavors, a traditional IRA or a Roth IRA. (Read more about the differences here.) One thing to note about both: Contributions are limited to $6,000 a year ($7,000 if you are age 50 or older).

Investing for other goals. If you’re saving for a goal other than retirement — or you’ve topped off your 401(k) and IRA contributions — a taxable brokerage account is a good option. As the name implies, this doesn’t carry the tax advantages of retirement accounts. You will have to pay taxes on any capital gains each year.

On the plus side, you don’t face any of the restrictions for withdrawals that come with tax-advantaged accounts. If you need money in a hurry, a taxable account would be your first line of defense before dipping into retirement accounts and potentially paying early withdrawal penalties.

A brokerage fee is charged by the stockbroker that holds your account. Brokerage fees include annual fees to maintain the brokerage account or access trading platforms, subscriptions for premium research, or even inactivity fees for infrequent trading. You can avoid or reduce brokerage account fees by choosing the right broker. Learn more about investment fees.

The difference between a full-service stockbroker and a discount stockbroker comes down to the level of service and how much you want to pay for that service.

Traditional full-service stockbrokers do more than assist with the buying and selling of stocks or bonds. They often offer a wide array of services and products, including financial and retirement planning, investing and tax advice and regular portfolio updates. But they can charge substantial fees and transaction costs that can erode long-term investment gains.

If you have more money than time, a full-service broker may be for you. For most investors, however, it can pay to look at discount stockbrokers. These brokers allow you to buy investments online through their website or trading platforms. You'll pay less in trading commissions and fees at a discount broker.

Other brokers, called robo-advisors, offer a combination of access to financial planners and automated investing technology. Companies in this category include Betterment and Personal Capital, and they build your investment portfolio for you for a fee. If you want a service to make investment decisions for you, robo-advisors are a good option.

Yes, but it will take more time than getting cash from your ATM, often a few business days. Your broker will need to sell securities (like stocks, bonds or mutual funds) equivalent to the amount you want to withdrawal, so it’s not as simple as removing cash from a savings account.

If you're taking all of your money out — whether transferring to a different stockbroker or cashing out to move to Tahiti — there may be account closing fees.

The rules for withdrawal of retirement accounts like an IRA are different, depending on your age. Most withdrawals carry a 10% penalty before the age of 59½ and will be taxed as ordinary income the year you cash out. (Roth IRAs, which are funded with after-tax cash, are more forgiving of early withdrawals.)

The nonprofit Securities Investor Protection Corporation insures cash and securities up to $500,000, with a $250,000 limit on cash losses. But this protects you only in the event your stockbroker fails. Any losses and gains of your investments carry no protections.