Best Online Stock Brokers for Beginners 2017

Brokers, Investing

NerdWallet offers financial tools and advice to help people understand their options and make the best possible decisions. The guidance we offer and info we provide are deeply researched, objective and independent.

We spent over 300 hours reviewing the top online brokers before selecting the best for our readers. And to help you find the one that’s best for you, we’ve highlighted their pros, cons and current offers. See our methodology below to learn more about how we selected the best online brokers.

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 is a stock broker?

A stock broker is a person or an institution licensed to buy and sell stocks and other securities via the market exchanges. Back in the day, the only way for individuals to invest directly in stocks was to hire a stock broker 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. (A little lost? Here’s some background on the stock market.)

The best online brokers for beginners overall

These brokers offer tons of educational offerings for beginners (and the advanced investor you’ll eventually become), affordable commissions, a broad range of inexpensive investment options and strong customer service support.

TD Ameritrade and Charles Schwab receive NerdWallet’s top 5-star overall rating for good reason. Each offer round-the-clock customer service, abundant online educational content, in-person support at local branches (300 offices at Schwab and 100 at TD Ameritrade). At both, investors also have access to a healthy lineup of commission-free investments for mutual funds and exchange-traded funds (ETFs).

Trade Source, one of Schwab’s two trading platforms, is an ideal on-ramp for beginning stock investors. Navigation on the web-based platform is simple, the research and tools are robust and access comes with no trade minimums or fees. Investors ready to wade into more sophisticated research, screening, technical indicators and market data can easily venture over to the company’s desktop platform, StreetSmart Edge.

TD Ameritrade also offers multiple trading platforms that earn high marks for free access to an impressive lineup of research and analytical tools. Investors select a skill level — rookie to scholar — and TD points to appropriate educational and research resources. One standout feature is the broker’s pre-built, customizable asset allocation model portfolios, which help customers assemble a properly balanced portfolio of stocks, ETFs, mutual funds and bonds. Both brokers have mobile trading apps that closely mirror the experience and capabilities of their online platforms.

The biggest knocks against TD and Schwab come down to price. TD Ameritrade’s $6.95 commission on stocks and ETFs is on the high side for discount brokers, and $2 more than the $4.95 you’ll pay at Schwab. Schwab gets dinged for the price of entry: The initial minimum investment requirement is $1,000 (compared to TD’s $0) for both IRAs and taxable accounts. However, if you set up a $100 or more automatic monthly transfer, that minimum is waived.

The best online brokers with no minimum deposit requirement

The $0 initial deposit requirement at these brokers means you can open an account and start investing today with any amount of money.

Don’t be turned off by the cover charge some brokers and mutual fund companies require to get in the door. There are plenty of brokers that will let you set up an investment account with nothing more than the lint in your pocket, especially if you’re looking to open an IRA, for which a $0 minimum deposit requirement is common. (IRA shoppers: See our picks for best IRA account providers for 2017.)

The field of brokers with no minimum deposit requirement for regular taxable brokerage accounts is narrower, but not by much. In addition to the $0 requirement to open an account, Ally Invest (which acquired TradeKing) and Merrill Edge are both notable for their low commission costs and nonexistent maintenance or inactivity fees.

Stock investors sacrifice nothing in terms of access to quality research and trading tools. What’s missing? Commission-free exchange-traded funds (ETFs), for one. Neither Ally Investor or Merrill Edge offer any. However, if mutual funds are on your investing menu, Merrill is your choice (offering more than 2,000 no-transaction-fee funds). Ally Invest has none, although the broker’s $9.95 fund commission is one of the lowest in the industry.

The best online brokers for customer support

New investors will appreciate that these brokers have people to answer questions online, over the phone and in person. They also have an impressive lineup of classes and tutorials offered both online and at local branches.

Fancy trading widgets, research doohickeys and rock-bottom fees aren’t every investor’s top priorities. Having someone to walk you through how to use those widgets and doohickeys may be a bigger selling point to those just getting started.

At Scottrade and Merrill Edge, help is just a phone call (or short drive to a brick-and-mortar branch) away. Both of these brokers have branches across the country where they host investor events, teach classes and allow customers to speak to an investment advisor in person.

Thanks to Bank of America’s acquisition of Merrill Lynch, customers can get help at any of the 2,000 offices where they can schedule complimentary consultations with Merrill Edge Financial Solutions Advisors. Scottrade’s network of 500 offices is expected to increase when TD Ameritrade completes its acquisition of the broker (expected to close in September 2017) and they merge services and offices under the TD Ameritrade name. If there’s no branch near you, both Scottrade and Merrill Edge have operators standing by to offer phone service, real-time online chat and email support.

When we talk about customer support, we also look at a broker’s educational resources. Here Merrill Edge’s investor education center is the standout for its videos, courses, calculators, webinars and articles, all searchable by investing experience (beginner, intermediate or advanced) or topic. Plus, in addition to providing research from its own analysts, customers can also access third-party research from S&P Capital IQ, Recognia and Morningstar (which also provides an investing classroom on the site).

The best low-cost online brokers

Even seasoned investors with high-dollar balances need to watch out for the corrosive effect fees can have. If your main aim is to keep overall account expenses in check, these brokers offer a range of investment options and have the courtesy to not nickel-and-dime customers for inactivity.

You’re not going to get any cheaper than free, and that’s exactly what investing app Robinhood offers: commission-free trading of more than 5,000 stocks and ETFs. This no-frills app has no account minimum, no annual or inactivity fees and is available for iPhone, Apple Watch and Android. What you don’t get for your $0 on this bare-bones platform is access to research reports, analysis software and automatic reinvestment of dividends (those are credited back to accounts as cash). That’s a lot for beginner investors to do without. Another limiting factor is that Robinhood supports only individual taxable accounts and not IRAs.

Not to undersell the value of Robinhood — after all, every dollar saved in trading fees means one more dollar to add to your returns — but free trading apps like Robinhood and Loyal3 (which offers only a limited selection of 70 stocks but offers access to IPOs) are strictly meant for executing individual trades. And that’s it.

If building a portfolio (rather than picking and choosing individual stocks) is your aim, check out Motif Investing — an unusual hybrid that’s part broker, part portfolio manager and (for an added fee) a robo-advisor. Investors pay just $4.95 to buy stocks and exchange-traded funds — including fractional shares. The thing that sets Motif apart is the ability for users to build and trade “motifs” — themed collections of up to 30 stocks or ETFs — for just $9.95, which comes to a $0.33 trade commission. There’s no account minimum, but $300 is required to invest in a motif. However, like Robinhood, Motif lacks much of the features that stock- and ETF-pickers value, such as research, analytical tools and a choice of order options.

The best online brokers for mutual fund and ETFs

These brokers offer a large lineup of low-cost ETFs and no-transaction-fee mutual funds.

If your exposure to mutual funds has been limited to the handful of offerings in your workplace retirement plan, brace yourself. The world of available mutual funds — and exchange-traded funds (ETFs), which are low-cost index funds that trade like individual stocks — is staggering. Thankfully, there’s no shortage of brokers that provide outstanding tools, services and guidance for mutual fund and ETF investors.

Although we name just two firms “best brokers for beginning mutual fund and ETF investors” — Vanguard and Fidelity — we’ll also point out that the offerings at Charles Schwab and TD Ameritrade are equally strong in all the areas that matter:

Access to low-cost funds: Mutual fund commissions are notoriously high and can range from $20 to $75. But they are easy to avoid if a broker offers no-transaction-fee (NTF) mutual funds which, as the name implies, customers can purchase without paying a trade commission. About half of the brokers NerdWallet reviews offer NTF funds and commission-free ETFs. Based on number of no-transaction-fee fund offerings alone, the standouts are TD Ameritrade (with nearly 4,000 NTF funds), Fidelity (roughly 3,600) and Charles Schwab (3,000-plus) and more than 2,600 at Vanguard. Additional points go to Vanguard since it is the industry’s gold standard for low-cost mutual funds because of its rock-bottom expense ratios.

Selection of commission-free ETFs: Commission-free ETFs are the equivalent of NTF funds. However, the savings here are less dramatic since ETF commissions are the same as a broker’s stock trading commission. For commission-free ETFs, Charles Schwab offers roughly 200 (available to Schwab customers as well as via OptionsXPress, which Schwab owns), TD Ameritrade has a list of 100-plus, Fidelity offers 91 and Vanguard has 55 (all Vanguard ETFs).

A note about redemption fees on commission-free ETFs and NTF funds: Most brokers charge early redemption fees if you sell the asset in the first 60 to 90 days, and all of the ones mentioned above are no exception.


Best brokers for beginners: summary

Broker
Best
for
Highlights
Commiss-
ions
Promotion
Account minimum
Start investing
TD Ameritrade
Overall
Broad educational content;
no inactivity fees
$6.95
per trade
$100 to $600 cash bonus, depending on account size
$0
Charles Schwab
Charles Schwab
Overall
Among largest selections of commission-free ETFs
$4.95
per trade
$100 referral award for first-time clients
$1,000

Ally Invest

Ally
No account minimum
Low commissions, free tools and research
$4.95
per trade
None
$0
Merrill Edge
Merrill Edge
No account minimum + Customer support
Breadth of research reports
$6.95
per trade
$100 to $600 cash bonus, depending on account size
$0
Scottrade
Scottrade
Customer support
High level of support: online + 500 branches
$6.95
per trade
700 free trades or up to $2,500 cash bonus for qualifying deposits
$2,500
($0 for IRAs)
Robinhood
Robinhood
Low cost
No-frills, free trading app for beginners
$0
per trade
None
$0
Motif
Motif
Low cost
Low commissions, availability of fractional shares
$4.95
per trade; $9.95 per motif
1 month free trial of Motif Blue
No minimum, but $300 balance to invest in a motif
Vanguard
Vanguard
Mutual Funds & ETFs
Low-cost index funds and ETFs
$7
for first 25 trades/year, $20 for later trades
None
$0; $1,000+ fund minimums
Fidelity
Fidelity Investments
Mutual Funds & ETFs
24/7 live support; free investing seminars
$4.95
per trade
300 commission-free trades with deposit of $50,000 or more
$2,500
($0 for IRAs)

More resources for new investors


Methodology: How we decided on "best"

To determine the best online brokers, we started by compiling a list of the largest brokerages and other notable or emerging players in the industry based on size, trading volume, reputation, registration with appropriate regulatory agencies (such as the SEC and FINRA), and consumer interest (as measured by search volume). We examined the following 16 companies: Ally Invest, Capital One, Charles Schwab, eOption, Etrade, Fidelity, Interactive Brokers, Loyal3, Merrill Edge, Motif, Robinhood, Scottrade, T. Rowe Price, TD Ameritrade, TradeStation, and Vanguard. Together they represent a broad selection of the options available to investors.

We evaluated these brokers across a number of categories to select the best overall for trading stocks: account fees, account minimums, the number of tradable securities, the cost of stock and options trades, the number of no-transaction-fee mutual funds, the number of commission-free ETFs, the cost of broker-assisted trades, the level of research provided, the sophistication of trading platform and mobile app, inactivity fees, the level of customer support and the number of branch locations.

NerdWallet’s overall ratings for online brokerages are weighted averages of these categories.

What the ratings mean:
5 stars out of 5 — Among the very best
4.5 stars out of 5 — Very good; only minor caveats for most customers
4 stars out of 5 — Good; issues that might make a difference to some customers
3.5 stars out of 5 — Fair; make sure strengths and weaknesses are a good match for you
3 stars out of 5 — Poor; proceed with great caution
2.5 stars out of 5 (or below) — Best to avoid


Dayana Yochim is a staff writer at NerdWallet, a personal finance website: Email: dyochim@nerdwallet.com. Twitter: @DayanaYochim.

Updated June 30, 2017.