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Best Online Stock Brokers for Beginners 2018

January 2, 2018
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.

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? Learn how the stock market works.)

NerdWallet’s top online brokers for beginners of 2018

NerdWallet rating

Fees

$6.95

per trade

Account minimum

$0

Promotion

$100-$600

in cash bonus with a qualifying deposit

The bottom line

Merrill Edge offers high-quality customer service, robust research and low fees. Customers of parent company Bank of America will love the seamless, thoughtful integration, with a single login to access both accounts.

Show pros & cons

Pros

  • Robust third-party research.

  • Ongoing promotions.

  • Integrated with Bank of America.

  • Free trades for eligible Bank of America customers.

Reader favorite

Cons

  • No commission-free ETFs.

  • Minimum balance requirement for active trading platform.

Read full review
NerdWallet rating

Fees

$4.95

per trade

Account minimum

$0

Promotion

$50-$3,500

in cash bonus with a qualifying deposit

The bottom line

Ally Invest’s robust trading platform and lineup of free research, charting, data and analytical tools make it a good choice for active traders. But it’s also appropriate for beginning investors who will appreciate that there is no account minimum and no annual fees.

Show pros & cons

Pros

  • Low commissions.

  • No account minimum.

  • Strong web-based platform.

  • Robust research and tools.

Reader favorite

Cons

  • No commission-free ETFs.

  • No no-transaction-fee mutual funds.

Read full review
NerdWallet rating

Fees

$6.95

per trade

Account minimum

$500

Promotion

60

days of commission-free trades with a qualifying deposit

The bottom line

E-Trade has long been one of the most popular online brokers, largely because of its easy-to-use tools. They offer a tiered commission structure that favors frequent traders but can add up to high costs for casual investors.

Show pros & cons

Pros

  • Easy-to-use tools.

  • Large investment selection.

  • Excellent customer support.

  • Access to extensive research.

  • Advanced mobile app.

  • Reduced commissions for frequent traders.

Reader favorite

Cons

  • Higher commissions for low-volume traders.

  • Minimum balance requirement for active trading platform.

Read full review

Want to compare more options? Here are our other category winners for best online brokers for beginners:

More resources for new investors

Best brokers for beginners: summary

Broker
Best
for
Highlights
Commiss-
ions
Promotion
Account minimum
Start investing
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

Ally Invest

Ally
Low costs
Low commissions, free tools and research
$4.95
per trade
$50-$3,500 cash bonus + free trades depending on account size
$0

E*Trade

E*Trade
Education
Large selection; reasonable commissions and fees
$6.95
per trade; volume discounts
60 days of commission-free trades ($10,000+ deposit)
$500
TD Ameritrade
Overall + Education + Mutual Funds & ETFs
Broad educational content;
no inactivity fees
$6.95
per trade
500 commission-free trades + up to $600 with a qualifying deposit
$0
Charles Schwab
Charles Schwab
Overall + Customer support + Mutual funds &
ETFs
Among largest selections of commission-free ETFs
$4.95
per trade
$100 cash bonus with a qualifying deposit
$1,000
Fidelity
Fidelity Investments
Low costs + No account minimum
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)

Our rating 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.

Brokerage account FAQs

Four of NerdWallet’s picks for best brokers have $0 account minimums for either taxable accounts or IRAs, so you can open an account right away. The amount of money you’ll need to begin investing depends on the assets you intend to buy — individual stocks may cost as little as a few dollars a share, whereas mutual funds often have minimums of $1,000 or more — and their related commissions, which generally start at about $5 per trade.

Historically speaking, investing in the stock market offers a much higher rate of return over the long term than most other investment options. Compounded over time, this can have a profound effect on your savings — particularly since more conservative vehicles such as savings accounts have failed to crack 1% on average for more than a decade now. Also, some types of accounts — like IRAs — offer significant tax advantages that can grow your nest egg more efficiently and also save you money each year on your tax bill.

While tradable assets vary by broker, the most common offerings are individual stocks, mutual funds, exchange-traded funds (ETFs) and bonds. Currency (or Forex), commodities options and futures contracts are available with many brokerages — but you may be required to answer questions about your investing experience, income and net worth to qualify to trade these assets.

You can open a brokerage account in about 15 minutes, and the process is similar to signing up for a checking or savings account. Brokers typically require the following information, though the information requested can vary by broker:

  • Social Security or tax ID number
  • Address
  • Employment status

You should be able to open your brokerage account in 15 minutes or less once you’ve gathered the materials above. Transferring funds so that you can begin trading may take a few days, however.

There are inherent risks when it comes to investing — the value of your asset could fall, wiping out gains, or you could lose your entire investment if its value falls to zero. That said, diversified investments like index funds tracking the S&P 500 are at a much lower risk of drastic or prolonged losses than individual stocks, particularly over a long time period.

The holdings in your brokerage account are insured up to $500,000 in the event the brokerage goes out of the business, provided it’s a member of the Securities Investor Protection Corporation. All of NerdWallet’s picks for best brokers are members of the SIPC. However, it’s important to note that investments you make in your account can potentially fall in value or even decrease to zero.

Most beginner investors will have a cash account, meaning any transactions must be covered by the available cash in their account. Margin accounts allow investors to borrow against the value of assets in their account to make transactions. Day traders or those who trade advanced options strategies, for example, often use margin accounts.

 

Hear how NerdWallet has helped others

“Excellent information about the best brokers for beginning investors. Thank you.”
- Wes M

Average user rating of NerdWallet

4.5 out of 5

Based on 1,642 ratings from actual NerdWallet users via ShopperApproved

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

Updated March 19, 2018.