Best Stock Brokers for Beginners
The best time to start trading stocks was 10 years ago. The second best time is now. Here are the best beginner brokers for those of you just getting started.
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How do buy stocks online if it’s your first time?
If you’re a newcomer looking to take your first step into the world of online stock investing, then you’ll want to know which online brokers will benefit you most and help you succeed as a beginner.
To assist you to narrow this down, we’ve created a list of the most beginner-friendly brokers by looking at their customer support, first-class educational and research material, easy-to-use platforms and products, and their pricing.
Some brokers focus more on guidance and support, while others prioritize advanced tools and the ability to grow with you. To complete our list, we’ve also included a buyers guide (below) to help you understand stock investing, its benefits and risks, and what to look out for in a stock broker as a beginner.
Even with COVID-19 causing huge volatility in the stock market, more people are downloading stock apps than ever before. Naturally, everyone is excited to enter the markets while they are full of potential—and having a great brokerage is a good way to profit from that potential.
So, what is the best online stock trading site for a beginner?
Top Online Stock Brokers for Beginners
The Most Beginner-Friendly Online Stock Brokers
1. Robinhood – Best Free Stock App
For those looking to jump into stock trading without the fees or hassle — Robinhood should be a strong consideration. A few years ago, two Stanford graduates moved to NYC and discovered most Wall Street firms pay hardly anything — or nothing at all — to facilitate trades. Yet they’re known to charge hefty commission fees.
Under this premise, the two graduates packed up their bags and moved to California, where they built Robinhood. The company’s mission was, and still is, “to provide everyone with access to the financial markets, not just the wealthy”.
- No account minimum
- Commission free trading
- Cryptocurrency trading
- Limited investment selection — no retirement accounts, mutual funds, or bonds
- Minimal customer support
- No tools
Investor Warning: Carefully consider the investment objectives, risks, charges and expenses of any investment company before investing. All securities trading, whether in stocks, exchange-traded funds (“ETFs”), options, or other investment vehicles, is speculative in nature and involves substantial risk of loss. Robinhood Financial encourages its customers to invest carefully and to use the information available at the websites of the SEC at http://www.sec.gov and FINRA at http://FINRA.org.
How do beginners buy stocks online? According to roughly 10 million people, the answer is Robinhood. That’s how many people currently use the platform.
Robinhood is great insofar as you can download the app and start trading right away — with no fees. You can create your own watchlists to monitor the stocks you want to keep an eye on.
Once you initiate a deposit, they’ll let you start trading immediately, even before they receive the funds. There are also no account minimums.
Yet when it comes to trading tools and educational resources, Robinhood is lacking. If you want to utilize intelligent investing strategies, you’ll be on your own here.
Further, when it comes to customer service, there’s little more than an FAQ section on the website and an automated chatbot. Of course, email is an option, but it’s likely to take some time.
Overall, if you want to jump into buying and selling stocks without any fees or hassle, Robinhood could be for you. Also, we’ve put all the Robinhood’s features further on test in our comprehensive Robinhood review.
2. TD Ameritrade – Excellent Overall
TD Ameritrade consistently ranks high for a number of categories. The broker has climbed the ladder in recent months after lowering its commission fees for online stock, exchange-traded funds and options trades.
- Detailed educational section
- Extensive and free research and data
- $0 commission fees on stock or ETF trades
- Guided investing and investment management solutions
- Certain tools are only available in certain platforms and are not all available on desktop and mobile apps
- The brokers website can be hard to navigate and find exactly what you need without help from customer service
TD Ameritrade’s extensive and free educational platform is a highlight of the online broker, which includes a podcast, an immersive curriculum, articles, videos and webcasts, TD Ameritrade Network and in-person events, to name a few.
The firm also offers customers a range of investment management solutions to help you craft a plan, along with providing top-class research tools to enable you to analyse the market and help you reach your goals.
Customers can speak to an advisor on TD Ameritrade’s Mobile Trader app, but you can also get a quick answer from the brokers Ask Ted, service. Ask Ted is a chatbot that will assist you with tutorials, investing tools, data and more to help make your journey to investing as seamless as possible.
TD Ameritrade also offers helplines on most social media platforms including Facebook, Twitter, Amazon’s Alexa, WeChat, and Apple Business Chat for quick and easy access.
First-timers should begin with TD Ameritrade’s standard web-based interface, also known as “the green site”. The broker offers the ideal platform for growth and progression by also providing tools for more advanced traders including, thinkorswim, where you can create a custom portfolio, set up trading alerts, and receive real-time news on current trends.
Overall, we say TD Ameritrade is one of the best trading platforms for beginners. The broker’s $0 commissions, research and educational tools are ideal for all levels. The firm also offers good customer service and guidance to help clients with any bumps they might hit along the way.
It should also be noted that Charles Schwab is set to acquire TD Ameritrade. The deal is expected to close in the latter half of 2020.
3. E*TRADE – Best Premium Service
E*Trade has been around a while, so they understand the needs of beginners and how to cater to those needs.
Their advanced trading platform, Power E*Trade is definitely a highlight of the broker and allows users to analyze the market, as well as offering significant stock and options trades. Their educational tools will also help you expand your knowledge base to make more informed decisions.
- Good selection of research and tools to cater to beginners and advanced traders
- E*Trades’ mobile futures ladder is great for helping futures traders earn higher gains
- User-friendly platform for options trading
- Test either your whole portfolio or just a single asset with their performance risk tools
- No commision fees charged for stock and ETF trades
- E*Trade has a specialized support channel that’s only accessible for those with higher account balances and / or frequent traders
- The brokers advanced options tools are not available on mobile
- High margin rates
E*Trade is another online broker that is suitable for newbies and more advanced investors. Their educational tools are available to all traders, even those that aren’t customers.
Their desktop and mobile tools are easy to use, and they have several market centres for trade execution. They are also now more accessible to beginners and younger investors since they eliminated their commission fees on ETFs and equities in October 2019. They do however, have a high margin interest rate that you should be aware of.
The broker’s website can be difficult to navigate and find the information you need and currently only customers who meet certain criteria such as larger accounts will receive priority service, more research findings and expert asset management.
When reviewing the E*Trade platform, we found that E*Trade offers innovative and intuitive trading platforms and a mobile app that beginners will enjoy. Newbies interested in developing their knowledge base will make use of the firm’s outstanding tools and educational material. If you’ve ever wondered about online stock trading for beginners, E*Trade is a great place to start.
4. Fidelity Investments – Best Educational Tools
Fidelity Investments offers one of the best research and education opportunities to you grow from a beginner into an advanced trader. The broker was also one of the first to offer reduced fees with no commissions on stock, ETF or options trades, as well as a comprehensive online learning center.
- Active Trader pro offers beginners real-time insights and easy-to-use trading tools
- Account Minimum: $0
- Great variety of research providers
- Cognitive computing platform to offer customers a real customer service experience
- Full View is free for all Fidelity customers and helps you keep on top of your finances
- Trading tools are in different platforms
- Only US citizens can open an account
Fidelity is a leading name, with over $3 trillion in assets under management (AUM), and a tough but exciting year ahead after a key competitor, Charles Schwab acquired TD Ameritrade. As of October 2019, the broker offers $0 commission fees on all stocks and exchange-traded funds, including a charge for options trades, which are now charge on a per contract basis of $.65
Fidelity also provides valuable customer service for newbies and is in the process of building a cognitive computing platform so they offer customers support in more human-like ways. The firm offers full banking capabilities, in addition to two money market funds with a 1.82% interest rate. You can also avail of a no account limit if you want to buy coverage on securities.
Fidelity’s Full View will help newbies track your finances, and even investment accounts, outside of Fidelity. Check out our Fidelity Investments review for further information about the pricing and fee structure.
5. Charles Schwab – Best for Research
Charles Schwab is a full-service broker that ranks high in almost all areas of its services, offerings, and fees, and is a great option for beginners who would prefer a well-rounded broker. With that said, their educational resources, and insights cater to traders of all levels.
- Insights and research from Morningstar, Market Edge, Credit Suisse, and others
- The StreetSmart Edge platform caters to simple and more complex strategies, and offers ideas on options and trading
- $0 commission fees on stocks, ETFs, and option trades.
- Although Schwab offers a selection of world-class tools and research, it could all be a bit overwhelming for first timers.
- The brokers offer of several trading platforms may also make it difficult for beginners to stay focused and on top of everything.
- Margin rates are higher than average
In October 2019, Schwab was the first online broker to go commission free on stock, exchange-traded funds and U.S options trading commission fees. Their recent acquisition of TD Ameritrade is sure to result in more streamlined services and potentially better products in 2020.
Schwab provides excellent customer support. Their online customer support and chat support is available to customers 24/7, and they also invite customers to attend their complementary workshops throughout their 350 plus branches.
Not one to fall behind, Schwab recently released a robo-advisor (ie, automated investing) platform called Intelligent Portfolios. Their robo-advisor can fully manage your portfolio – a great option for beginners. Schwab also offers clear guidance, and a Client Concierge to help you sort your initial priorities.
If you are more interested in stocks and options, Schwab offers magnificent research and reports from third party company’s including, Morningstar and Market Edge. Beginners will also love Schwabs insights section, that includes a knowledge center, insights and ideas and investing principles for those looking to get a leg-up from the start.
As we touch on in our Charles Schwab review, Schwab offers basic web trading features that are easy to use, in addition to two other trading platforms, StreetSmart Edge and Tradesource. StreetSmart Edge is Schwab’s premier trading platform that has customizable features and an intuitive work-flow that syncs with your personal trading style. It’s suitable for beginners because it lets you create simple strategies, but it will also cater to more complex strategies once you get some more experience in.
Overall, Charles Schwab is a full-service broker, offering easy-to-use and comprehensive insights and data. Their robo-advisor is one of the best, and can take charge of your portfolio for you 100% hands off.
Further, Schwab’s StreetSmart Edge trading platform will cater to both simple and more complex strategies as you learn and grow. Their recent acquisition is also sure to be a positive for customers in the year ahead and many of the benefits and features of TD Ameritrade get rolled in.
6. Acorns – Best for Hands-Off Beginners
Acorns makes out our list for the top online stock brokers for beginners. The firm helps investors round up purchases and invest the change into your portfolio. The broker offers a selection of options and robo-advisors that help newbies get started on mastering the creation of a profitable portfolio over time.
- Great for newbies that don’t want to go head first into risky situations and want to earn a profit through their savings.
- Easy-to-use, simple and customizable tools
- The firms targets Passive investors but they also allow you to take out lump sums and set up automatic deposits.
- Automated investments in ETFs, based on your recommendations from your personal information.
- All tools and resources are available on their mobile app
- Acorns charges commission fees, including an initial $5 to open an account and a $3 monthly fee.
- Not a great range of investment products
We believe Acorn deserves a spot on this list because they are highly rated by nearly all their customers, ourselves included as you can see in our Acorns review. The brokers fees however, are not looked favorably upon since the industry move towards lower fees in October 2019.
Overall, Acorns will suit newbies looking to passively learn about investing, but not online trading exchanges, so much. They’re not suitable for anyone with an interest in doing any extensive learning, as the firm are all about a simple approach to passive investing. Newbies won’t need to remember to fund accounts because everything is automated.
Investors should just keep in mind that passive investing takes a while to accrue a profit, and Acorns does charge fees that may not allow them to make gains as fast as possible with passive investing.
How Should Beginners Buy Stocks Online?
Okay… so we’ve listed the best online brokers for beginners, but now you’ll need to figure out which broker will suit your personal goals and investing style.
Some brokers offer detailed knowledge material and guidance, to help you diversify your portfolio, make more informed decisions, and even build and monitor your portfolio for you. Others are more hands-off and let you decide for yourself.
Traditionally brokers charged high commissions and fees, but there has been a big move away from this which is great news for young investors trying to get a start in the industry.
What is a Stock Fund? 📈
Domestic stocks funds give investors the ability to own stock in some of the world’s biggest companies through the world’s largest and most liquid market. Because US stocks tend to have low-risk and good return, investors favor them as a core component to their portfolio.
Buying shares in a domestic stock fund means that your money is pooled with other investors’ money, and is mainly used to buy stocks in U.S companies. Most funds own hundreds of stocks to increase profit.
Overall, stock funds are a good investing option and have many benefits including being a low-risk option and offering significant appreciation potential.
What are the Advantages of Domestic Stock Funds? 👍
Long ago, investors figured out that life is much more stressful if their entire savings are spread out over several areas and companies—because the odds of all of them going bankrupt are tiny. Therefore, funds are something you don’t have to watch all the time, and can enjoy life instead.
To get the best results and reduce the volatility of your portfolio over time, investors buy individual stocks across many different industries. This practice, referred to as diversification, protects investors from huge losses when one stock falls in price because you still should have good performing stock in other industries, as they’re unlikely to all fall at the same time.
Long-term Saving 🕰️
Domestic stock funds are best for long-term saving as they offer significant appreciation potential. This is ideal if you want to save for long-term goals, including retirement or college. This type of investment helps your savings stay in line with or above inflation.
Risks of Domestic Stock Funds 👎
Investing in funds might be an easy way to stay diversified, it’s not a superior method of long-term investing—at least not necessarily. Buying into a diversified bundle of bad stocks is bad, plus, there are some inherent expenses associated with funds.
Loss of Principal 📉
A stocks performance is determined by the stock holdings performance. This means that when a stock decreases in price, it also negatively affects the value of your investment in the fund, too.
If you sell your fund when it’s lower in value, it can result in a loss. Also, just because your fund is diversified, does not make it immune from loss.
Potential Tax Consequences 🏛️
Stock funds may receive dividends or if a stock rises in value they may choose to sell, which requires shareholders money to be distributed by means of distribution. You are required to pay taxes on all distributions earned.
In cases where funds have held onto stocks long-term, you may receive capital gain distributions, which you will also need to pay tax on, even if you have received negative returns that year. When it comes to buying and selling stocks, the best way to combat taxes is through tax-loss harvesting.
What is Stock Trading Leverage? ⚖️
Many stock brokers offer investors leverage when trading. This can also be referred to as margin trading, and involves borrowing money to increase the size of your stock investment when you don’t have enough money in your account. This leverage can increase your return on investment, but it can equally result in a huge loss.
How Do Stock Brokers Get Paid: Fees & Commissions 💵
Online brokers get paid through charging commissions and fees on stocks, ETFs, options and mutual funds. With the industry move towards zero commissions fees, fewer brokers are charging these as of October 2019.
However, they may also charge account fees or minimum investment deposit, so it’s good to work out how much you’ll potentially be paying in fees before you choose a broker.
🆓 Keep in mind: Fees and commissions are often the main source of income for brokers—however, there are a few free brokerages where you don’t have to worry about hidden expenses.
Full-Service Options vs Robo-Advisor Tools 🛠️
When searching for the right broker, understanding which broker ‘type’ is most suited to your needs is crucial. There are two types of online brokers; a full-service broker and a robo-advisor.
A full-service broker should offer the complete broker package of services. They generally offer comprehensive knowledge and guidance to help you make the best decisions on how to successfully allocate your assets, in addition to advising you on trends and helping you to create a strategy for your portfolio.
A robo-advisors generally offers less guidance, and allows investors to buy stock themselves. The best robo-advisors offer automatic rebalancing and tax-loss harvesting, which is suited to a more hands-off investing style.
Note that all robo-advisors offer the investor a view into their portfolio via their investing app and are much cheaper than full-service brokers. Typically, a robo-advisor might charge anywhere from 0.2% to 0.5% of your portfolio annually, and some—like M1 Finance—are completely free.
Customer Support ☎️
Beginners will generally really benefit from a broker’s customer support, so we recommend researching what customers think of the support a broker provides its clients.
Charles Schwab is the only broker to offer a money-back guarantee on its fee-based services if customers are not happy, and some online stock brokers do not prioritize customer support and can be hard to reach.
When deciding on a broker to commit to, find out what support or guidance they offer beginners, how accessible their services are, and whether or not their products and platforms are easy-to-use. Stock brokers with a focus on beginners may not always offer the best customer support.
⚠️ Important: If something goes wrong with your account, you must be able to reach your broker’s customer support quickly. Otherwise, you might stress and miss out on trading opportunities while waiting.
Can You Set Up Retirement Accounts? 👛
If setting up a retirement account is your sole focus then make sure to find out whether or not a firm offers this. While some offer the option of setting up a retirement account, others do not offer either IRAs or Roth IRAs. A firm that doesn’t offer IRAs or Roth IRAs may not be the one for you.
Choosing the Best Stock Trading Platform for Beginners ✅
Once you have a good understanding of the stock market, its basic concepts and an awareness of the potential risks you face, choose an online broker that you feel matches your experience level and trading style, and start slow. When it comes to online stock trading for beginners, be sure to do your research prior to committing to a broker.
Overall, newer traders should prioritize customer support and guidance, educational resources, and easy to use tools and platforms, so that you don’t become overwhelmed. Don’t focus too much on prices right now because you probably won’t trade too much to start with anyway, and when you do, you can always switch brokers.
So, what is the best online stock trading site for a beginner? Well, now you have everything you need to decide that yourself.
Whichever broker you choose, take your time to learn the ropes and strategize, strategize, strategize!
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