Best Online Stock Brokers for Beginners for 2023
A stock broker is a trading platform (or person) that facilitates the buying and selling of marketable securities like stocks and exchange-traded funds (ETFs). Through a stock broker, you can open a brokerage account, a specialized financial account designed to hold investments and cash.
It is frequently used synonymously with “brokerage,” which is the name for a company that employs brokers or operates in that capacity to facilitate trade.
You can't just stroll into your neighborhood bank and make an investment when you want to acquire stock in a firm. Neither can you just call the company and buy shares. Stock brokers are useful if you need a specialized brokerage account.
What are the different types of brokerage accounts?
Discount and full-service stock brokers are the two primary categories. They all have different prices and degrees of service.
Discount broker
A company known as a discount broker allows investors to buy and sell securities through the internet. Customers have the option of controlling the stock purchase and sale process or opening an account with a robo-advisor to have their transactions made automatically. Although there is frequently no human broker taking and filling your orders, many cheap brokers include features that assist you in choosing how to conduct your trades.
Discount brokers live up to their name because they are far less expensive than full-service brokers and most of them provide zero-commission stock trading. A discount broker is the greatest option for the vast majority of investors, particularly new investors. Because of this, discount brokers are the only ones we consider to be the finest trading platforms for novices.
Full-service broker
A full-service broker is comparable to an established broker. It's a business that often does business out of a physical office where a real person, also known as a stock broker, takes and executes buy and sell orders from clients. A full-service broker may also offer individualized investment planning services, such as assistance with stock purchases, tax preparation, and retirement planning.
Given the costs of hiring human advisors and maintaining physical facilities, full-service brokers are far more expensive than bargain brokers. Costs have, however, usually decreased over the past few decades as a result of competition from stock brokers, efforts to increase accessibility to investment, and access to instruments for labor automation on their end.
High-net-worth investors that desire individualized service and committed investment portfolio management are best suited for full-service brokers. For almost all investors, discount brokers are best.
Best Online Stock Brokers for Beginners for 2023
We know everyone's financial circumstances and goals are different, so we've chosen a variety of brokers to help you find one that meets your needs. Here's a review of our picks for the best online brokerages for beginners.
Fidelity
Best for: DIY investors
Fidelity Investments is a full-service brokerage firm that offers a wide range of investment products, including stocks, mutual funds, exchange-traded funds (ETFs), bonds, options, and more. The company was founded in 1946 and is headquartered in Boston, Massachusetts. It is one of the largest and most well-respected brokerage firms in the United States, with over $9 trillion in assets under administration.
One of Fidelity's biggest strengths is its low fees. The company offers some of the lowest commissions in the industry, with stock trades costing just $4.95 per trade. Fidelity also offers a wide range of no-fee mutual funds and ETFs, making it an attractive option for investors who want to keep their costs low.
In addition to its low fees, Fidelity is known for its excellent customer service. The company has a large network of branches throughout the United States, making it easy for investors to get in-person assistance with their accounts. Fidelity also has a robust online platform that allows investors to manage their accounts and trade securities online.
Another unique feature of Fidelity is its fractional share investing option. This allows investors to buy and sell fractional shares of stocks and ETFs, which can be particularly useful for investors who want to invest in high-priced securities but don't want to buy a full share.
Fidelity also offers a wide range of research and educational resources for investors. The company has a team of analysts who provide market insights and investment recommendations, and it also offers a variety of online courses and webinars to help investors improve their knowledge and skills.
One potential downside of Fidelity is that it doesn't offer commission-free trading on all securities. While the company does offer a large selection of no-fee mutual funds and ETFs, some investors may find that they need to pay commissions on certain securities.
Overall, Fidelity is a great option for investors who want a well-rounded broker with low fees and excellent customer service. The company's wide range of investment products, fractional share investing option, and robust research and educational resources make it a strong choice for DIY investors.
Robinhood
Best for: Mobile investing
Robinhood is a commission-free brokerage platform that was founded in 2013 and is based in Menlo Park, California. The platform is known for its user-friendly mobile app, which allows investors to buy and sell stocks, ETFs, and cryptocurrencies with no commission fees.
One of Robinhood's key strengths is its ease of use. The platform is designed to be simple and intuitive, with a clean interface that makes it easy for investors to navigate and manage their investments on the go. Robinhood's mobile app is especially popular among millennials and younger investors who prefer to manage their investments through their smartphones.
Another advantage of Robinhood is its commission-free trading. This means that investors can buy and sell stocks, ETFs, and options without paying any commission fees. Robinhood was one of the first brokers to offer commission-free trading, and this has helped to make it a popular choice among investors who are looking to keep their costs low.
Robinhood also offers fractional share investing, which allows investors to buy and sell partial shares of stocks and ETFs. This is particularly useful for investors who want to invest in high-priced securities but don't have the funds to buy full shares.
In addition to its traditional brokerage services, Robinhood also offers cryptocurrency trading through its Robinhood Crypto platform. This allows users to buy and sell Bitcoin, Ethereum, and other cryptocurrencies without paying any fees.
One potential downside of Robinhood is that it doesn't offer as many investment options as some of its competitors. The platform only offers trading in stocks, ETFs, options, and cryptocurrencies, and it doesn't offer mutual funds, bonds, or other types of investments.
Another concern is that Robinhood's business model relies heavily on order flow revenue, which means that the platform may receive compensation from market makers for directing orders to their trading desks. While this is a common practice in the industry, some investors may be concerned about potential conflicts of interest.
Overall, Robinhood is a good option for investors who are looking for an easy-to-use platform with commission-free trading and fractional share investing. The platform's mobile app and cryptocurrency trading options are also attractive to younger investors who prefer to manage their investments through their smartphones. However, investors who are looking for a wider range of investment options or who have concerns about potential conflicts of interest may want to consider other brokerage platforms.
SoFi Active Investing
Best for: Membership ecosystem
SoFi Active Investing is a commission-free brokerage platform that was launched in 2018 by Social Finance Inc., a personal finance company that offers a range of financial products and services. The platform is designed to be user-friendly and accessible to both beginner and experienced investors, with a focus on offering a wide range of investment options and other financial products.
One of SoFi's key strengths is its membership ecosystem. In addition to its stock trading app, the company offers a range of other financial products and services, including personal loans, student loan refinancing, and life insurance. This makes SoFi an attractive option for investors who are looking for a one-stop-shop for their financial needs.
Another advantage of SoFi is its unique features, such as cryptocurrency trading, fractional share investing, and access to IPO investing for smaller investors. SoFi is one of the few brokerage platforms to offer commission-free options trading to its members, making it an attractive option for options traders.
SoFi's mobile app is also user-friendly and offers a range of tools and resources to help investors manage their portfolios. The app includes features like real-time market data, customizable watchlists, and news and analysis from a variety of sources.
One potential downside of SoFi is that it doesn't offer as many investment options as some of its competitors. The platform only offers trading in stocks, ETFs, and cryptocurrencies, and it doesn't offer mutual funds, bonds, or other types of investments.
Another potential concern is that SoFi is a relatively new player in the brokerage industry, and it doesn't have the same level of brand recognition or reputation as some of the more established firms.
Overall, SoFi Active Investing is a good option for investors who are looking for a commission-free brokerage platform with a wide range of investment options and other financial products and services. The platform's unique features, such as cryptocurrency trading and fractional share investing, make it an attractive option for investors who want to diversify their portfolios. However, investors who are looking for a wider range of investment options or who prefer a more established brokerage firm may want to consider other platforms.
E*Trade
Best for: Mobile platform
E*Trade is a well-established online brokerage platform that was founded in 1982. It is a popular choice for investors who are looking for a reliable and user-friendly platform with a strong mobile app.
One of the key strengths of E*Trade is its trading platform. The platform is easy to use and offers a range of tools and resources to help investors manage their portfolios. It includes features like real-time market data, customizable watchlists, and news and analysis from a variety of sources. The platform also offers advanced trading tools for more experienced investors, including options trading and margin trading.
E*Trade is also known for its educational resources. The platform offers a wide range of educational resources, including articles, videos, and webinars, to help investors learn about investing and improve their skills. The educational resources cover a range of topics, from basic investing concepts to advanced trading strategies.
Another advantage of E*Trade is its wide range of investment options. The platform offers trading in stocks, ETFs, options, futures, mutual funds, bonds, and more. It also offers a range of account types, including individual brokerage accounts, IRAs, and managed portfolios.
E*Trade's mobile app is also highly rated by users. The app is easy to use and offers all of the same features and tools as the desktop platform. It also includes additional features like mobile check deposit and fingerprint login for added security.
One potential downside of E*Trade is its fees. While the platform offers competitive pricing for stocks, options, and ETFs, it charges higher fees for mutual funds and other investment products. Additionally, the platform charges a $500 minimum deposit to open an account, which may be a barrier for some investors.
Overall, E*Trade is a solid choice for investors who are looking for a reliable and user-friendly platform with a strong mobile app. The platform's trading tools, educational resources, and wide range of investment options make it a great choice for both beginner and experienced investors. However, investors who are primarily interested in trading mutual funds or who are looking for a lower minimum deposit requirement may want to consider other platforms.
Merrill Edge ® Self-Directed
Best for: Managing finances under one roof
Merrill Edge is an online brokerage platform that is owned by Bank of America. It offers a wide range of investment options, including stocks, bonds, mutual funds, ETFs, CDs, and options. The platform is a good choice for investors who want to manage their finances under one roof, as it offers access to a variety of financial services.
One of the key advantages of Merrill Edge is its relationship with Bank of America. This allows investors to link their Merrill Edge account to their Bank of America account, providing a seamless experience for managing their finances. It also provides access to real-live financial advisors, as Merrill Edge has advisors in many of its branches across the country. This can be a great advantage for investors who prefer to have a personal relationship with their financial advisor.
Another advantage of Merrill Edge is its research and educational resources. The platform offers a variety of research tools and reports, including analyst reports, market commentary, and stock screening tools. It also offers educational resources, including articles, videos, and webinars, to help investors learn about investing and improve their skills.
Merrill Edge's trading platform is also user-friendly and offers a range of tools and features to help investors manage their portfolios. The platform includes real-time market data, customizable watchlists, and access to advanced trading tools like options trading and margin trading. It also offers a mobile app that allows investors to trade and manage their portfolios on the go.
One potential downside of Merrill Edge is its fees. The platform charges higher fees for certain investment products, including mutual funds and ETFs. It also charges a $6.95 commission fee for online equity trades, which may be higher than some other online brokers.
Overall, Merrill Edge is a good choice for investors who want to manage their finances under one roof and have access to real-live financial advisors. The platform's research and educational resources, user-friendly trading platform, and mobile app make it a good choice for both beginner and experienced investors. However, investors who are primarily interested in trading mutual funds or who are looking for lower fees may want to consider other platforms.
Cash App Investing
Best for: Mobile investing and banking
Cash App isn't exactly a full-featured broker, but it can be a good investment account for beginners who want a simple platform to occasionally buy and sell stocks, invest in fractional shares, and trade Bitcoin.