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As a new trader or investor, low transaction costs and fast execution speeds are two of the most important criteria to screen for when evaluating online stock brokers. A strong emphasis on customer support, an intuitive easy-to-use platform and extensive educational resources are especially valuable.
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Overall Best Online Stock Brokers For New Traders
Stocks Brokers offering comprehensive educational resources and relatively low commissions are Charles Schwab and TD Ameritrade.
Choosing among the best online stock brokers means ranking brokers among the most important characteristics for new traders or investors:
- Knowledge Bank or Educational Content and Resources
- Customer Support to assist in order execution and general queries
- Affordable transaction costs
- Broad range of investments, including Stocks, Bonds, Mutual Funds, Options, Futures & Forex
Both Charles Schwab and TD Ameritrade offer a diverse range of mutual funds and exchange-traded funds (ETFs). Exchange-traded funds are index funds that offer exposure to various sectors, such as healthcare, finance, technology, currencies, and much more. Some ETFs are commission-free and some mutual funds have no transaction fees. If you are unsure, customer support can assist you in finding out.
Schwab provides an ETF Portfolio Builder tool which examines risk tolerance and creates a diversified ETF portfolio that is customized to each individual’s reward and risk preferences. It has a broader range of commission-free ETFs than TD Ameritrade.
Schwab encourages investors to grow their portfolios steadily over time by waiving account minimums for monthly automatic deposits over $100. TD Ameritrade is more attractive when it comes to the minimum amount required to open an account: $0 versus $1,000 for Schwab.
Overall Best Online Stock Brokers When Opening An Account
Many brokers require a minimum amount before an account may be opened. These online stock brokers have no minimum balance requirement to open an account.
MerrillEdge offers a compelling value proposition to mutual fund investors, providing over 5,000 no-transaction fee funds. E*Trade offers approximately 1,300 no-transaction fee mutual funds by comparison.
For beginners, Merrill Edge and E*Trade come top of the list. Merrill is also more attractive due to it being cheaper by $3 per trade relative to ETrade. Plus, Merrill charges $49.95 to close accounts versus $60 at E*Trade.
Merrill also stands out for its heightened customer service focus with more than 2,000 offline outlets for customers to visit and meet face-to-face with Merrill Edge Financial Solutions Advisors.
For a taxable, non-qualified, account, ETrade does have a minimum $500 balance requirement, but for a qualified account, such as an IRA, the requirement is $0.
Other online stock brokers with no minimum deposit requirements, include:
- TD Ameritrade
- Capital One Investing
Best Online Stock Brokers for Customer Service
Brokers offering phone, online chat, and in-person customer support are vital to new traders and investors. Below is a list of online stock brokers who excel at customer support.
ScottTrade and Fidelity stand out from their online stock broker peers by having an offline presence too. Each of their websites has information on where you can find the nearest local branch where you can speak to someone in person.
With increased customer service comes increased cost, and both ScottTrade and Fidelity have relatively high minimum account requirements for non-qualified accounts.
Their heightened focus on customer service extends to education, live webinars, virtual online chat features, and phone support.
Best Online Stock Brokers for Transaction Costs
Inactivity fees are one of the hidden expenses at many brokers. To avoid such hidden expenses and keep trading expenses low overall, consider the low-transaction cost brokers below.
Robinhood has limited educational tools, screening analytics and research but the transaction costs cannot be beaten: $0 trade commissions, $0 account minimum and access to over 5,000 stocks and ETFs. Robinhood supports non-qualified, taxable accounts only.
TastyWorks is almost as compelling with just $5 stock opening trade. For more seasoned investors who wish to trade options, TastyWorks offers a compelling $0 commission on all closing trades. The charge for opening an options trade is just $1 per contract and for a futures opening trade it is $2.50 per contract.
Best Online Stock Brokers for Mutual Funds and ETFs
Brokers offering $0 transaction fees for mutual funds and low-cost ETFs are below.
Vanguard made its reputation as a provider of low-cost mutual funds while Schwab pioneered affordable online investing. Vanguard is the default choice for many beginner investors but both Schwab and Vanguard have their merits. Both Vanguard and Schwab offer zero commission ETFs and zero commission mutual funds.
Typically, only mutual funds on a stock brokers list are available for trading with that broker. If you find a mutual fund that is not on the list, some brokers will not add it, and others like Schwab may charge a hefty fee, as high as $76.
Schwab offers its Mutual Fund OneSource Platform to investors with capital amounts as low as $100. Schwab also offers a choice of about 200 commission-free ETFs. The per trade rate at Schwab is $4.95.
Vanguard has a high hurdle of $1,000 to invest in many of its funds. Commission-based ETFs will cost money at the rate of $7 per first 25 trades and $20 thereafter for balances under $50k. Vanguard has no minimum requirement to open an account and offers over 50 commission-free ETFs, fewer than Schwab.