The Best Online Brokerage Accounts For Beginners To Experienced Investors

Joseph Meyer
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The Most Important Factors for Choosing an Online Brokerage Account

There is a vast range of online brokerage firms available to the average investor.

While there are a number of quantitative factors to take into account when choosing an online brokerage, a good place to start is a qualitative overview of company, based on the most common and important factors to contemplate when you are opening a brokerage account.

Given the vast array of online brokerage firms available to the average investor, the following factors should help to frame your understanding and help you select the best online brokerage firm for your circumstances.

The most important factors to consider when opening an online brokerage account are focused on establishing the fee structure of your online brokerage account.

Fees must be one of the most important factors to take into account when choosing an online brokerage account.

Online brokerage firms typically charge investors a small commission for each trade they make in addition to other fees.

Fully understanding the fees charged by your online brokerage firm is a critical aspect of selecting the best brokerage firm for your investments.

To gauge your online brokerage account fees, calculate the total cost of trading. This encompasses each trade you make in a given year as well as inactivity fees and any other fees that may be charged by your broker.

What is important to understand is that the online brokerage firms with the most competitive pricing structures are typically those that are able to provide investors with the highest quality of customer service and access to the cheapest trades available on the market.

The Best Online Brokerage Accounts for Beginners to Experienced Investors

If you’re a novice investor, then the selection of an online brokerage account for your portfolio can seem daunting. With so many investors looking after their hard earned savings, it’s no surprise that the online trading industry has exploded in recent years. With so many diverse options, beginners can easily overlook some great brokerages that are out there.

The battle for online brokerage supremacy is fierce, and the competition is extremely cut-throat as each broker is trying to out-do the other. When I was a novice investor, I was overwhelmed by the industry leading offerings and selection and didn’t think I could make a choice that was right for me. I took a slow and steady approach, and I tried a few online brokerages along the way.

In this section, I’m going to look at my favorite online brokerage accounts for beginners to advanced investors. I’ll also look at details like the minimum deposit amount, customer service ratings, and various other considerations for each brokerage account.

Betterment: Best Brokerage for Beginners

Betterment is an online financial advisor that allows you to invest your money in exchange-traded funds (ETFs) based on your risk tolerance and your financial goals. If you want to invest for the long-term (more than 15 years), then use your account to grow your nest egg over time. If you want to invest for the short term (less than 15 years), then Betterment can help you gain a little extra income.

In addition to its great resources and education materials, Betterment has two features and one point that make it a surprisingly good brokerage account.

First feature – first in the industry. Thanks to its low-cost structure, Betterment was the first in the industry to offer a lucrative portfolio fee structure. All you have to do is choose a portfolio and invest your money. Betterment is the first financial advisor that offers a free, fully diversified portfolio with the goal of reducing your investment costs and increasing your returns.

Second feature – first in the industry. Rather than traditional stockbrokers, Betterment is truly hands-off until you need some help. After you sign up for a Betterment account and complete your personal risk questionnaire, you’ll receive a portfolio of ETFs that fit your profile and goals. Then you can watch your money grow, completely hands-off.

M1 Finance: Best for Free Trades

If you’re looking for an all-in-one portfolio site that offers no-cost trading systems, M1 Finance is the way to go. This technology has a few different utilities all rolled into one. Firstly, it gives you a completely free trading platform. Secondly, it gives you a way to connect all of your accounts and track your progress. Thirdly, it gives you the ability to practice economic trading and understand markets on a micro level. Finally, it simplifies everything with its clean interface designed for everyone to use. Best of all, when you’re ready to take your game to the next level, portfolio managers can work with you to take your investments to the professional level.

TD Ameritrade: Best for ETFs and Ease of Use

I’ve been an active investor for years and have gone through almost all the options online: E*Trade, Ameritrade, TDAmeritrade, Schwab, Scottrade and a few others. Because of this, I believe I have a good understanding of the ins-and-outs of each of these companies and can adequately compare them across various criteria.

To be upfront, I do make money off of some of these referrals so I suggest you click on them! But I am also genuinely a big fan of what each of these companies offer for the everyday investor.

Below, I have broken down the pros and cons of each of these online brokerage firms by category, comparing each against their competitors.

E*TRADE: Best Tools for Beginners

E*TRADE is unique among brokerage websites because it also has a secure mobile app specifically for investing. E*TRADE is also a top-rated brokerage firm, offering tools and resources for all types of investors no matter where you are in your investing journey.

The Challenge

Get help for just about any financial concern you have. Check out the E*TRADE Q&A Sessions where E*TRADE’s investment advisors field questions about the stock market, investing techniques, asset allocation, retirement and insurance.

Where They Stand Out

Every product page has a unique Investor Snapshot summary that rates the products or service in the five categories below and rates it on a scale from 1 to 5 stars. E*TRADE also offers the best in-person service by having their army of dedicated financial advisors available to answer your questions whenever you need it.

E*TRADE’s Investment Tools

  • Graphs: Largest collection of free graphs, including stock market, mortgage and real estate graphs.
  • Tools: Research tools such as a Portfolio Analyzer, Online Trading, Mutual Fund Screener.
  • News: Stay up to date with the latest stock market trends, everything from earnings reports to economic indicators.
  • School: Home to the entire A-Z Learning Center, which offers investing education for both beginning investors and experienced investors.

ZacksTrade: Best for Active Investors

If you enjoy researching companies and stocks but you don’t have the interest or the time to actually buy and hold them, ZacksTrade is an excellent solution.

Our community of stock analysts gives you access to calls on 1,300+ stocks every trading day. Simply learn the best trading strategy to apply to each stock on the list by clicking on “Learn More.”

Learn More!

Research is only of value if it is actionable.

After all, if you don’t know what to do with the information you’ve found out, it’s not worth much.

It’s what we do with the research that makes ZacksTrade great.

What’s so special about ZacksTrade ZacksTrade gives you all the information you need to profit from your stock selections AND enables you to trade them profitably.

Identify and Arm Yourself with the Research You Need to Win on Investments

Learn what trades are the best fit for your risk tolerance by reading up on a company, a market sector, or a global economy.

Acorns: Best for Investing Pocket Change

Acorns is really good if you want to start investing for the first time. You’ll get immediate access to a portfolio, with access to a variety of investment options. If you’re ready to invest a decent amount after a few months, you can also transition your portfolio over to a traditional investment service like Betterment or Wealthfront.

USAA: Best for Military Personnel and their Families

One of the oldest banks in the country (founded in 1922), USAA was originally set up for people with military links. It began with six people in San Antonio, Texas, lending money between each other. These days the bank’s membership has expanded to include people who have been in the military or spouses, parents, or children of troops.

It is one of the best online brokerages for beginners because:

  • You can buy stocks, mutual funds, ETFs, and options.
  • There are no account opening or maintenance fees.
  • USAA does not charge any trading commissions.
  • It offers 24/7 customer service support.
  • The website is user-friendly.
  • The three tools the site offers for free (Watchlist, Top 5, and Insight) are excellent.

Firstrade: Best Online Interface

Free Trading and High-Yield Savings Account.

Over the years, Firstrade has evolved from a discount brokerage to a full-fledged online brokerage. Now, this is an excellent option for beginner investors because of its low cost, wide product line, and no minimum deposit.

Besides mutual funds, stocks, options, you can open a money market account with no minimum deposit and free online bill pay. As you advance with your investing skills, you can earn more using its Free Educational Resources and Trading Tools.

Beginners will also enjoy the clean, easy-to-use online interface. The level 2 and advanced level charting are the most advanced you’ll find at any brokerage. As you advance, you can take advantage of a comprehensive suite of professional-level financial tools.

You don’t have to worry about getting lost with 200 commission-free exchange-traded funds (ETFs) available to trade. And multifaceted ways of saving is another benefit of Firstrade. You can open a 90-day CD or money market account with 0.90% APY, without a minimum deposit. There are no monthly holdings or balance requirements.

Lending Club: Best Online Brokerage Alternative

Lending Club is not exactly what I would call an online brokerage account, but it’s my favorite new online way to invest stuff. Basically, it’s like owning a small portion of a loan. Let’s say you give 500 dollars to a pool of investors (other account holders). Some smart lending company will use that cash to give a loan to someone else. They charge a certain interest rate and if the borrower doesn’t pay up, your account gets wiped out. But if the person pays, you may get a portion of it or maybe even all of it. That’s the basic idea of how Lending Club works.

Some people have even made a lot of money using Lending Club.

I’ve been using it for a while now and really like it. Lending Club allows you to start with as little as 25 dollars. Unlike other online brokerage accounts, it’s easy to begin. There’s no paperwork, no lengthy process. And it’s not a wacky concept either. One of the best things about the site is its transparency. You see everything from the interest rates people are getting, to the types of loans being made. It’s a simple, easy way to start investing.

How We Found the Best Online Brokerage Firms

When it comes to brokerages and investment accounts, there are plenty of options on the market, and these days, it is very easy to open an account. You can choose from your typical online brokerage accounts to robo-advisors like Wealthfront and Betterment.

On top of these online trading accounts, there are also traditional stockbrokers, firms, and broker-dealers that specialize in being a middle-man between you and investments. But which one is the best for you? Which one should you go with? Where do you even start?

We had these questions running through our heads and thought of asking professionals what they thought about this subject. After reaching out to them, they provided us with a wealth of knowledge and we were able to acquire valuable information that will go in-depth about this subject.

For the sake of clarity, we wanted to pass this knowledge on to you. We used this information as a resource to create the “Best Online Brokerage Accounts For Beginners To Experienced Investors” guide. This guide will help you decide which brokerage firm is best for you so you can make the most of your money.

What You Need to Know about Online Brokerage Accounts

A brokerage account is a place where stocks, bonds, mutual funds, and other securities are housed. When you buy or sell any of these securities, your broker will execute the transaction on your behalf.

A brokerage account allows you to invest in the stock market without having to actually own any of the stocks or shares of publicly traded companies. Stocks and shares, also referred to as equities, are a type of security. You can also have a brokerage account for bonds, mutual funds, and other types of investments.

Different brokerage firms will provide access to different securities. For example, some firms will allow you to purchase shares of companies listed on foreign stock exchanges. Other firms will not allow you to purchase these shares. This is because of market restrictions, and it is your responsibility as an investor to check with your broker before buying any securities to be certain the security is available.

However, when you open a brokerage account, you will have access to several types of securities. Like with a checking account, you’ll need to verify your identity and set up an automatic bill payment method. In order to open an account, you’ll need to have money to invest.

When you open a brokerage account, you’re also opening an investment portfolio. You’ll be responsible for keeping your investments balanced to avoid over-extending yourself.

Terms and Resources for Beginners

These days, investing isn’t so much of a luxury as a necessity. But like everything else these days, investing comes with its own set of complexities, jargon and continually shifting terms. And that’s what this comprehensive glossary of terms is for – to make sure there’s no confusion as you learn more about investing.

Investing 101: Frequently Asked Questions (FAQ)

What are stock brokers?

Online brokers broker trades and investments. Not everyone needs a stock broker. But they can be extremely useful for investors who are new to the stock market, who want to do more than create and manage a simple portfolio of stocks and bonds, and who want expert assistance with a range of complex financial and tax matters.

There Are Generally Three Types of Online Brokerage Accounts …

{1}. Commission-based online brokerage accounts: These accounts generally charge a commission on each trade, but allow you to trade stocks, options, and other investments at a minimal cost.
{2}. Fee-based online brokerage accounts: These accounts generally charge a flat fee to cover the cost of managing your account, regardless of how many trades you make. For investors who want access to a range of financial services and want to work with a financial professional, these accounts are often more cost effective than commission-based accounts.
{3}. Retirement account-based online brokerage accounts: These accounts are set up to allow you to invest in a variety of securities, such as mutual funds, certificates of deposit, bonds, and stocks to fund your retirement. In addition to the low cost or no-cost access to financial products, these accounts can help you to save on taxes when you make withdrawals.

How much money do I need to invest?

There’s a lot to learn when you’re buy your first tract of land, stocks, bonds or any other financial instruments all without a professional help.

That’s where online brokerage firms come in, they can provide you with all the financial advice you need to make your financial investments in stocks, bonds, and other financial markets.

Here Are The best online brokerage accounts, which will provide you all the information you need, advice, research, tools, and an investor-friendly trading platform.

They Are

{1}. Charles Schwab
{2}. E-Trade
{3}. RobinHood
{4}. TD Ameritrade
{5}. Ally Invest
{6}. Fidelity
{7}. Merrill Edge
{8}. Vanguard

Since each online brokerage is different, there’s no single online brokerage account for everyone. This is why you need to read through this list online brokerage reviews in order to find the online brokerage account that best suits your needs.

To help you get started, we selected only the best online brokerage accounts that you need to consider. Some of them are free of commissions, while others do not charge commissions for some transactions.

How do I cash out of my account?

Before you are able to cash out of your account, you must first determine how you want to liquidate your assets.

You can sell your stocks one at a time, or as a bundle, depending on the speed at which you want to do it. If you sell your shares one at a time, your trade will likely be automatically executed over days or weeks.

If you don’t want to wait and want to get a lump sum in your hands quickly, you can sometimes sell your stock as a bundle to a third party.

Don’t forget to file your taxes.

Can I open accounts with more than one online brokerage firm?

A lot of people ask this question. And they do so because they recognize that each online brokerage firm has a variety of services that may fit their investing objectives.

Most online brokers offer the same types of accounts. If you are looking to open an account with a retail broker, these are your options:

Cash account: Great for short-term investing because you can use this account to place all your assets and trade equities and ETF’s. This is a good first account.

Margin account: Good for long-term investors because you can use this account to invest in margin. This is particularly useful for leveraging your portfolio.

Mutual fund account: This is a great account for the long investor because of the great variety of low-cost index funds and ETF’s.

Municipal bond fund account: This is a great long-term account for investors who are looking to diversify their portfolio.

There are brokers who have specialty accounts and options for investors but these accounts tend to come with a few cons so be careful. You can read more about specialty accounts and options by checking out our online brokerage reviews to find a broker that’s right for you..

Can I lose money?

Yes. While you may see great returns from your investments, you could also lose all or most of your money. Remember that the stock market is risky, and past performance is never a guarantee of future performance.

That said, long-term stock market returns are attractive, with the average annualized total return (interest plus dividends) of the S&P 500 measuring around 12% from 1928 to the present. Risk-adjusted total returns (factoring in the volatility of the market) have returned an average of 7.6% over the same period, and that’s after including the market downturns.

Stocks tend to be most volatile in the early months of the year and least volatile in the year’s middle months. In the long run, some stock market downturns have been relatively mild while others have been more pronounced. It’s difficult to tell in advance how bad a downturn will be, but investors should understand that risk is built into securities, and that stocks will be more volatile than bank deposits or government bonds.

What kind of information do I need to open a brokerage account?

Assuming you are checking out a brokerage company that you might not have dealt with before, it never hurts to call their toll free number and inquire about your initial investment requirement. You may find that you will have to put 500 dollars initially when they were expecting only 100 dollars. The investment requirements will also give you an idea of the minimum amount of equity capital they need to trade for their customers.

If you are going to open an IRA account, do not expect your broker to educate you too much on the different IRAs that are available, especially if you have never invested before. Existing IRA owners are usually very knowledgeable about their accounts and find their IRA investments easy to manage on their own. You may want to check with your IRA custodian instead to make sure that you can open a self directed IRA account.

Summary: Best Online Brokerage Accounts of 2021

About the Author

Stock Market Investing For Beginners focuses on investing principles with a strong focus on stock market investing and stock market investing strategies. Since 2012, I have been writing about topics that include investing in stock market stocks, stock market investing, stock market investors, and Forex trading.

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