Ready to start investing? Congrats. It’s a huge step on the road to financial independence.
I don’t recommend getting hung up on choosing the best online broker (after all, it’s less important where you invest as long as you get in the habit).
The following brokers are my recommendations for new investment accounts, whether it’s an IRA or a taxable non-retirement account.
TD Ameritrade features no minimum opening deposit and a user-friendly interface. They were voted ‘Best Broker for New Investors’ by Barron’s in 2012.
Their trading commissions are a flat $9.99; not the cheapest but still quite affordable. And if you really get into trading and stock-picking, TD’s powerful research tools don’t disappoint. Best of all, TD Ameritrade also has commission-free ETFs perfect for new investors.
If you can afford the $500 minimum opening investment, consider Scottrade.
Their trades are just $7 a piece and they have over 500 brick-and-mortar locations for face-to-face customer service should you ever need it. These days you can do 99 percent of your investing online, but there are times when it might be nice to talk to a real live person. For new investors, Scottrade also boasts an impressive number of mutual funds (over 13,000) that you can invest in.
If you find the idea of choosing from say, over 13,000 mutual funds a bit overwhelming and you want to keep investing as simple as possible — at least until you’ve grown your cash a bit — take a look at Betterment.
Betterment isn’t really a broker so much as an alternative — very easy — way to invest in a a broad index of the stock market. Many experts — including Warren Buffet — say that this is how most individual investors should invest. The idea is you simply invest in everything — an index of the entire stock and bond markets. You eliminate the risk of a few bad investments weighting down your returns. Over time, studies show that index investors do at least as well, and often better, than people who spend years (and fortunes) trying to pick stocks that will beat the market. Best of all, index investing is cheap.
Other Online Brokers
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Note: One way I’m able to support my blogging while helping you is to link to products I like and earn a referral commission if you sign up. I only link to products I trust. That said, you should know that, for some of these brokers, I earn a small amount if you follow my links and eventually open an account.