Online stock brokers make it fast, easy and affordable for anybody to start investing. Many have no minimum deposit requirements and provide trades for less than $10 each. Here’s are our recommended online stock brokers, a list we update twice a year.
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Editor’s Pick! TD Ameritrade surpassed Scottrade this year to be our most recommended online broker with solid research tools, fast customer service, and competitve pricing.
If you open an account with $2,000 or more you can trade free for 60 days. Deposits of over $25,000 can also earn up to a $600 cash bonus. TD has something for everybody. For beginning investors, they offer an impressive array of mutual funds. For serious traders, TD Ameritrade’s thinkorswim advanced trading platform provides some of the most advanced professional trading tools out there like trade analysis with volatility and probability tools and real-time performance and risk monitoring.
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Scottrade offers unlimited trades for just $7, no maintenance or inactivity fees, and the convenience of 500 physical branches nationwide (something no other discount brokers match). Get started trading with a low minimum $500 opening deposit.
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Zecco features no minimum balance requirement and inexpensive $4.50 trades, but they do charge a $30 annual fee. If you have a balance of at least $25,000 or make 25 trades a month, however, you get 10 free trades per month, making Zecco a great deal, fee notwithstanding.
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Fidelity offers a strong mix of trading tools, competetive pricing, and integrated banking options like free checking and bill pay easily linked to your brokerage accounts. And being the world’s second biggest mutual fund company, you can trade thousands of Fidelity funds without paying a trade commission. On the downside, customer service is average with longish wait times, and I find their Website less easy-to-use than other sites.
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We love Vanguard for their lost-cost mutual funds and ETFs and, as advocates of passive investing, recommend Vanguard frequently to people who share in this philosophy. Compared to the other brokers here, however, Vanguard lacks many of the trading bells and whistles and banking options of competitors. If you want to set up automatic investments in low-cost mutual funds and forget it, go with Vanguard. If you take a more active role in managing your investments, look elsewhere for now. Most accounts require a $3,000 minimum investment. If your account balance is less than $50,000, your first 25 trades are $7 and $20 thereafter. If your balance is over $50,000 you get unlimited $7 trades.
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Often voted a SmartMoney best online broker, TradeKing does not have minimum balance requirement or an annual fee and trades are only $4.95. If your old broker charges you “transfer-out” fees, TradeKing will also reimburse you, up to $150. Research tools and service response times are good, but not at the same level as some slightly more expensive brokers here.
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OptionsXpress is more than just options; it’s a full-service online brokerage that has no minimum account balance requirements or annual fees. Trades cost $14.95 with no additional charge for broker-assisted trades. Experts often rank OptionsExpress’ online trading tools among the best. On the downside, they are pricey when compared to discount online brokers and most investors don’t need access to advanced options trading features.
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E*Trade is a good pick for data junkies as they get high marks for research; E*Trade’s stock screeners, charts, and planning tools are among the best available to individual investors. Also, if you deposit $2,000 or more you’ll get free trading for 60 days and up to $500 cash bonus on your deposit. See E*Trade’s site for details.
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Broker Alternatives
Traditional stock brokers aren’t for every investor. If you prefer a more hands-off approach to investing (which we here at Money Under 30 actually recommend), you can certain purchase mutual funds and ETFs at any of the above brokers, but these different companies may be attractive alternatives, too.
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Betterment is a new investing tool that I like a lot. It’s designed for investors who want the most hands off solution possible. Basically, when you create a Betterment account, you invest in the entire stock market according to your specified risk tolerance (Betterment automatically adjusts your asset allocation between stocks and bonds). There’s no stock picking and no trading. As studies suggest that over the long-term, stock picking rarely beats overall market returns, Betterment is a great solution for long-term investors who don’t want to spend a lot of time thinking about investing. Read more in our full Betterment review.
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ShareBuilder from ING Direct is an alternative to traditional brokers that lets you purchase fractional shares of a stock on a regular basis. It’s designed for automatic investing so, instead of say taking $5,000 and buying 100 shares of stock at $50 a piece, you contribute $200 a month to ShareBuilder and acquire stock each time regardless of the share price on that particular day. This is a great tool for new investors who want to get started with a modest monthly amount, but ShareBuilder lacks the tools and service of full-service brokers. Read more in our full ShareBuilder review.
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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.
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