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Over the long run, the stock market is one of the best places to put your money to work, but you can't just buy a stock through your bank account, or call the company and ask to buy shares -- you'll need to find one of the best brokerage accounts.
Fortunately for everyday investors, the brokerage industry has changed dramatically over the past couple of decades. To buy a stock, you used to have to call an individual known as a stock broker, who placed the order on your behalf. This process was complex -- and expensive.
The industry has evolved -- now most investors buy and sell stocks through online stock brokers. And competition in the industry has never been higher. With many offering zero-commission trading and research tools once available only to professionals, there are some excellent choices for investors. Here are The Ascent's picks of the best online brokerage accounts, as well as what you should consider in choosing the best stock broker for you.
TD Ameritrade stands out as one of our top rated all-around brokerages with outstanding tools and products, in-depth and comprehensive research, and no account minimums.
Read Full Review$0 stock trades
$0
On TD Ameritrade's Secure Website.
With no fees, access to trade fractional shares and cryptocurrency, Robinhood is a no frills but efficient trading platform.
Read Full Review$0 for stocks, ETFs, options, and cryptocurrencies
$0
Get a free stock with a new account
On Robinhood's Secure Website.
A discount broker that's designed for active traders and cost-sensitive investors. If you're willing to do the work to price each of the two commission schedules, you can often spend less than with other platforms.
Read Full Review$0 stock trades
$0
New accounts with qualifying assets earn $50 to $5,000 using code FOOLAFYJ
On TradeStation's Secure Website.
Ally Invest impresses with $0 commissions and $0 account minimums. It's a great choice for those looking for an intuitive platform from which to make cheap trades.
$0 stock and ETF trades
$0
Fidelity combines $0 commissions, top-notch research, and an excellent mobile app, all in a simple platform. With $0 account minimums and zero-expense-ratio index and mutual funds, this is one of the most affordable brokers.
$0† commission for online US stock and ETF trades
$0†
E*TRADE manages to cater to active traders with multiple trading platforms, while also appealing to long-term investors with thousands of mutual funds and ETFs that can be traded for free.
$0 stock trades
$0
Merrill Edge sports $0 stock and ETF trades, strong research offerings, and fantastic customer support. It's a solid option for all investors, and especially attractive for Bank of America customers.
$0 stock and ETF trades
$0
Schwab has aggressively slashed fees on its mutual funds and ETFs, eliminated common account fees, reduced commissions to $0 per trade, and allows investors to buy fractional shares of stock, making it extremely affordable.
$0 stock and ETF trades
$0
It's not the best option for more active traders, but Vanguard remains a top option for passive investors with excellent zero-commission options for index funds and ETFs.
$0 stock and ETF trades
$0
You can think of an online stock broker as a conduit to the stock exchanges. In exchange for a commission on every trade, they send your orders on to stock exchanges and market makers, which actually do the heavy lifting of matching your buy order with someone who wants to sell, and vice versa .
You and I can’t knock down the door to the stock exchanges and make a trade ourselves without a broker. In truth, the stock exchanges as we think of them from their depictions in movies and on TV don’t really exist today. Believe it or not, most trading actually takes place between computers located in dimly lit server rooms in New Jersey, a few miles away from New York City’s financial district.
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Just as the process for processing stock trades has changed, the terms we use for the people and businesses who facilitate trades has changed, too. Today, instead of using the term “stockbroker” as an all-encompassing term for any person or firm that deals in stocks, we generally divide companies into two categories: “discount brokers” or “full service brokers,” labels that better describe what they actually do.
Online stock brokers are discount brokers. They aren’t in the business of giving you advice or phoning you up with stock picks for frequent traders. Instead, discount brokers simply focus on the very basic service of helping you buy or sell a stock (or other type of investment) when you want to from the convenience of your own home. Because discount brokers forgo many of the frills, they can price their services at rock-bottom prices. The best online stock brokers charge $0 to place a stock trade, a bargain especially considering what traditional brokers charge. In addition, discount brokers also tend to have lower minimum investment requirements, some with no minimums at all, making them accessible for everyone.
Firms we label “full-service brokers” are more closely related to the stockbrokers of days gone by. Full-service brokers often employ human brokers who can help you make a trade, find mutual funds to invest in, or make a retirement plan. That said, full-service brokers are costly, since people are inevitably more expensive than computers. A popular full-service broker charges a minimum of $75 to place a stock trade, which can jump as high as $500 or more to buy a large amount of stock. Buying a mutual fund through a full-service broker can potentially set you back thousands of dollars since they often charge fees equal to a portion of the amount you invest. Full-service brokers are more likely to have higher account minimums; some advisors only work with clients who have $1 million in assets or more!
Realistically, the lines between the two types of brokers are slowly starting to converge. Discount brokers now have wealth management services that offer the help of a human advisor at a full-service price. Some full-service brokers also offer a basic level of service at discounted prices. Merrill Edge® Self-Directed is the discount brokerage arm of the full-service brokerage Merrill Lynch, for example.
As with most financial products and services, there's no such thing as the best online stock broker for everyone, so we're sharing several of our favorites.
The best brokerage accounts on our list offer different online stock trading platforms, different educational resources, and more. With that in mind, here are some of the features we looked at when deciding which online stock brokers were the best in the business, and why they matter to you:
The best online stock brokerage account for you depends on your needs. Here are a few things you might want to consider:
If you're just getting started with investing, check out these other resources on our website:
While some online stock brokers have minimum account requirements, the amount you need to get started as an investor has more to do with what you invest in than where you open an account.
Here’s how we think about the effective minimums for certain types of investments:
As we mentioned before, buying individual stocks at most of the online discount brokers will cost you $0 in commissions, which makes it very cost-effective to fill out your portfolio and less expensive to diversify with a number of stocks.
Not every stock broker is the right fit for every person. While we think you can't go wrong with our top picks, it may be worth reviewing other stock brokers to find the right fit for you. See below for a list of all-around great picks as well.
While we have listed out our best online brokerage picks in this list, it may be worth comparing brokerage firms across several key factors to understand which is the best stock broker for you. Our handy online brokerage comparison below helps to understand essential such as picks that are best for certain types of investors, our ratings, and commissions.
| Broker/Advisor | Best For | Commissions | Next Steps | |
|---|---|---|---|---|
TD Ameritrade
Rating image, 5.0 out of 5 stars.
|
Rating image, 5.0 out of 5 stars.
|
Best For:
Research |
Commission:
$0 stock trades |
|
Robinhood
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Low fees |
Commission:
$0 for stocks, ETFs, options, and cryptocurrencies |
|
TradeStation
Rating image, 4.0 out of 5 stars.
|
Rating image, 4.0 out of 5 stars.
|
Best For:
Active traders |
Commission:
$0 stock trades |
|
Ally Invest
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Low fees |
Commission:
$0 stock and ETF trades |
|
Fidelity
Rating image, 5.0 out of 5 stars.
|
Rating image, 5.0 out of 5 stars.
|
Best For:
Beginners |
Commission:
$0† commission for online US stock and ETF trades |
|
E*TRADE
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Mobile platform |
Commission:
$0 stock trades |
|
Merrill Edge® Self-Directed
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Customer support |
Commission:
$0 stock and ETF trades |
|
Charles Schwab
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Retirement investors |
Commission:
$0 stock and ETF trades |
|
Vanguard
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Passive investors |
Commission:
$0 stock and ETF trades |
Discount brokers are able to offer most of the service and functionality of a full-service broker -- at a much lower price. Investors who like choosing their own stocks and funds can save a fortune by using an online discount broker.
It is sometimes possible (but usually extremely complicated) to buy stocks without a broker. You will usually need substantial wealth to take advantage of other methods.
To buy a stock online, all you need to know is the company’s ticker symbol. For example, Disney’s is “DIS,” and Adidas’s is “ADDYY.” If you don’t know the ticker for a given stock, most brokers also allow you to type in the name of the company.
Some online brokers pay interest on cash invested in their brokerage accounts. The interest brokers pay is often below the interest rate on high yield savings accounts, so you may want to research all your options before keeping much cash in your investment accounts.
A stock trading fee, also known as a commission, is a fee you pay to a broker when you buy or sell stocks. Many discount online brokers have now eliminated stock trading fees so you may wish to consider shopping around for a brokerage that charges no commission.
Irena Vodenska, Ph.D., CFA
Professor of Finance, Director, Finance Programs, Administrative Sciences Department, Metropolitan College, Affiliate Faculty Global Development Policy Center
What advice do you have for a first-time investor?
First-time investors could be very different, so a single piece of advice is probably not appropriate for all of them. If we assume that the first-time investor is a young professional, for example, in their first job right after school, they have a long investing horizon in front of them. Hence, they could be more aggressive in selecting a portfolio, mainly comprising domestic (U.S.), or even international equity. These young investors are in their savings part of the investment horizon and do not require short-term liquidity so that they can afford riskier investments, at least with a portion of their portfolio. Another consideration is the level of the risk-averseness for these first-time investors. Even if they have a long-term investing horizon and low liquidity requirements, first-time investors may opt for safer investments if they are very risk-averse. In that case, instead of equity (stocks), fixed income securities (bonds) will be more appropriate.
What is a common misconception about investing?
Investing is an individual choice. One of the common misconceptions about investing is that investments always have positive returns, i.e., if you invest, you will earn money at all times. This belief might be true on average, measured as a cumulative return over many years. However, the performance of an investment portfolio could be volatile, i.e., experiencing both negative and positive returns periodically. Another misconception about investing is that anyone who invests in financial markets will become rich quickly. While this might happen, it is not the norm but rather an exception. A third misconception could be that investing is trading, which is not the case. One can think of trading as short or very short-term investing; however, investing, per se, implies a long or a very long-term holding of the purchased securities, accompanied by a low-frequency rebalancing of the portfolio.
How can investors feel more confident when choosing a brokerage?
Excellent question. Investors should consider very carefully whom they will be choosing to trust with their investment decisions. There is a distinction between a brokerage and an investment advisory firm. Brokers engage in the business of effecting transactions in securities for the account of others, for which they receive compensation. When brokers recommend securities to their clients, they must ensure that the investment is "suitable" for the client. On the other hand, investment advisors advise others about investing in securities and receive compensation for the advice. When investment advisers recommend an investment to their clients, the investment needs to be in "the best interest" of the client. These differences are essential and create two different standards of conduct: 1) Suitability for brokers and, 2) Fiduciary ("best interest of the customer") for investment advisers. Investors should know the difference, and before entrusting their investments to securities professionals, they should ask whether they are a "fiduciary"? Investors can be confident if the answer is "Yes, I am a fiduciary."
Reena Aggarwal, Ph.D.
Director, Center for Financial Markets and Policy at Georgetown University
What advice do you have for a first-time investor?
One should start investing as early as possible, even if it is with a small amount of money. The magic of compounding is real and in the long run even this small amount can grow into a large amount. You should consider how much risk you are willing to take, and risk-taking also depends on the stage of your life cycle. Generally, young investors can afford to take more risk than retired people who are counting on their savings during retirement.
What is a common misconception about investing?
A common misconception is that I can beat the market and make a quick buck. It is rare for anyone to beat the market on a consistent basis. Markets don't always keep going up; you should consider the implications of both bull and bear markets on your portfolio. It is a good idea not to put all your eggs in one basket and instead have a diversified portfolio.
What are some investing trends that new investors should be aware of?
Retail investors have become more active participants in the financial markets, particularly during COVID. There has been a lot of interest around platforms for retail investors, allocation of IPOs, and popularity of products such as special purpose acquisition companies (SPACs) and crypto products. It is important to do your due diligence before investing in any asset. Regulatory agencies such as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) provide useful alerts and bulletins that are worth checking.
Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.
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