As a beginner, the process of investing in stocks might feel overwhelming, especially after the intense fluctuations in the stock market in 2020. All the expert stock traders once have been there. And honestly, the complicated financial jargon is enough to scare a beginner. Therefore, we came up with some recommendations for the best online stock broker for beginners like you.
In our comprehensive list, we entirely focused on features that are helpful to new investors. Moreover, we have selected the best brokers from top-graded educational resources. Each of them offers easy navigation, a good pricing structure, and top-level customer service. You would be surprised to know some brokers listed below offer free demo accounts to let you try their services.
Best Online Stock Brokerage firms:
Here is a summarized list of the best online stock brokers for beginners in 2021:
- TD Ameritrade – Best for providing educational resources to beginners
- E*Trade – Best for convenient trading
- Merrill Edge – Best for Customer Support
- SoFi Invest – Best for EFT investors and Active Traders.
Now that you already know the top ones let’s get a deep insight into their services and features that they are providing.
4 – Best Online Stock Brokers for Beginners
When you are a newbie, having the right brokerage account is essential. It serves as a robust investing foundation. Therefore, to give you a lifetime of experience with that, the following is the list of best online brokers for you to refer to.
1. TD Ameritrade:
Quick facts:
- It requires $0 to open an account
- It takes $0 stock trading cost
- No base commissions – $0.65/contract
- No annual fee
Being one of the top stock traders, TD Ameritrade always prioritizes making Investment easy for their customers. They typically target new investors and groom them for stock trading. Since this generation is more into social media, the company has built a responsive social media presence to facilitate the younger audience and make them familiar with the general investing concepts. Their key feature is providing financial education to their young clients. Now you might be thinking they deal with beginners only, but that’s untrue. They have their features expanded from basic to advanced level for their expert traders.
What they offer:
With Ameritrade, you will get everything you want as a trader. For instance,
- They offer you to take a test drive on their platform without making any contract or purchase commitment.
- You can create your account and explore their features as long as you want that, too, without making any deposit.
- You can obtain all the financial information that you require as a newbie.
- They offer you to become a confident and skillful future stock trader.
How to Sign-up with Ameritrade:
- Go to their website, open the account application page, and fill out your basic information.
- In the next step, enter your personal information such as your social security number, mailing address, etc.
- Review the information you have entered.
- The fourth step is agreeing to terms, reading the pdf carefully, and agreeing upon the terms.
- As a final step, set up your account by providing a username, password, and security questions.
- Congratulations! You have done it – now browse through and explore.
| PROS | CONS |
| ● They offer well-designed educational and financial concepts starting from basic to advanced levels for you to emerge as a great investor.
● They have 280 offices where they offer in-person education. ● They have several training sources present on their website. ● They offer live programming nine hours apart from on-demand content. ● They have a user-friendly phone app, simple to browse, and works best for the young generation. |
● Experienced investors have to check other websites to use preferred tools as they prefer a mix of both fundamental and tech analysis in their stock trading.
● A new investor can get confused with the vast array of account types to decide which one to go with. The assistance should be provided in this regard. ● Investors will get a small interest rate – 0.01 to 0.05 percent for the still money in their account if they want to earn high interest, then rotate cash in the trading market. |
2. E*Trade
Quick facts:
- Like TD Ameritrade, it requires $0 to open an account
- No commission on stock trading – $0.50 to $0.65 fee on contracts
- Bonds trading starts from $10 to a max of $250
E*Trade offers a wide range of investing styles through their PC and mobile-based platforms. They have redesigned their websites and apps to make them more user-friendly for young investors. You will get fast access to multiple screening, portfolio reviews, and financial, and educational tools on their websites and apps. For beginners, they have a demo account for new traders to practice on. As you grow, you will find exclusively designed E*Trade platforms that guide you on your way to expert asset courses.
What they offer:
This online brokerage expert offers:
- Well-designed mobile app with a strong workflow.
- The trading tools on their platform allow you to find and construct trading best strategies.
- Both of their platforms- mobile and web are easy to navigate.
- E*Trade Pro is a platform for experienced traders as it offers real-time data access and extensively designed charting tools.
How to sign-up with them:
Online:
- Head to the website and choose the type of account you want.
- If you open a brokerage account, you can instantly transfer your funds to the account.
Via Mail:
- Download the account opening application
- Print it out
- Fill out the application form and sign it
- Mail the application along with a check payable to E*Trade to the mail address.
| PROS | CONS |
| ● They have an extremely well–designed website, tested as the most comprehensive website.
● The company’s paper trading feature is largely used to test strategies. With the help of delayed data, you will make use-full better performing strategies. ● For investors who want to make a quick movement can use E*Trade Prebuilt Portfolio. They will have to pick from three risk levels, including conservative, moderate, and aggressive, with EFTs minimum of $2500. |
● It has a pre-set tiered commission for option trades and charges $0.65/contract for slow active traders and $0.50 for active high traders.
● If you want to trade in foreign currencies in the international market, then it is not the right place for you. ● You cannot get a consolidated picture of your net worth due to the finances – held externally. |
3. Merrill Edge
Quick facts:
- It requires $0 as an account minimum.
- It offers stock trading free of cost
- It charges $0.65/contract for options trading.
- No annual, inactivity, or transfer fees.
If good customer service is your priority, you should check out Merrill Edge. Besides providing good customer service, it offers terrific built-in resources in its platform that help new investors make sound investments. Further, they have dedicated advisors with whom you can have a face-to-face conversation at any branch of the Bank of America. Like other brokerage firms, they are not just limited to providing trading advice, but their main focus is on planning strategies for different life stages of their investors. There is no surprise that the company has an extensive network of advisors to keep its investor’s investments safe. With two PC-based platforms and one mobile-based app, they provide the young investors with context-sensitive assistance. The best part is the story features which are helpful for traders to know their portfolio situation and what is affecting their funds and stocks’ performance.
Why are we boasting about their customer service? It’s because the company provides extensive technical support to its customers via online chat and phone lines. If you want urgent assistance, then a phone line would be a better option as it is faster.
What they offer:
The brokerage firm has to offer a variety of things, including
- Free of commission trading for stocks, EFTs, and options trades. However, an initial contract fee is charged for option trades.
- No debit or ATM fee and you can check your account balance free of cost.
- Free payment of bills.
- It offers various investment vehicles such as stocks, mutual funds, EFTs, Options, CDs, and bonds.
- Since Bank of America owns it, you will get fee discounts on bank services along with credit/debit card rewards.
How to sign-up with them:
- Open the website either on your phone or PC browser.
- Head to the application page and select the account type.
- Provide all the necessary personal information like social security number, date of birth, mailing address, employment status, company name, and annual income.
- Fill out the application form by putting in your personal information, and account details.
- Finally, submit the form.
- Now fund your newly set brokerage account
- Choose your first Investment.
| PROS | CONS |
| ● It has well-designed portfolio analysis tools by which you can check how your financial assets are working. You have the option available to transfer accounts held to other financial institutions to get a clear financial picture.
● It offers high-end third-party research tools to its fundamental investors. ● Investors with $100,000 worth of qualifying assets will get additional benefits. |
● It has high option trades, contract fees, and interest rate margins.
● It has limited online spread trading options. However, complex trading can be done via phone calls to a live broker. ● The company does not offer to trade futures options and cryptocurrencies. |
4. SoFi Invest
Quick Facts:
- It requires a $0 account minimum
- It takes a $0 management fee
- It offers free-of-cost career counseling and loan discounts.
- It offers active stocks trading and an automated adviser option
We chose SoFi for beginners because it requires a $0 minimum account balance, which means you can still invest if you do not have a big amount of money. Also, the process is simple and easy for beginner-level traders. You can reap more benefits if you have other SoFi accounts. As it will be convenient to make money out of both the SoFi investment account and SoFi money. That being said, if you are an expert trader, SoFi might not suit you well as it does not offer services like stop-loss orders and tax-loss harvesting. It mostly has simple options so that new investors can easily operate without getting confused. Also, it gives free access to Certified Financial Planners to help you with your queries. Therefore, it is best recommended for beginners.
What they offer:
Below are the features provided by SoFi invest:
- It allows you to invest in the company’s fractional shares.
- It allows you to invest in cryptocurrencies like Ethereum, Bitcoin, Litecoin, and 17 other cryptocurrencies.
- Investors with a minimum of $3000 across all the SoFi accounts can invest in the company’s coming-up IPO offerings.
- Along with a wide array of investment options, it provides its customers with robust planning and investment tools.
- Via the SIPC protection program, it offers investors protection up to $500,000.
How to sign-up with them:
- Head to the company website and choose the type of account you want to open
- Fill out the form for a brokerage account, and you will be asked to put in your personal information.
- Your new brokerage account will be opened.
- Transfer funds to your newly setup brokerage account through a bank
- Start investing your money.
| PROS | CONS |
| ● No minimum limit to starting Investment.
● It requires a very low to $0 fee to open an account and own funds. ● Complimentary access to CFP (Certified Financial Planners). ● More than 17 types of cryptocurrency trading are available. ● It offers free stocks and EFTs. ● Fast and convenient account opening process. ● Excellent customer services |
● It does not have advanced trading options like tax-loss harvesting and stop-loss orders.
● Since Sofi’s automated platform is only 3.5 years old, it has low track record than other brokerage firms. ● Only available for US residents. ● It has a narrow product portfolio. ● The research tools are of a basic level. |
Who is a Stockbroker?
From the name, it might feel like a stockbroker is a person or something. Well, it’s a term used for dedicated firms for stock trading. They carry out buying and selling of stocks and different other securities on behalf of their clients. The commission may vary from broker to broker and security to security.
How much money do you need to have a brokerage account?
Fortunately, you just need a small sum of money to open your brokerage account and can start trading with the minimum cash you have on hand. However, some brokers may charge $0 to $500. So if you are a beginner, we would recommend going for a free-of-cost account opening option.
What is the account opening process in general?
Typically, it would help if you had all your personal information ready to open an account. Following, we have listed what you will need:
- Name
- Address
- Social security number
- Date of birth
- Phone number
- E-mail and offline mail addresses
- Driving license
- Passport information
- Employment status
- Business information (if any)
- Annual income
- Net worth
Are Trading and Investing both the same?
No, they are simply different from each other.
| Investing | Trading |
| ● The term investing is referred to the stock purchase held for an extended period.
● It increases wealth over time. ● It provides the investors with more returns as compared to a traditional savings account. ● It is safer than trading. |
● Trading refers to the quick buying and selling of securities.
● Investors churn the benefits of frequent price fluctuations in the market. ● Trading is riskier and only fits experienced investors. |
Which one is better, Discount or Full-service brokerage?
Well, both of them have their pros and cons.
Discount Broker:
| PROS | CONS |
| ● They charge low commissions.
● They provide you with educational stuff to learn how to invest. ● They have online platforms to manage your investments. |
● You need to self-educate yourself to use advanced tools. |
Full-Service Broker:
| PROS | CONS |
| ● They provide you with a deeper insight into the market and securities.
● They provide their clients with retirement plans and strategies to increase wealth. |
● They typically charge higher than discount brokers. |
How to Select a Stockbroker?
Before selecting a stockbroker, there are a few things that you must decide on beforehand. It includes:
- Whether you want to start from a beginner or advanced level
- How much Investment do you have to make?
- Do you want to go for trade or invest in
- What kind of financial assets do you want to invest in
Can you trust your money with brokers?
All brokerage firms functioning in the United States must have $500,000 in SICP insurance, including $250,000 as a cash limit. Having a SICP security means your Investment will stay protected against the loss of securities worth over $500,000. However, beginners who have brokerage accounts below $500,000 should be concerned about the security of their money.
Can you withdraw Investment from the brokerage account?
Withdrawing money from a brokerage account is pretty simple. If you have some money left after making investments, then you can directly withdraw it as you do with the bank. However, the invested amount can only be withdrawn if you liquidate the assets. This means you have to sell out your securities first then you can withdraw your amount.
Conclusion
Conclusively, With the market utterly saturated with online stock brokers, it is pretty challenging to find the best one for beginners. Therefore, we have listed above some best online stock brokers for beginners after deep research. Also, we made sure that these brokers charge $0 commission, competitive market rates, and 0 account balances from the newcomers. So, if you are someone who has just entered the financial world, it’s better to check out these best firms for beginners.