The best online brokerage accounts offer numerous benefits that make investing easier, including investing resources and having reasonable minimum account requirements. While some beginner-level brokerage accounts offer more hand-holding and automation, advanced investor brokerage accounts tend to offer benefits such as free trading and access to superior trading tools.
We compared 20+ online brokerage accounts to find the best based on key criteria that most interest investors. While Betterment comes out on top in our ranking as the best online account for beginners, we’ve also highlighted other companies that we think help stand out from traditional brokerage accounts.
Whether you’re a new investor hoping to get started or a long-term investment professional looking to try a new company, you’ve come to the right place. Read on to learn more about the top brokerage accounts we stand behind and why you might want to try them out.
The most important factors to consider when choosing an online brokerage account
- Decide where you are on your investment journey. Would you like an online brokerage firm to choose a portfolio based on your desired risk? Or would you like to actively trade stocks, ETFs and other investments without outside help?
- How much do you have to invest to get started? Most of the online brokerage firms on our list don’t require a minimum balance, but the advanced options may require $ 2,000 or more to get started.
- What kind of investments do you want to access? Some online brokerage accounts let you invest more than others, but almost all of them give you access to stocks, bonds, mutual funds, ETFs, and more.
- Would you like to open a retirement or brokerage account, or maybe even both? Some of the companies on our list have different options for you to explore.
The best online brokerage accounts for beginners to experienced investors
The type of investor you are will determine which of these online brokerage accounts is best for your needs. Are you someone who trades stocks or ETFs on a regular basis? Or are you an investor who wants to decide on your risk tolerance and have your brokerage firm create a portfolio that suits your needs?
Either way, the following online brokerage reviews can help you find out which company offers the account benefits you want.
Improvement: Best placement for beginners
Why This Company Made Our List: If the alphabet soup of investing amazes you – Roth IRA, Traditional IRA, SEP IRA, 401k, Roth 401k, etc. – Betterment is a good place to start.
Betterment believes investing is so complicated that many people become analytical paralysis – as in, people become so overwhelmed with their options that they end up making no decision at all.
If you read our review on Betterment Investing, you will find that investing can be incredibly easy. In fact, there are few decisions to make when you sign up:
- How much money to invest
- How often do you want to invest it
- Your tolerance for risk
That’s it. Recovery will take care of the rest.
It’s really easy, which is why it’s a great place for beginners. As an aside, we also like the fact that Betterment doesn’t require a minimum account balance to get started.
What is holding it back: Improvement fees from 0.25% to 0.40% per year based on your account balance. So you pay ongoing fees in exchange for account management.
M1 Finance: Best for Free Trades
- Automated account management, but you decide where to invest
Why This Company Made Our List: If you like the idea of automated account management but want to decide where to invest, M1 Finance may be the ideal brokerage firm for you. In addition to streamlining the investment process and making sure your funds are allocated where you benefit most, M1 Finance is free. It couldn’t be more affordable.
M1 Finance is pre-installed with 60 targeted investment portfolios, so-called pies, with professionally selected slices.
If these cakes don’t fit your palette, you can also create your own and choose from M1’s robust range of ETFs and stocks. M1 Finance also uses an algorithm to lower your capital gains tax on every sale of securities.
If you haven’t already sold you can check out our M1 Finance Review. In the meantime, consider some of M1’s best features:
- Tax export: Your M1 investment data records can be exported directly to H&R Block and TurboTax
- Retirement: M1 Finance allows you to open traditional IRAs, SEP and Roth IRAs, as well as rollover plans.
- SIPC Protection: Your money is protected for up to $ 250,000 in cash and $ 500,000 in cash and securities.
- No Fees: No trading fees, no advisory fees, and no account management fees.
What is holding it back: M1 Finance is not built with tax loss harvesting and does not provide interaction with financial advisors or investment professionals.
TD Ameritrade: Best for ETFs and Ease of Use
Why This Company Made Our List: If you are looking for a solid industry leader who makes it easy for new investors to invest, TD Ameritrade is a great option.
Unlike Betterment, TD Ameritrade isn’t just designed for new investors. Once you’re signed in, you’ll have access to a range of robust tools, whether you’re new to investing or have invested for decades. With that in mind, TD Ameritrade offers the ability to access something that approaches the full service without the full service price.
As an industry leader, TD Ameritrade offers a variety of investments that are suitable for new and experienced investors alike:
- Over 2,300 commission-free ETFs
- Over 13,000 mutual funds
- Annuity products such as bonds and CDs
- Trade stocks, options, forex and futures
- Variety of account options: Traditional IRA, Roth IRA, SEP IRA, Simple IRA, 401,000 rollover, normal taxable investment accounts
Do you want to learn more about TD Ameritrade? Please see our TD Ameritrade Review for more information.
What is holding it back: The biggest downside to TD Ameritrade is the fact that you can only trade in US markets.
E * TRADE: Best Tools for Beginners
Why This Company Made Our List: If you are looking for an industry leader in online trading to help you learn more about investing, E * TRADE is a great option. The company has more than 20 years of experience and is one of the most popular trading platforms in the US.
However, E * TRADE is not only intended for new investors. Once you get started, you’ll have access to robust tools like research, screeners, and more.
As an industry leader, E * TRADE offers one of the largest stocks of potential investments available:
- Every ETF sold
- Over 9,000 mutual funds, including over 4,400 unencumbered and no transaction fee mutual funds
- Trade stocks, options, and forex
- Variety of account options: Traditional IRA, Roth IRA, 401,000 rollover, normal taxable investment accounts
We love that E * TRADE offers $ 0 commission trading on US publicly traded stocks, ETFs and options. We also believe that they have one of the best and most intuitive online and mobile trading platforms available today. Find out more about how this can be the right broker for your needs in our E * TRADE test.
What is holding it back: While E * TRADE is great for beginners who want access to investment tools and education, their fees can be higher than some competitors outside of the free options.
ZacksTrade: Best for active investors
Why This Company Made Our List: ZacksTrade is an active and experienced investor’s dream. If you are looking for a platform to control your own investments and actively trade at an affordable price, you should check out ZacksTrade’s offerings.
ZacksTrade offers low trading fees on stocks, ETFs, mutual funds and options and has an interface for experienced traders and one for beginners. Beyond the trading fees, you can expect a fee-free experience with no need to worry about account or inactivity fees.
The platform also provides users with access to a wide variety of trading tools, research reservoirs and the continuous update of global market data. These tools allow you to make well-informed trades to keep up with your investment goals. Plus, you get live chat access to ZacksTrade’s broker team if you need assistance.
Check out our ZacksTrade review for more information.
What is holding it back: At ZacksTrade, you need at least $ 2,000 to open a margin account or at least $ 2,500 to open a cash account.
Acorns: Best for investing in pocket money
Why This Company Made Our List: Acorns allows you to set up an investment account that allows you to round up your transaction amounts and invest your pocket money. There is no minimum account and you can start with as little as $ 5.
Your investment goes into a diversified portfolio with a monthly fee of $ 1 per month for accounts set up in the basic plan. Other plan options cost either $ 2 per month or $ 3 per month, depending on the features you want to access. For example, the $ 3 monthly premium plan includes reimbursed ATM fees, connected investment accounts, and more.
If you feel like you don’t have enough money to get started, this can be a great solution. You don’t even need a minimum amount to get started. Once you’ve built your account, you can move your account to another broker who may have lower fees or offer different options. Find out more in our Acorns review.
What is holding it back: The fees can be disproportionate if you have a really small account balance.
USAA: Best for military personnel and their families
Why This Company Made Our List: While not everyone is eligible to open a USAA account, anyone who actively serves in a military branch, retired from the military, or has a family member who has served in the military is authorized to open a USAA account. USAA has provided insurance and financial products to military personnel and families for over 80 years.
USAA doesn’t charge annual fees or minimum accounts for their IRA, and you also have numerous investment options including mutual funds, CDs, annuities, etc. While their trading fees may be a little higher than other online brokerage fees, you still have competitive rates, especially if you buy more Make investments in the account.
USAA Account Benefits:
- Easy and quick to set up
- Ability to manage multiple accounts and insurance policies in one place
- Easy to read and understand website with clear navigation
- Wide range of investment opportunities and options
What is holding it back: You must have a military connection or military service to open an account. The fees can be higher than other online brokerage firms that offer fee-free deals.
Firstrade: Best online interface
Why This Company Made Our List: Aside from the low trading costs, one of the best things about Firstrade is how easy the website and interface are to use. Some of the websites of the other internet brokerage firms are cluttered and difficult to navigate. The Firstrade website is simple and clean.
Firstrade’s online dashboard is extremely easy to read as it breaks information into two separate accounts. One column shows your account information and the other column allows you to keep track of the market.
While Firstrade doesn’t offer the same fancy tools as some other websites, it does make investing easier. In addition, they offer a free IRA and $ 0 commissions and $ 0 contract fees for options traders. If you’re the kind of person who wants just the bare minimums with low fees, Firstrade is the website for you.
For more information, see our Firstrade Review.
What is holding it back: This pure discount brokerage firm does not offer online chat or 24/7 customer support.
Lending Club: Best Online Brokerage Alternative
Why This Company Made Our List: If you’re a beginner looking for an easy alternative to stocks and want a solid short-term investment, the Lending Club is a great choice.
With Lending Club, you don’t invest in stocks, bonds, or ETFs. Instead, you help your colleagues by funding their loans.
With just $ 25, you can invest in debt securities that have potentially higher returns than stocks. However, you run the risk of defaulting a borrower, which is something you should know beforehand.
It’s easy to get started, and the Lending Club also offers managed grade portfolios for relatively low fees if you have a large enough account balance. You can even open a retirement account with LendingClub. There are also no transaction fees as borrowers pay fees on their loans.
What is holding it back: Investing with LendingClub means investing in loans for your colleagues, which is very different from traditional investments.
How we found the best online brokerage firms
With so many online brokerage firms available today, it was important for us to compare them based on the key features they offer. We also wanted to keep an eye on long-term costs as investors shouldn’t pay too much for services that they can get for free elsewhere. Here are the main factors we considered when selecting the online brokerage firms for this ranking:
- Fees: Every online brokerage company charges fees to stay in business. However, the amount of fees you pay and the different transactions you pay them for can make a huge difference to your long-term returns. We have focused on brokerage firms that offer low fees, and in some cases no fees, for at least certain types of investments.
- Automation: Automating your investments is one of the best ways to build wealth over time. We looked for online brokerage accounts that would allow you to automate any component of your investment plan, whether that means automatic dividend reinvestment, the ability to automate a specific monthly investment amount, or any other feature that helps you “set and Forget “help. Your investment plan.
- Online interface: We also looked for brokerage firms that had updated easy-to-use online interfaces. Mobile apps are also a plus as many investors want to invest or monitor their balance on the go, no matter where they are.
- Minimum accounts: Finally, we tried to give preference to broker accounts with reasonable minimum balance requirements. Getting started as an investor shouldn’t require thousands of dollars upfront. So we’ve included some beginner accounts that have a much lower barrier to entry.
What you need to know about online brokerage accounts
There are many details to consider when deciding which company to open a new account with. Here are some key tips to keep in mind before you hit the trigger and open a new account:
Fees can be more important than you think.
The fees associated with investing don’t seem like a big deal, but they can add up to huge sums over time. Vanguard offers this example: Imagine you invested $ 100,000. If the account earns 6% per year for the next 25 years, and has no costs or fees, you will end up with about $ 430,000. On the other hand, if you paid 2% per year in costs, you would have only about $ 260,000 after 25 years. In this example you would give up 40% of your winnings based on only 2% fees.
Look for a platform that will allow you to manage all of your investments in one place.
While you may be willing to invest some time in your investment strategy, try not to over-complicate it. Ideally, you will find a platform that will allow you to manage all of your investments in one place, including a brokerage account, your retirement accounts, and more.
Consider your investment schedule.
Make sure you invest appropriately according to the risk you want to take. Come up with a long-term strategy that will prevent you from risking too much in a short period of time.
Don’t overwhelm yourself.
Before you start investing, it can be helpful to make sure your financial ducks are in a row. This means you have your bills and monthly financial obligations under control, and you need to put emergency savings aside so you can tackle a huge loss of income.
Finally, don’t put all your eggs in one basket. Diversify your investments or choose index funds or mutual funds that handle diversification on your behalf. Also, make sure that you are appropriately diversified across stocks and safer investments like bonds according to your risk tolerance.
Terms and resources for beginners
Asset allocation: Asset allocation is an investment strategy that allows investors to choose their underlying investments based on their risk tolerance and the planned investment duration. The underlying goal of asset allocation is to maximize investment returns while minimizing risk over time.
Binding: A bond is a loan that investors can buy and that guarantees a certain rate of return. While some bonds pay fixed rates, floating rates are also common.
Bank account: A cash account is a brokerage account in which the investor has to pay all of his investments in full.
Exchange Traded Fund (ETF): An ETF is a security that contains a selection of underlying securities (such as stocks) that typically track an index.
Index funds: An index fund is a type of mutual fund that tracks a financial market like the S&P 500. Index funds are aimed at broad diversification and simplification, and investors like them because they tend to come with low fees.
Margin Account: A margin account is a type of brokerage account that investors can use to invest in borrowed funds.
Investment funds: A mutual fund is a bundle of investments that can include stocks, bonds, money market instruments, and more.
Retirement account: While you can invest in a brokerage account, many investors also use online brokerage firms to invest in retirement. Common retirement accounts include 401 (k), Traditional IRA, SEP IRA, and Solo 401 (k). Most retirement accounts offer significant tax benefits.
Camp: A stock is a type of investment that represents a stake in a company. For example, if you buy shares in Disney (DIS), you own a very small stake in that company, and your ultimate goal should be to make a profit as the price of your shares rise over time.
Investing 101: Frequently Asked Questions (FAQ)
The following frequently asked questions and answers can help you learn even more about the subject.
What are Stock Brokers?
A stockbroker is an investment professional who buys and sells securities for his clients on a major exchange such as the New York Stock Exchange (NYSE) or the NASDAQ. A stockbroker can be an individual, but the online brokerage firms in this ranking can also be called stockbrokers because they process the same transactions by the same rules.
How much money do I have to invest?
Some online brokerage firms do not require a minimum account balance to get started. So you can open an account now and wait until you are ready to fund it. However, some online brokerage firms require minimum accounts. So be sure to check this.
How can I withdraw my account?
With a brokerage account, you can make transfers to your account as well as transfers from your account. To pay off your investments, you need to sell them first. Fortunately, online brokerage firms on this list make buying and selling investments a breeze.
Can I open accounts with more than one online brokerage firm?
You can open a brokerage account with as many online companies as you want. However, you should be wary of paying redundant fees or over-complicating your investment plan.
Can i lose money
You can always lose money investing. Make sure you understand the risks of investing – and that you could lose all of the money invested – before you open an account and get started.
What information do I need to open a brokerage account?
To open a brokerage account, you will need personal information such as your social security number, address, phone number, and full name. You will also need to set up a traditional bank account to be able to manage transactions to and from your account.
Summary: Best Online Brokerage Accounts of 2020