5 Best Online Stockbrokers For Beginner Investors

Written by: George Smith
05/31/2019

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If you’re a beginner to the world of investments, it’s important that you choose the right broker to be successful. While brokers are often positioned as the middleman used to make trades, they’re actually a lot more than that. The broker you choose will help you build a solid foundation for your investments by offering appropriate fees, having learning and teaching elements and investment analysis to help you grow in your investment strategy.

What are stockbrokers?

While you probably have some understanding of what a stockbroker is, it’s important to really understand their role completely in order to make the best decision for you.

Stock brokers are either firms (often operating as a platform), or individuals who are licensed to buy and sell securities, including stocks, through the stock market. While many first time investors choose an online platform-style company (known as an online brokerage account) and make the trades themselves.

The Top 5 Stockbrokers

1. Alley Invest

Alley Invest is a great option for beginners. They feature a $0 minimum account balance, no yearly fees, and their trades are a reasonable $4.95 per trade. The best part though, is that they have a really good trading platform with lots of analytical data and research. This is a platform that you can really grow with as you excel at trading. One thing to note is that Alley Invest does not offer mutual funds. So if that’s something you’re interested in it’s probably not the best option.

2. TD Ameritrade

TD Ameritrade is also a great platform for people who plan on learning and growing as they invest. Their trading commission fees are high at $6.95 per trade, but if you plan on getting into investing really aggressively, they have amazing customer service, along with trading and research tools that are above and beyond what other companies offer.

3. Fidelity Brokerage

Fidelity Brokerage is an excellent option due to their nearly 4,000 fee-free mutual funds. In addition to that, they have a moderately low trading commission of $4.95 and like TD Ameritrade they have an excellent customer service reputation. Over the last couple of years they’ve been working to expand their expense-ratio index fund portfolio making them stand out amongst their competitors.

4. Schwab Brokerage

Schwab Brokerage has the $4.95 trading fee that is competitive with Fidelity and Alley. They have no account minimums and offer some of the highest quality research available. In addition, they shine in the area of investment options with the best offerings of EFTs. They also offer no-transaction fee mutual funds. These additional options makes Schwab Brokerage affordable to build a diversified portfolio.

5. Robinhood

Last but not least, Robinhood is a great app for beginners who don’t want to worry about fees. That’s right, there are absolutely no fees to trade your stocks! In addition, they have $0 account minimums and they offer cryptocurrency as an option for investments. The only negative about Robinhood is that they don’t currently offer bonds, mutual funds, or any types of retirement accounts. However, I would guess that in the future these will be added. So, if you’re most concerned about fees right now, Robinhood is a good option.

Before you make your decision as to which broker is best for you, it’s important that you understand the basics of stockbrokers.

Commonly Asked Questions Regarding Stockbrokers To Help You Pick The Best Broker For You

How Much Money Do You Need To Get Started?

Honestly the answer is that it really depends on what your goals are. Technically, you can open an account for $0 upfront. Once you have an open account, you’ll have to meet the account minimums for investing. However, if you talk to your account manager you might be able to make an arrangement where you have a sum of $100 or more that auto invests monthly. Perhaps the best platform for someone in this position is Robinhood.

How Does The Brokerage Account Work?

A brokerage account is the platform that allows you to trade money for stocks, bonds or mutual funds. You simply open your account and invest in the assets. Once you have an asset it will also show up on the platform and you can track its performance.

What Are Brokerage Fees?

Brokerage fees are the fees charged by your stockbroker! These can include a variety things such as annual fees, subscriptions, inactivity, premium content, or maintenance fees.

What Is A Full Service Broker? 

A full-service broker is one that offers “full service”. What this means is that you’ll get more preferential treatment, help and advice. Full service brokers also tend to have additional benefits like financial planning, tax help and advice, accounting and retirement planning. The cost of a full service brokers are typically sustainably more than “discount” brokers or online brokers.

If you’re dealing with large amounts of money or complex financial situations, than it’s likely a full service broker is the right option for you. Also many full service brokers are modernizing their services and allow their clients to trade online.

Lately, there has been a trend in the investing world where companies have created a mash of online brokerage with full service. These services are typically referred to as robo-advisors and they provide you with a range of full services through AI learning and automated technology. Some popular brokerage firms that fall into this genre include Personal Capital and Betterment.

Is It Possible To Cash Out?

Of course. The money you’re investing is yours, so if you sell your assets you can request the funds to be transferred to your bank account. Now, with that being said, there are somethings to think about before cashing out. The first thing is that, the process isn’t instant. It can take several business days to sell off your securities and then transfer the money back into your bank. Also, if you plan on closing the account completely, there’s a good chance some of the money in your account will go towards closing fees.

Should I Worry About The Safety Of My Money In A Brokerage Account?

Don’t worry, your money should be fairly safe. As long as you go with a reputable stockbroker, your cash will be insured and protected up to $500,000. You can read more about that protection on the SIPC homepage.

With that being said, you have to remember that while your cash is fairly safe, your investments are risky! There are no protections against loss of stock value.


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