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Best Online Brokers
The world of investing doesn’t have to be scary — even if you are new to the field. The one aspect that will make investing more successful and comfortable for you is to choose the right online broker for your needs.
The online broker you choose will determine how you invest, from the types of assets you can invest in and even the fees you'll pay. There are many online brokers available, each with varying levels of do-it-yourself capabilities and advisor-led perks. This online brokers buyer's guide will clarify the different types of online brokers available and help you compare some of our most-rated companies.
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| Company | Customer rating | Investment choices | Account minimum | Commissions | Cryptocurrency option | |
|---|---|---|---|---|---|---|
 E*TRADE | Learn More | 1.1
635 reviews
635 reviews
| Stocks, options, futures, ETFs and mutual funds | $0 | $0 commissions for online U.S.-listed stock, ETF, mutual fund and options trades | Cryptocurrency stocks, ETFs and coin choice |
 Vanguard | Learn More | 1.2
504 reviews
504 reviews
| Mutual funds, ETFs, stocks, CDs, bonds, retirement accounts | $0 | $0 commissions for ETFs, stocks and mutual funds |  |
 Ameriprise Financial | Learn More | 1.9
433 reviews
433 reviews
| Stocks, ETFs, options and mutual funds | $2,000 per account; $25,000 per household | $6 per trade | |
 Robinhood | Learn More | 1.1
173 reviews
173 reviews
| Stocks, ETFs, crypto, options, margin, retirement accounts | $20 | $0 | BTC, ETH, DOGE and stablecoins |
 Webull | Learn More | 2.0
6 reviews
6 reviews
| Stocks, options, ETFs, OTCs and fractional shares | $0 | $0 commissions for stocks, ETFs and options | |
 Charles Schwab & Co. | Learn More | 1.6
488 reviews
488 reviews
| Stocks, index funds, options, futures, ETFs and mutual funds | $0 | $0 commissions for ETFs, options, stocks and mutual funds | Cryptocurrency ETFs and mutual funds |
Online Brokers Buyers Guide
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In this guide
Contents
What is an online broker?
An online broker is a platform that lets you invest in stocks, bonds, ETFs, options and other investments remotely. In the past, you had to rely on a stockbroker, who acted like a costly middleman. With a digital platform, you have full control of your trades and can do so at a lower cost.
Online brokers provide tools for market research, charting, tax reporting and more. They also offer educational resources to help beginners understand investing.
Types of online brokers
Many online brokers serve people who want to trade stock from home or on the go without consulting a financial advisor. However, many other online brokers are legacy brokerages and advising firms that have adapted to offer online investment platforms.
Here are the three main types of online brokerage companies.
- Platform-only brokers or discount brokers: These brokers offer basic trading services at a lower cost, making them ideal for beginners or casual investors. Discount brokers provide a platform for buying and selling securities, but they typically don't offer personalized advice or portfolio management.
- Full-service brokers: As the name implies, full-service brokers offer a wide range of services beyond just executing trades. They provide personalized investment advice, retirement planning, tax guidance and sometimes even banking services. While their fees are higher than discount brokers, the comprehensive service may be worth it for investors who need more guidance or want to handle all their financial affairs in one place.
- Robo-advisors: These are automated investing services that use algorithms to manage your portfolio. You simply set your financial goals and risk tolerance, and the robo-advisor does the rest. They automatically adjust your portfolio to market changes and rebalance it as needed. Robo-advisors charge lower fees than full-service brokers and are great for set-it-and-forget-it investing. However, they lack the personal touch and in-depth advice you would get from a human advisor.
How to choose an online broker
Choosing an online broker requires careful consideration of several factors, such as how user-friendly the trading platform is and the commissions and fees charged. Consider the following before choosing an online broker.
Trading platforms
- Ease of use: Make sure the platform is easy to use and that you can find any trading tools and features that are important to you. Many brokers offer a demo version of their trading platform so you can try it out before signing up.
- Speed: There likely won’t be much difference between the speed at which sites can make trades, but any differences that do exist can have significant financial repercussions if prices change quickly. Look for a site that advertises its platform speed.
- Execution: Brokers are legally obligated to provide clients with the best possible order execution, but that doesn’t mean they all get the same results. However, order execution is less important if you will be placing limit orders, meaning you request to buy or sell a certain number of particular securities when the price reaches your specified point.
Costs and fees
- Minimum initial deposit: If you do not want to invest a significant amount of money, choose a broker that does not require a minimum initial deposit. Some companies will let you open an account and begin making trades with only enough in your account to cover the commission and the stock price, while other sites require you to deposit thousands of dollars before you can begin trading.
- Commissions: Commissions and trading fees are the most common costs associated with trading stocks and other securities online. Brokers usually charge these fees per trade; the more often you trade, the more money you’ll spend.
- Brokerage fees: Brokerage fees are what brokers charge to hold your account or provide certain services, like premium research. Different brokers may charge these on different schedules, and they may go by different names.
- Advisory fees: If you opt for guidance from an investment advisor or robo-advisor, expect to pay additional fees, expressed as a percentage of your assets under management (AUM).
- Inactivity fees: Some brokers charge inactivity fees if you do not trade often enough. They may require you to make a minimum number of commission-based trades every month, quarter or year. If you don’t make the minimum number, you’re charged a fee.
Investment aids
- Research tools: Many sites offer live updates to track stock prices. Having this tool built into your trading platform might help you make decisions faster, which could have financial benefits when prices are changing quickly. If you are investing for the long term and aren’t planning to make trades every day based on split-second decisions, you can probably use a variety of other websites to find similar information for free, though.
- News: Broker websites often feature a section where you can see market news. It may be convenient to see news stories on your trading site, but the same information is available for many other sources. If you don’t plan to visit your trading site daily, this isn’t a feature worth paying extra for.
- Management options: If you want the option to get professional advice, look for a company that offers other financial services. These might include occasional conversations with an advisor, specific market research, portfolio reviews or full-time management from an investment advisor.
Educational materials
- Explanatory articles: Brokers often provide this content to help beginning investors find out what certain terms mean and how to navigate their trading platforms. More advanced information may also be available, though.
- Instructional videos: Sites with more educational resources may include videos that explain things in a more visually engaging way. If you learn better with someone explaining things to you, look for a site with video resources.
- Live webinars: Some brokers host live webinars. These sites might be helpful if you want to learn more and get insights from experts. Webinars are typically free for account holders.
Customer support
- Hours: Make sure the company’s website clearly lists its hours of operation. If you plan to make trades after business hours, look for a platform with extended hours.
- Contact options: Most companies offer customer service by phone, email and online chats. If you prefer one of these options over the other, try contacting the company with a question using that method before you sign up for an account.
- Fraudulent activity alerts: Some companies offer protection for consumers whose accounts are accessed by unauthorized parties. These brokers may replace the funds or securities stolen as long as you’ve followed all their best practices for security and privacy.
Pros and cons of online brokers
Online brokers have revolutionized the world of investing, making it accessible to almost anyone with an internet connection. However, there are some drawbacks to consider before choosing an online broker.
Pros
- Accessibility: Online brokers give you the ability to manage your investments anytime, anywhere, as long as you have internet access.
- Lower fees: Compared to traditional brokers, online brokers typically have lower fees and commissions due to their lower overhead costs.
- Investor control: You have complete control over your investments. You can buy or sell at your convenience without having to go through another person.
- Variety of investment options: Online brokers often offer a wide range of investment options, including stocks, bonds, ETFs, mutual funds, futures and sometimes even forex and cryptocurrencies.
Cons
- Lack of personalized advice: Unless you choose a full-service online broker, you won't get personalized advice on your investments.
- Risk of rapid trading: The ease and speed of online trading can encourage rapid trading, which can be risky and lead to significant losses if not managed carefully.
- Technical issues: As with any digital platform, there's always the risk of experiencing technical issues, which could potentially impact your ability to trade.
- Overwhelming choices: While having many choices is a good thing, it can also be overwhelming for new and inexperienced investors to sort through and choose.
» MORE: What is a good investment?
Alternatives to online brokers
While online brokers have become a popular choice for many investors, it's not your only option for investing. Here are several other alternatives to using an online broker.
- Traditional full-service brokers: While more expensive, these brokers do all the investing for you with special consideration for your retirement or personal savings goals.
- Direct stock plans (DSPs): Some companies allow investors to purchase stock directly from them without using a broker. DSPs can come with lower costs but also might have restrictions on when you can purchase.
- Dividend reinvestment plans (DRIPs): DRIPs are plans offered by companies that allow investors to reinvest their cash dividends into additional shares or fractional shares of the underlying stock on the dividend payment date.
- Investment clubs: An investment club is a group of people who pool their money to make investments. Investment clubs are usually organized as partnerships, with each member having a say in how the investment capital is used.
- Equity crowdfunding: Crowdfunding can be used to invest money in exchange for shares in a company. You invest alongside other investors in small or large projects.
FAQ
How much do online brokerage firms charge?
It depends on your brokerage, the investments you’re making, and the level of service you want. As you’re comparing brokerages, see if they want to work with the investments you’re interested in. Possible charges include:
- Commissions or trading fees
- Brokerage fees
- Advisory fees
- Inactivity fees
What do you need to open an online brokerage account?
Expect to provide:
- Basic personal and contact information
- Proof of identification
- A bank account for transferring funds
- If you’re working with an investment advisor, they may also ask you questions about your investment goals and risk tolerance.
Can you invest in the stock market without a Social Security number?
Yes, but not all brokerages allow noncitizens to open accounts. Expect to provide other forms of ID, like your Taxpayer Identification Number (TIN), if you don’t have a Social Security number.
Can I buy stocks online by myself?
Technically, no, but there’s generally no human contact required if you buy stock through a platform-only broker.
Information in this guide is general in nature and is intended for informational purposes only; it is not legal, health, investment or tax advice. ConsumerAffairs.com makes no representation as to the accuracy of the information provided and assumes no liability for any damages or loss arising from its use.
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