No matter what your financial circumstances may be, trading is a great way to make your money work for you. However, if you are new to trading, you want to be sure to go with the right broker.
A good broker will provide new investors with educational resources so they can learn as they move forward in their journey. They will provide clear commission and pricing structures and high levels of customer service. Some will also offer low minimum account balances and demo accounts to practice on.
Many brokers also offer online resources. Web sites should provide easy navigation and convenient features like portfolio construction tools.
If you are new to investing, and you are looking for a broker you can trust, here are a few that are recommended.
TD Ameritrade is a trusted name in brokers. When it comes to welcoming beginners, they make it easy for new investors to get started.
The company maintains a strong social media presence providing educational resources in their posts. The pathways they offer are recommended for beginners and advanced traders. They provide information on everything from basic concepts to advanced strategies.
TD Ameritrade also welcomes beginners to test drive the platform before making a commitment. For example, users can open an account without making a deposit. This gives them a chance to poke around and see what’s what before deciding if they want to invest.
The company also has a well-designed mobile app that is extremely user friendly.
In addition to providing terrific online resources, TD Ameritrade also has offices located in several locations for in-person education.
On the downside, because TD Ameritrade is mainly online, users may decide they would prefer to use a different platform. Also, the multitude of account types they offer could be confusing to new users. Finally, investors are paid a small rate of interest unless they decide to move their cash into money market funds.
E-Trade offers three computer-based programs and two mobile platforms for traders. Their website and app have been redesigned to cater to investors that are starting out. They provide two level menus, easy access to screening tools, portfolio analysis and educational offerings. They also have demo accounts beginners can practice on.
Their more advanced platforms are well designed and provide an educational experience as well.
Those looking to invest quickly can find out more about E-TRADE’s Prebuilt Portfolios. They allow users to choose from three different risk levels (conservative, moderate and aggressive) made up of ETF’s ($2500 minimum) or mutual funds ($500 minimum). Traders will only need to pay fund management costs. No other fees apply.
Using E-Trade comes with its share of disadvantages as well. They have a tiered commission schedule for option trades charging .65 per contract for those who don’t trade that often and .50 for those who play more than 30 options trades per quarter.
They also don’t provide direct access to international markets.
Finally, although you can see all your E-Trade accounts when you log in, you can not consolidate your externally held finances to form a complete picture of your net worth.
Robinhood is a zero-fee discount broker that has been around since 2013. It’s regulated by top tier financial authorities like the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
In addition to its brokerage service, it also has a cash management service that allows users to earn interest on uninvested amounts.
It is known for its great customer service, its efficient mobile and web trading platforms and for providing fast and fully digital account opening for traders.
Cons associated with using the service include a limited product range and few educational resources.
Merrill is one of the best online brokers for new traders. They have numerous resources for traders at every stage of investing and at every stage of their lives. In addition to online platforms, you can also sit down with an advisor at almost any Bank of America branch.
The company offers two well designed computer-based trading platforms and two mobile apps. The Story features are informative educational resources that provide investors with insight on what’s going on with their investments.
Merrill also offers great customer service via telephone. They offer technical support and trading assistance 24/7 and you can get the answers you need relatively quickly.
Clients with more than $100,000 in qualifying assets in Bank of America and Merrill Edge and can help you qualify for additional benefits that can make or save you money.
However, Merrill is not perfect. Investors will find that their per-contract fees and margin interest rates are a bit high. Options spreads traded online are limited to two legs. If you want to trade more complex spreads, you may be better off phoning in your order to a live broker.
Merrill also does not give you the option to trade futures, futures options or cryptocurrencies. Therefore, some investors may outgrow the firm if they become interested in more complex trading.
Fidelity offers several educational opportunities that can get you from a beginner to an advanced trader. The company was one of the first to offer reduced fees with no commissions on stock, ETF or option trades and a comprehensive learning center.
They have no account minimum, easy to use trading tools, a well-designed computing platform and a Full View feature that helps you keep on top of your finances. They offer full banking capabilities and two money market funds with an 1.82%. There is no account limit for buying coverage on securities.
On the other hand, trading tools are on different platforms making for a less than seamless experience. Also, only US citizens can open an account.
Charles Schwab is the first online broker to offer no commission on stocks, exchange traded funds and U.S. options trading commission fees. They recently acquired TD Ameritrade which may result in more streamlined services and a better product line in the near future.
They offer excellent customer services and chat support is available 24/7. They also have complementary workshops that take place at their 350 plus branches.
In addition, they recently released a robo-advisor for automated investing which is part of their platform, Intelligent Portfolios. The advisor can fully manage your portfolio which is quite convenient for beginners. They also offer clear, concise information and a client concierge to help you prioritize your investments.
Although Schwab provides a wide selection of tools and research, it can get a bit overwhelming for beginners. The amount of trading platforms can also make beginners lose focus. The margin rates area also higher than average.
Acorns is good for new investors because they provide a simple and educational approach to passive investing. The automated system means investors won’t need to remember fund accounts.
The type of passive investing Acorns does not require any fee, but it will take a long time for investors to gain a profit. However, it is recommended for those who don’t want to take too many risks while earning a profit.
Although the firm targets passive investors, they allow you to take out lump sums and set up automatic deposits. They provide automated investments in ETF’s that are suited to your needs. They have easy to use, customizable tools and all tools and resources are available on their mobile app.
Acorn is a highly rated company, but their broker fees have not been looked on favorably since their move to lower fees in 2019. They also charge commission fees including a $5 fee to open an account and an ongoing $3 monthly fee. They also do not provide a great range of investment products.
Webull is a US based fintech startup offers zero-fee and discount brokerage services. They were founded in 2017 and they are regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulation Authority (FINRA).
The company provides a maximum of $500,000 in investor protection including a $250,000 cash limit as part of their SIPC protection scheme.
Accounts can be opened seamlessly and quickly on a digital platform. The platforms are well-structured and user friendly.
However, Webull’s product portfolio is limited. They cover only US stocks, ETF’s and options. You can also only use bank transfers for deposits and withdrawals. No credit or debit cards or electronic wallets can be used for these purposes. It can also be difficult to get anyone on the phone for support and there is no live chat option available.
Now that you know your best choices for brokers, will you be trying your hand at getting your money to work for you?