Online Investing For Beginners
When you are new to investing, the stock market can be intimidating and a bit hard to grasp: all this technical lingo, complicated
trading platforms, the crazy swings up or down, and a lot of generally unpredictable behavior. Many beginners also feel some level
of apprehension: who wants to lose their hard-earned money? But investing is just a skill that can be learned, and the more time and
effort you put into your investing education and real-life practicing, the better you become.
It’s also important from the start to choose a brokerage firm that is friendly to entry level investors.
Some brokerage houses target wealthy clients who want to let the firm manage their money. Other companies are
after customers, such as day-traders and professional money managers, who are already knowledgeable and comfortable with advanced trading
tools and account management.
However, there are also online brokerages that are great for beginners
, that welcome new investors, and offer them comprehensive
educational materials, online webinars and classes, and trading simulation
tools to practice trading (also known as "virtual" or "paper" trading). Some firms even have helpful online communities, where customers
can ask questions, learn from more experienced members, and get investing ideas from fellow users. A few of these companies don’t
even charge additional commission if a client wants to call a broker and place a trade with the broker's help.
Best Online Brokers for Beginners
Below we list three discount brokerage firms that are the best for beginner investors, for both regular brokerage and various IRA accounts:
) charges just $4.95 per
stock or ETF trade (even for broker assisted trades!), and $9.95 for mutual funds transactions. The firm created the highest rated
and very helpful investor community. TradeKing offers plenty of educational materials on its website, and has an award winning customer
service. Investors can open an account with this sixth largest brokerage house in the U.S. and give it a try with $0 down and no obligation.
New customer promotion link:
Get $100 in free commissions. No hidden fees. No minimums.
- TD Ameritrade
(TD Ameritrade Review
) has a flat $9.99 per
trade stock/ETF commission, and offers 2,500 NTF (no commission) mutual funds and $0 account opening minimum. The firm is one of the best-known
brokerage companies in the country. Broker-assisted trades are very high, though -- $49.99 per trade. There are tons of educational resources on
TD Ameritrade's website and an easy access to active trader community. The firm is offering a practice account for beginners and advanced
investors to try different investment strategies without any risk. However, commissions on all investment products at TD Ameritrade are higher
than the average in the industry.
New customer promotion link:
Trade free for 60 days + get up to $600.
) offers a flat $7 commission per
stock or ETF trade, a $17 per transaction rate for no-load, no-transaction fee mutual funds as well as 2,600 commission-free (NTF) mutual funds.
Minimum $2,500 is required to open a regular brokerage account ($0 for IRA). Scottrade is one of the largest online brokers in United States,
with great customer service, largest network of local offices for in-person visits, and good banking services (savings, CDs, money market and
free checking accounts). However, broker-assisted trades are not cheap at $32 per trade.
New customer promotion link: Get up to $2000 when you open new account or add funds to existing account.
If you want the best trading platform and investing environment, or to practice online trading without risking real money (this feature is
called virtual or paper trading), then go with TD Ameritrade. Read full TD Ameritrade Review
TradeKing is the best entry level broker if you want bargain pricing or to participate in very helpful online investor community.
You can read full TradeKing Review
Open an account with Scottrade if one or more of these apply:
- you are only comfortable investing with one of the oldest, most established and largest online brokerage houses;
- you want to invest mostly in mutual funds;
- you are looking for an IRA account (Traditional or ROTH IRAs, retirement accounts for self-employed - there are no IRA fees at Scottrade).
See full Scottrade Review
The best online brokers for beginners enable their clients to buy and sell stocks listed on NYSE, NASDAQ, and other exchanges. Some of these stocks are
included in S&P500 and Dow indexes. Of course, the customers also have an ability to invest in literally thousands of various mutual funds from most major mutual fund
families including Vanguard and Fidelity. The types of mutual funds available are no-load, load, NTF (no transaction fee), index funds, bond and target retirement funds, and others. The firms
also allow options trading as well as investing in ETFs and a majority of available bond securities.
All companies mentioned in this article are members of FINRA and have to comply to strict government rules. The
client accounts are insured by SIPC for up to $500,000 per customer, including up to $250,000 in cash.
Updated on 2/1/2016.