Choosing your first brokerage firm
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 more than a little 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, like 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 best investor community of all brokerages. TradeKing offers
plenty of educational materials on its website, and has the highest rated customer service for the last four years. 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: (Refer a friend and both receive $50)
- TD Ameritrade
(TD Ameritrade Review
has a flat $9.99 per trade stock/ETF commission, 2,500 NTF (no-transaction fee) 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 active trader community. However, commissions on all investment products are some of the highest 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, and $2,500 is required to open an
account. It 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).
Broker-assisted trades are not cheap at $32 per trade.
New customer promotion link:
$100 in Transfer Fees Refunded. No set-up fees. No Annual Fees.
If you are completely new to investing and you want to practice online trading without risking
real money (this feature is called virtual or paper trading), or you want to have access to the best trading platform, then go with TD Ameritrade.
Read full TD Ameritrade Review
TradeKing is the best entry level broker if you want the low pricing or to participate in very helpful online investor community.
You can read the full TradeKing Review here
Open an account with Scottrade if you are only comfortable investing with one of the oldest, most established and
largest online brokerage houses for do-it-yourself (DIY) investors in the country, or you are looking for an IRA account (no IRA fees).
See the full Scottrade Review here
All companies listed in this article are members of FINRA and have to comply to strict government rules. They are also SIPC insured which is a broker-dealer equivalent
of FDIC insurance for banks.
This article was updated on 12/15/2014.