Best Online Brokerage Account for Small Investors

Best brokerage firm for small investor in 2016. Top discount online broker for small account balance for low cost investing (trading) in stocks, mutual funds, ETFs, options, and bonds.

Best Brokerage for Small Investor: Commissions

Stocks and ETFs $4.95
Stocks and ETFs broker assisted $29.95
Options$4.95 + $0.50 per contract
Mutual funds $20
Futures $1.50 per contract

Investments stocks, options, mutual funds, bonds, futures, ETFs
Optionshouse minimum deposit to open account $0 for cash account, $2,000 for margin account
FeesOptionshouse fees
Promotion and login linksOptionshouse login, Optionshouse promotions and Optionshouse referral

Advantages of the Best Online Broker for Small Account

  • Very low commissions
  • Free streaming quotes
  • No fee IRA accounts
  • No volume requirements, or maintenance or inactivity fees
  • Free check-writing privileges
  • Free DRIPs/dividend reinvestment (complete, non-fractional shares only)
  • No surcharges on large orders or extended hours trading
  • Low margin rates
  • Free virtual trading

Best Brokerage Firm for Small Investor Review

Optionshouse is one of the best discount online brokerage firms for investors with small account balance in 2016 since there are no minimum deposit requirements, no hidden fees, and no penalties for having low balance, or not making any trades. Prospective customers can open cash account with $0.

The firm also offers extremely low cost pricing: $4.95 per stock or ETF trade, and $20 per mutual fund trade. Compare it to big brokerage houses: $10 for stocks and $50 for mutual fund trades at E*TRADE, $9 and $76 per trade respectively at Charles Schwab, and finally $8 and $50 per trade respectively at Fidelity Investments.

It's extremely important to get the best pricing for investors with small account balances since high commissions will take a huge bite out of their account. For example, let's say account balance is $1,000 and an investor decides to buy a mutual fund. Since the cost of transaction is $76 at Charles Schwab, it means that investors will spend 7.6% of their portfolio just on that one transaction! It's a huge expense! Compare it to just $20 per mutual fund transaction at Optionshouse or just 2% of the account balance.

Another thing worth mentioning is that some online brokers charge account inactivity fees: the fee is imposed when a customer does not make a specified amount of trades during a month (Interactive Brokers), a quarter (Lightspeed Trading), or a year (TradeKing). Small investor will likely not be making a lot of trades, because active trading will just eat away their money. Optionshouse doesn't charge inactivity fees.

There are also companies that impose special fees that could destroy a small account investor - Low Balance Fees. These fees are charged if client has account balance lower than required by a brokerage house (Interactive Brokers), or it could be charged if the amount invested in a mutual fund is too low (Fidelity Investments, Vanguard). Optionshouse does not charge any of the above mentioned fees.

Because there are no setup, termination, or maintenance fees for all individual retirement accounts, Optionshouse is also a great option for an IRA account (traditional, ROTH, SEP, or SIMPLE IRA).

If you have never heard about Optionshouse, and you only want to open an account with one of the well-known companies - you have nothing to worry: E*TRADE acquired Optionshouse in July of 2016.

Read detailed Optionshouse review.

Open Optionshouse Account and Get 60 Days of Free Trades

Open Optionshouse Account

Alternative Broker for Small Investors

For investors who are looking to open an account at one of the largest brokerage houses in the United States, TD Ameritrade is an excellent alternative to Optionshouse. It is one of the big 5 brokerage houses and it has been in business for over 30 years.

TD Ameritrade allows customers to invest in thousands of mutual funds and in 101 ETFs without paying any commission. The firm requires no minimum deposit to open and maintain both IRA and non-IRA accounts. There are no account inactivity or low balance fees. Their new client promotion offer allows investors to build a diversified portfolio of stocks and ETFs without spending a dime on broker commissions. All this makes the firm one of the best brokers for small investors.

More information is in detailed TD Ameritrade review.

Open TD Ameritrade Account and Get 60 Days of Free Trades

Open TD Ameritrade Account

Updated on 8/19/2016.

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