Best Online Trading Brokerage Firms for Beginners



Online Investing For Beginners


When you are new to investing, the stock market can be confusing 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 virtual simulation tools to practice trading (also known as "paper" trading). Some firms even have helpful online communities, where customers can ask questions, learn from more advanced members, and get investing ideas from experienced investors. 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 best discount brokerage firms for new investors who are looking for either regular brokerage account or for one of the various IRA accounts:

Broker Fees Stocks/ETFs
Commissions
Mutual Funds
Commissions
Options
Commissions
Maintenance
Fees
IRA Setup
and Annual Fees
Ally Invest $4.95 $9.95 $4.95 + $0.65 per contract $0 $0
Schwab $4.95 $76 $4.95 + $0.65 per contract $0 $0
TD Ameritrade $6.95 $49.95 $6.95 + $0.75 per contract $0 $0


Broker Review Investment Products Trading Tools Customer Service Research Overall Rating
Ally Invest
Schwab
TD Ameritrade


Top Beginner Brokers Overview


-  Ally Invest (Ally Invest Review) charges just $4.95 per stock or ETF trade (even for broker assisted trades!), and $9.95 for mutual funds transactions. The stock and ETF commission drops to just $3.95 per trade for clients making 30 or more trades per quarter or for those with $100,000 balances. The firm created the highest rated and very helpful online investor community. Ally Invest offers plenty of educational materials on its website, and has an award winning customer service. Investors can open an account with this dynamic brokerage house and give it a try with $0 down and no obligation.

New customer promotion link: Switch to Ally Invest and get up to $150 in transfer fees reimbursed.





-  TD Ameritrade (TD Ameritrade Review) has a flat $6.95 per trade stock/ETF commission, and offers 2,500 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 – $44.99 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 the best online trading practice account for beginners and advanced investors to try different investment strategies without any risk.

New customer promotion link: Trade free for 60 days + get up to $600. TDA





-  Charles Schwab (Charles Schwab Review) offers a flat $4.95 commission on stock and ETF trades. Minimum $1,000 is required to open a brokerage account. Charles Schwab is one of the largest online brokers in United States, with great customer service, large network of local offices for in-person visits, and good banking services (savings, CDs, and free checking accounts). However, mutual funds that are not in NTF program cost a steep $76 to buy.

New customer promotion link: Make $100,000 deposit and get 500 commission-free online equity and options trades.





Our Recommendations

If you want the best selection of educational materials, the highest number of commission free ETF's, and excellent customer service options then go with Schwab.

Ally Invest is the best entry level broker if you want the lowest pricing or to participate in very helpful online investor community.

Open an account with TD Ameritrade if:

  • 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 (there are no IRA fees at TD Ameritrade);
  • you want the best trading platform and investing environment, or to practice online trading without risking real money.





Overview

New investors who want to find a safe and reliable brokerage firm should check out Charles Schwab, Ally Invest, and TD Ameritrade. With billions of dollars in client assets, these large brokers are able to provide good services and in 2017 they are rated the "Best Online Brokers For Beginners".


Education and Research

Investor education is especially important for beginners. Charles Schwab has vast resources that novice traders can study to learn more about securities trading. Ally Invest offers articles and videos on many different financial topics. Self-guided financial courses are available, too.

TD Ameritrade also has a wide selection of informational material. The broker provides independent third-party reports on stocks at no charge. TD Ameritrade also owns Investools, an educational service. This program offers securities courses at the beginner, advanced, and expert levels.

The Schwab website hosts videos and articles that discuss many important financial issues, such as estate planning, taxation, education savings, retirement, and inheritance. And of course a lot of material is devoted to securities, including not just stocks but also options and fixed-income products.


Trading Tools

TD Ameritrade offers user-friendly trading tools that beginners will appreciate. The most basic is the web browser. This is a good place to start. At the bottom of the browser is SnapTicket, an easy-to-use trading ticket. Trade Architect is also available. This is a web-based platform. Thinkorswim is a more sophisticated desktop program, which includes paperMoney, a practice platform. PaperMoney would be useful for new investors who need to practice trading without any risk.

Ally Invest also has a well-designed website. The broker offers advanced trading system called Ally Invest LIVE to all its customers.

Schwab's website is user-friendly thanks to handy menus at the top of the browser. A useful trade ticket appears at the bottom. The broker's desktop software StreetSmart Edge is easy to use, although it does require a $1,000 account balance.


Mobile Apps

All three brokers provide mobile apps to make investing more convenient. Ally Invest's app works for Android, Windows phone, iPhone, and iPad. Besides trading, the app has many useful features, such as an ability set up charts, option chains and alerts.

Investors at TD Ameritrade can use iPhone, iPad, Apple Watch, Android, and Windows 10. Live streaming of CNBC is available with no active trader requirement, which the Ally Invest app lacks. The broker has a thinkorswim app, which includes paperMoney, the practice platform.

At Schwab there are mobile apps for phones, tablets, and smartwatches.


Trading Costs


Stock and ETF trades at TD Ameritrade carry a $6.95 charge. Charles Schwab and Ally Invest are charging just $4.95 per trade. Trading options at TD Ameritrade costs an extra $0.75 per contract. At Charles Schwab and Ally Invest there is a $0.65 per contract fee.

At all three brokers, traders can use a live broker to execute a trade over the phone, although the commission is higher than trading on-line. TD Ameritrade charges a rather steep $44.99 for this service, while Charles Schwab is at $29.95. Ally Invest doesn't have a surcharge - commission is still $4.95.

There are no maintenance fees or inactivity fees for brokerage accounts at TD Ameritrade and Charles Schwab. To open an account at Charles Schwab, investors must deposit at least $1,000. TD Ameritrade and Ally Invest have no minimum.

Ally Invest or TD Ameritrade would be a good choice for small investors who want to get their feet wet in the investing world with a small opening deposit.


Mutual Funds and Exchange-traded Funds

TD Ameritrade offers more than 11,000 mutual funds for its clients to trade. Nearly 2,000 of these have no load and no transaction fee. Funds with a transaction-fee are $49.99. This fee applies to both purchases and sales.

Ally Invest customers can buy and sell over 11,000 mutual funds. There are no no load and no transaction fee funds. The charge for transaction-fee funds is only $9.95 on both the buy and sell sides.

Investors at Charles Schwab have access to more than 5,541 mutual funds. 3,462 of these have no transaction fee and no load. Funds with a transaction fee cost $76 to buy but $0 to sell.

TD Ameritrade and Charles Schwab offer a selection of 100+ and 200+ ETF's respectively that carry no commissions. Regrettably, Ally Invest doesn't offer any ETF's without commissions.


Customer Service

All three brokers have good customer support options. TD Ameritrade has phone support 24 hours a day, 7 days a week.

Branch locations are available throughout the U.S. from two brokers: TD Ameritrade maintains more than 100 locations, with soon to be added 500 more Scottrade branches. Beginning investors who need some personal assistance can find it at one of Schwab's 325 branch locations.


Banking Features

A checking account is available at all brokers, connecting cash management features to a brokerage account. TD Ameritrade has the best account with FDIC insurance at $500,000, more than twice the usual limit. The broker also reimburses ATM fees for all customers.


Safety

All companies mentioned in this article are members of FINRA and have to comply to strict government rules. The client accounts are safe and insured by SIPC for up to $500,000 per customer, including up to $250,000 in cash.


New Customer Promotions

Ally Invest: Switch to Ally Invest and get up to $150 in transfer fees reimbursed.

Charles Schwab: Make $100,000 deposit and get 500 commission-free online equity and options trades.

TD Ameritrade: Trade free for 60 days + get up to $600. TDA



Updated on 5/23/2017.





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