Best brokerage firms for beginners

Best Brokerage Firm Accounts for Beginners Stock Trading and Online Investing (2020)



Best Online Brokers For Beginners

Below we list the three best brokerage firms for beginner investors who are looking for either regular brokerage account or for one of the various IRA's:


Pricing


Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
Ally Invest $0 $9.95 $0.50 per contract $0 $0
M1 Finance $0 na na $0 $0
TD Ameritrade $0 $49.99 $0.65 per contract $0 $0


Services


Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
Ally Invest
M1 Finance
TD Ameritrade


Promotions


Ally Invest: Up to $3,500 cash bonus + $0 commission trades.

M1 Finance: Pay $0 commissions. Transfer account to get up to $2,500 bonus at M1 Finance.

TD Ameritrade: $0 commissions + transfer fee reimbursement.



Top Beginner Brokers Overview

-  Ally Invest (learn more) charges $0 per stock or ETF trade, and $9.95 for mutual funds transactions. The broker 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: Up to $3,500 cash bonus + $0 commission trades.

Open Ally Invest Account





-  TD Ameritrade (learn more) has a flat $0 per trade stock/ETF commission, offers 4,200 no-commission mutual funds, and $0 account opening minimum. The firm is one of the best-known brokerage companies in the country. There are tons of educational resources on TD Ameritrade's website and easy access to the 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: $0 commissions + transfer fee reimbursement.

Open TD Ameritrade Account





-  M1 Finance (learn more) has a flat $0 per trade stock/ETF commission. The firm is offering investors an ability to create their own mutual funds, called Pies, or to invest in the professional Pies that mimic popular mutual funds.

New customer promotion link: Pay $0 commissions. Transfer account to get up to $2,500 bonus at M1 Finance.

Open M1 Finance Account





Our Recommendations

Ally Invest is the best broker for beginners who want the lowest pricing or to have a professionally managed account.

Open an account with TD Ameritrade if:

  • you are only comfortable investing with one of the oldest, most established, and largest brokerage houses; we rated TD Ameritrade The Best Overall Broker in 2020
  • 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.

Open an account with M1 Finance if you want to invest only in stocks and ETF's for a long run and don't want to pay mutual fund fees.





2020 Best Brokerage Firms for Beginners

New investors who want to find a safe and reliable brokerage firm should check out TD Ameritrade, Ally Invest, and M1 Finance. With billions of dollars in client assets, these large brokers are able to provide good services and in 2020 they are rated the "Best Online Brokers For Beginners".


Education and Research

Investor education is especially important for beginners. TD Ameritrade 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.


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. 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.

Because M1 Finance isn't a typical on-line broker, there is no desktop platform. Buying and selling Pies takes place on the website, and it's very simple even for a beginner investor.

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


Best Beginner Broker


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.

M1 Finance customers can use the broker's mobile platform, which is compatible with Android and Apple devices. The platform is designed for phones (not tablets) and there's no smartwatch app. Nevertheless, the app is nicely designed.


Trading Costs


Stock and ETF trades at M1 Finance, TD Ameritrade, and Ally Invest carry a $0 charge. Trading options at TD Ameritrade costs an extra $0.65 per contract. At Ally Invest there is a lower, $0.50 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: $25. .

There are no maintenance fees or inactivity fees for brokerage accounts at M1 Finance (accounts above $20) and TD Ameritrade. There are no account minimums.

Ally Invest is a great broker for beginner investors who want to get their feet wet in the investing world with no opening deposit.


Mutual Funds and Exchange-traded Funds

TD Ameritrade offers more than 13,000 mutual funds for its clients to trade. Nearly 4,200 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.


Best Broker For Beginners


M1 Finance offers Pies that have the same composition as the most popular mutual funds. The huge advantage of these Pies is that they don't have any fees that the same mutual funds charge. That provides enormous savings over the years, while having the same diversification and risk profile that mutual funds provide.


Best Broker For Beginners


Ally Invest customers can buy and sell over 12,000 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.

All three brokers offer all ETF's with no commissions.


Customer Service

The 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 450 locations. Beginning investors who need some personal assistance can find it at one of TD Ameritrade's 450 branch locations.


Banking Features

A checking account is available at all brokers, connecting cash management features to a brokerage account. M1 Finance has the best account with FDIC insurance. Ally Invest has the best rates on the online savings account offered through the parent company, Ally Bank.


Safety

All companies mentioned in this article are members of FINRA and have to comply with 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.


Promotions


Ally Invest: Up to $3,500 cash bonus + $0 commission trades.

M1 Finance: Pay $0 commissions. Transfer account to get up to $2,500 bonus at M1 Finance.

TD Ameritrade: $0 commissions + transfer fee reimbursement.





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.