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Best Online Brokers for Small Investors
Best brokerage firm for small investor in 2019. Top discount online broker for small account balance for low cost investing (trading) in stocks, mutual funds, ETFs, options, and bonds.
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Best Brokerage for Small Investor: Commissions
| Investments | Commissions |
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| Stocks and ETFs | $4.95 ($3.95 per trade if making 30+ trades per quarter or for $100,000 balances) |
| Options | $4.95 + $0.65 per contract ($0.50 per contract if making 30+ trades per quarter or for $100,000 balances) |
| Mutual funds | $9.95 |
| Bonds | $1 per bond with $10 minimum, $250 maximum |
| Treasuries | commission-free |
| Certificates of Deposit (CDs) | $24.95 |
| Investments | stocks, options, mutual funds, bonds, CDs, forex, treasuries, ETFs |
| Ally Invest minimum deposit to open account | $0 for cash account, $2,000 for margin account |
| Fees | Ally Invest fees |
| Promotion link |
Ally Invest promotions
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- Very low commissions
- No minimums, or maintenance or hidden fees
- Free real-time quotes
- Top-rated customer service
- Fee-free IRAs
- Free DRIPs (dividend reinvestment plans)
- Low cost professional portfolio management
Best Brokerage Firm for Small Investor Review
Ally Invest is one of the largest brokerage houses in the United States, and the best discount online brokerage firm for small investors
(small account balance) 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 a brokerage account with $0 down.
The firm also offers low cost pricing: $3.95 per stock or ETF trade for clients making 30 or more trades per quarter and $4.95 otherwise.
With Ally Invest customers could invest in 8,000 mutual funds. More than 1,600 have no load. Mutual funds at Ally have the lowest transaction fee among all
online brokers - only $9.95 on both the buy and sell sides.
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 $9.95 per mutual fund transaction at
Ally Invest or just 1% 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. Small investor will not be making a lot of trades,
because active trading would just eat away their money. Ally Invest 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). Ally Invest does not charge any of the above mentioned fees.
Because there are no setup, termination, or maintenance fees for all individual retirement accounts, Ally Invest is also a great option for an IRA account
(traditional, ROTH, SEP, or SIMPLE IRA).
Read detailed Ally Invest review.
Open Ally Invest 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 Ally Invest. It is one of the big 5 brokerage houses and it has been in
business for over 30 years. Offering the best tools in the industry with record breaking execution time and some of the lowest fees available, the
benefits of TD Ameritrade far outweigh any possible drawbacks making TD Ameritrade the best brokers for small investors.
TD Ameritrade's website is well-designed with intuitive menus, and users can easily find all the resources they need. One particularly
useful feature is the ability to enter trades anywhere on the website through the order-entering box that is located on the bottom of every page.
Trading through this site is, in short, efficient and comprehensive.
TD Ameritrade is one of the few on-line discount brokers to offer an advanced desktop trading platform completely free of charge or requirements for all its clients.
Amazingly, the software also comes with some very powerful charting tools.
TD Ameritrade allows customers to invest in thousands of mutual funds and in 296 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
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