5-star brokerage rating

Best Online Broker for Small Investors

Best brokerage firm for small investor in 2017. Top discount online broker for small account balance for low cost investing (trading) in stocks, mutual funds, ETFs, options, and bonds.

Etrade rating


Best Brokerage for Small Investor: Commissions

Stocks and ETFs $6.95 ($4.95 if making 30+ trades per quarter)
Stocks and ETFs broker assisted $34.99
Options $6.95 + $0.75 per contract ($4.95 + $0.50 if making 30+ trades per quarter)
Mutual funds $19.99
Futures contracts $1.50 per contract, per side + fees
Fixed Incomemarkup or markdown and any transaction fee will be included in the price quoted
Bonds$1 per bond (minimum $10, maximum $250) for online secondary market trades. Includes Agency bonds, Corporate bonds, Municipal bonds, Brokered CDs, Pass-thrus, CMOs, Asset Backed Securities.

Investments stocks, bonds, mutual funds, futures, fixed income, options, ETFs
Etrade minimum deposit to open account $500 for a non-retirement account, $0 for a retirement account, $2,000 for a margin account
FeesEtrade fees
Promotion links Etrade promotions

Advantages of the Best Online Broker for Small Account

  • No account maintenance or inactivity fees
  • Large and well established company
  • Powerful trading tools
  • No IRA account fees, and no minimums with electronic statements and confirmations
  • Low minimums to open accounts: $500 for a regular brokerage account and $0 for a retirement account
  • Investing advice is available by phone or in person
  • No surcharges on large orders or stocks under $1
  • Great research amenities from S&P, MorningStar, Thompson Reuters, Credit Suisse, and Smart Consensus

Best Brokerage Firm for Small Investor Review

Etrade 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 only $500.

The firm also offers low cost pricing: $4.95 per stock or ETF trade for clients making 30 or more trades per quarter and $6.95 otherwise. There are 101 ETF's that investors could buy at Etrade without paying any commission.

With Etrade customers could invest in 6,244 commission-free, NTF (no-transaction fee) mutual funds, and buy non-NTF funds for just $19.99 per transaction. With NTF funds you could build diversified portfolio without paying broker commissions.

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 $19.99 per mutual fund transaction at Etrade 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. Small investor will not be making a lot of trades, because active trading would just eat away their money. Etrade 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). Etrade does not charge any of the above mentioned fees.

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

Read detailed Etrade review.

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Open Etrade Account

TD Ameritrade rating

TD Ameritrade

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 Etrade. 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 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 7/3/2017.

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