In our review of the Best Brokers for Beginners, we focused on the features that truly help a new investor learn while they begin their investing journey. Brokers were rated based on their educational resources, easy navigation, clear commission and pricing structures, portfolio construction tools and research. Those brokers with higher ratings all offered minimum account balances, and practical demo accounts. Here are our top five brokers for beginners:
- TD Ameritrade
- E*TRADE
- Merrill Edge
- Charles Schwab
- Fidelity Investments
Online brokers want new investors to become lifelong customers. The winners in this category provided the right tools and resources to help new investors and traders hone their skills and gain valuable experience.
TD Ameritrade
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- Account Minimum: $0
- Fees: $6.95 for stock and ETF trades, $6.95 per leg plus $0.75 for options
Despite slightly higher than average fees, TD Ameritrade attained the top spot because of the firm’s detailed educational platform, its range of product offerings, and the ability to open an account and explore before depositing any money. Beginning traders should get started on TD Ameritrade’s standard web-based interface, frequently referred to as “the green site.” As they grow comfortable with trading, they can move up the features ladder into Trade Architect, and consider jumping into the rich thinkorswim trading platform, which is packed with tools for sophisticated options traders. This is a broker that can grow with you. We also found its demo account, research tools, and mobile apps to be much better than the industry average.
TD Ameritrade also received awards for Best Overall Online Broker, Best for Day Trading, Best for Options Trading, Best Web Trading Platforms, Best for ETFs, Best for Roth IRA, Best for IRA and Best Stock Trading Apps.
Pros
Well-rounded set of educational material and resources
Access to everything from commission-free ETFs and mutual funds to options, futures, and Forex trading
$0 minimum initial investment
Cons
Commissions were slightly higher than other brokers in the category
Tools are spread across multiple platforms
You must hold the commission-free ETFs you have purchased for at least 30 days, or pay both sides of the commission ($13.90) when you sell
E*TRADE
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- Account Minimum: $500
- Fees: $6.95 stock and ETF trading
E*TRADE’s higher than average costs are largely offset by robust trading and analysis software. Forex trading and annuities are missing, but E*TRADE’s advanced trading platform, launched in December and called Power E*TRADE, integrates the options trading and education tools via their acquisition of OptionsHouse, and should provide a lot of value to stock and options traders.
E*TRADE also received awards for Best Web Trading Platforms, Best for Options Trading, Best for ETFs, Best Stock Trading Apps, Best for Roth IRAs, and Best for IRAs.
Pros
More research and analytical tools than most of the other brokers we reviewed
User-friendly options trading platform
Huge investments in their infrastructure over the last few years
Cons
Commissions are higher than some other brokers for infrequent traders
Only frequent traders and those with high account balances can access a specialized support channel
Dividend reinvestment unavailable online
Merrill Edge
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- Account Minimums: $0
- Fees: $6.95 per stock trade. Options trades $6.95 per leg plus $0.75 per contract
With its growing group of financial advisors and a $0 minimum initial investment, Bank of America’s Merrill Edge provides an excellent home base for beginning traders who are either looking for a little more hand-holding, want to start with a smaller account, or both. The firm’s technology focuses on helping clients plan for financial goals, and their “Portfolio Story” experience is a great way to track progress towards those goals. Among other features, the Portfolio Story tracks your investments in terms of environmental, social, and governance ratings.
Recognizing that younger investors prefer to use mobile devices, Merrill has made its desktop and app experiences increasingly similar, making the transition from one to the other much smoother.
Merrill Edge also received awards for Best Web Trading Platforms, Best Stock Trading Apps, Best for IRAs, and Best for Roth IRAs.
Pros
Merrill Edge employs financial advisors at more than 2,000 Bank of America locations for in-person service
$0 Minimum Initial Investment
Top-notch education for new stock and options investors
Cons
Commissions were slightly higher than other brokers in the category
Large account balance needed to qualify for free trades
Free trades can only be used for stock and ETFs
$5,000 minimum to access Merrill Edge Guided Investing robo-advisory platform
Charles Schwab
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- Account Minimum: $0
- Fees: $4.95 per stock and ETF trade, $0 for Schwab ETFs and $4.95 plus $0.65 per contract for options
Among our top 5 Best Brokers for Beginners, Schwab offers the lowest combination of trading commissions and account minimums. Schwab also offers a wide array of commission-free exchange-traded funds (ETFs) and mutual funds for those who aren’t interested in individual stocks. Those who are interested in stocks and options will find world-class research.
Charles Schwab also received awards for Best Overall Online Brokers, Best Web Trading Platforms, Best for International Trading, Best for Options Trading, Best for Penny Stocks, Best for Roth IRA, Best for IRA, Best for ETFs, and Best Stock Trading Apps.
Pros
Commission-free exchange-traded funds (ETFs) and mutual funds
Commissions are lower than other brokers in the category
A wealth of information created by highly rated research analysts and news sources
Waivable account minimum
Cons
The sheer number of features and reports available can feel overwhelming
Schwab maintains transaction history for just 24 months online
Several different trading platforms which make it hard to keep track of everything
Fidelity Investments
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- Account Minimum: $0
- Fees: $4.95 per stock/ETF, $4.95 plus $0.65/contract per options trade
Fidelity offers a wide range of trading capabilities, research, and education opportunities that can help the new investor grow. They offer 265 commission-free ETFs, which are a big help when getting started. With over $2 trillion in assets under management, Fidelity is a massive broker with the ability to use its scale to deliver excellent customer support, and low trading costs.
Fidelity also received awards for Best Overall Online Brokers, Best Stock Trading Apps, Best for ETFs, Best for Penny Stocks, Best for Roth IRAs, Best for IRAs, Best for International Trading, and Best Web Trading Platforms.
Pros
Superior trade routing algorithms
No longer requirements for their Active Trader Pro platform
Calculators to help new traders avoid entering orders that might be rejected due to inadequate buying power
Fidelity is doing a lot of work "under the hood" to avoid the outages that plagued them in 2017 and 2018
Cons
Features spread across several platforms
Platform instability: Fidelity’s site crashed during several trading surges in 2017 and 2018. The firm is working to improve its infrastructure, though.
Low balance fees for some mutual funds
Methodology
Investopedia’s mission is to provide investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.
In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.