The Best Online Trading Platforms For Beginners
Andrew Dehan8-Minute Read
September 13, 2021
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Back in the day, if you wanted to trade stocks, you had to go through a completely human brokerage. Like many things in the past 10 – 20 years, the roles that were played primarily by humans are now filled by computers. Where online trading was once a niche, it’s now the norm.
Since many people feel comfortable with online transactions, online brokerages have become normal for people dipping their toes into the stock market. But what are online brokerages and which are the best for beginners?
Here we’ll answer that, and more.
What Is An Online Brokerage?
An online brokerage is an investment account that is used for buying and selling securities. Online brokerages are platforms that fulfill the traditional stockbroker role. Instead of having to call up a broker to trade securities, you can log into your account and make all your transactions online.
Different brokerages may specialize in certain areas. Where one brokerage may be more geared for retirement savings, others may be better for trading on futures or in international markets. Knowing how you’re interested in investing your money will help you choose the right online broker for you.
How Do Online Brokerage Accounts Work?
An online brokerage account lets you save and invest money. Many online brokers feature educational and research materials to help you make sound financial decisions. The depth of this information varies among brokers.
What also varies is the flexibility and specificity of the trading platform. Some online brokerages operate more like advanced savings accounts, where others have a wide array of investment options.
Opening An Account
To open an online brokerage account, all you need is your personal information and to link a bank account. Some brokerages require a minimum deposit to keep the account open. Once you have you have your account open, you can deposit cash into it and start purchasing securities like stocks, bonds, mutual funds and ETFs.
Don’t know what to buy? Many of these accounts offer education to help you decide where to put your money. Whether you want to invest based on personal interests (such as tech or commodities) or based on risk level, you can get direction on where to invest your money.
To get started, many brokerages offer specific mixes of stocks grouped by categories like industry or risk level. Most people starting out would do best putting their money into conservative-to-moderate investments, with their eye on long-term growth.
Higher-risk stocks have the potential for big, short-term profits, but also are more likely to drop, causing you to lose money. Turning a profit on high-risk stocks ultimately comes down to good research and a bit of luck. Remember, especially with risky stocks, don’t invest money you can’t afford to lose.
The Best 4 Online Brokerages For Beginners
The list of available online brokerages is large and can be a little overwhelming if you’re not sure where to start. That’s why we’re breaking down the best brokerages for beginners.
To narrow the list down to these four online brokerages, we looked at several online reviews and customer reviews, weighed the features and drawbacks and considered their user-friendliness for beginners. Except for Acorns (which we’ll explain in a bit), all brokerages here charge $0 per transaction, require $1 or less account minimum and allow trading fractional shares.
We took our entirely subjective rankings and broke out our favorite brokerages in different categories for beginners. While there are other online brokerages that can work for you, here’s our advice on where to start.
TD Ameritrade – Best Overall Online Brokerage
With tons of education, research information and easy-to-use desktop and app functionality, TD Ameritrade takes our top spot for best online brokerage for beginners. The content is there for those who want to go deep and there’s tons of support for novice investors.
Let’s look at the pros and cons.
- Great mobile experience
- Tons of customer support contact options
- Excellent education materials, including in-person trainings
- So many investment tools and content, as well as different available account types, can make things confusing for new users
On the Consumer Affairs review site, TD Ameritrade has a 3.8/5 rating. One reviewer had this to say:
“TD Ameritrade has made my investing go smooth and very easy to understand. When I first opened my account I was very new to investing but with their mobile app and online tools together with live support I actually feel like a pro and I have seen my investments go up 100% thanks to counseling and advice on which ones I should make at the right times!! 100 stars if I could.”
Acorns – Best For Keeping It Simple
Maybe you want to get investing because you want a better return than what you’d get on your savings account, but you don’t want to spend a lot of time and effort picking stocks. That’s where Acorns comes in. Acorns specializes in simplifying the process.
Acorns’ main driver is their Round-Ups® program, which ties your Acorns debit and/or credit card to your account and will round up every purchase to nearest dollar. Once your round-ups hit $5, it will be deposited into your account. This small incremental savings can really add up over time.
For their core portfolio group, Acorns has different offerings based on your desired of risk level and type of investing you want to do. Here’s how they break down:
- Conservative – 100% blend of bonds
- Moderately Conservative – 60% bonds, 40% stocks
- Moderate – 40% bonds, 60% stocks
- Moderately Aggressive – 20% bonds, 80% stocks
- Aggressive -100% blend of stocks
On top of that, they also offer a set of portfolios geared toward sustainable investing using a similar breakdown of moderately conservative to aggressive. These give investors the option to invest in companies focused on improving the world through how they’re impacting the environment and society and how they’re governed (ESG).
Here are some of the pros and cons.
- Rely on diversified portfolios built by financial experts
- Simply, easy-to-use app and desktop experience
- Great financial literacy content
- Free sustainability portfolio for sustainable/ESG investing
- Monthly fees of $1, $3 or $5 depending on your coverage
- Very limited choice/flexibility in investment options
- Some customers report less-than-average customer service
One reviewer on Trustpilot had this to say:
“I'm very happy with Acorns, it got me interested in investing and taking my finances seriously. I'm not sure where I'd be had I not started using them.”
Webull – Best Bang For Your Buck
If you’re looking to go deeper than Acorns and want to avoid paying some of the higher fees of other brokerages, Webull may be right for you. Webull is geared for mobile users, making trading simple while also providing more advanced tools.
Where Webull stands out is in its lack of fees. It’s the least-expensive online broker. Webull offers commission-free trading over 5,000 stocks and ETFs, and free options trading. On top of that, there are no annual account fees or inactivity fees.
Combine its affordability with a user-friendly mobile app and feature-packed browser and desktop platforms and you’ve got a great place to start for beginner investors.
The pros and cons look like this:
- Least expensive online brokerage
- Easy-to-use mobile app
- Great advanced features for browser and desktop platforms
- Limited educational support – beginners may need to look outside of the platform for advice
- Some reviewers report mediocre customer service
A user on Trustpilot had this to say:
“Love the paper trading feature. The charts are wonderful. The platform is very user friendly and professional. Great app for beginners.”
Interactive Brokers – Best For Aspiring Traders
Want to step into the deep end? Do you love research and information? Do you want to grow from a casual investor to an active trader? Our advice is to check out Interactive Brokers. Interactive Brokers’ reputation is as a brokerage for advanced traders, but the company introduced its IBKR Lite service in 2019, geared for beginners.
Where Interactive Brokers excels is its trading platforms. IBKR Lite users can utilize the Client Portal, IKBR Mobile and the Interactive Brokers’ Desktop Trader Workstation platforms to make the most of their investments. The Client Portal is a streamlined trading and account management platform where the IKBR Mobile app brings the power to your phone.
The flagship platform, the Trader Workstation, is a powerful and flexible tool for those who want to go deep. With piles of company and market data and research, you can dive in to pick stocks that align with your goals.
- Powerful trading platforms
- Free trades with IBKR Lite
- Allows investors to filter by socially responsible investments
- Website can be difficult to navigate
- Can be overwhelming for beginner traders
One reviewer on Trustpilot put it like this:
“Powerful global share brokerage service. Trustworthy and robust systems. Flexible interfaces to work on any platform. Options and interfaces complex for amateur traders and searching for help is daunting.”
How To Open An Account
Before opening an account, you need to decide what your goals are. Different accounts specialize in different areas, and not all brokerages offer all account types. For example, if you’re interested in setting up an IRA or 401(k), you need to find a brokerage that offers that (TD Ameritrade does). These accounts function differently than accounts trading securities due to how they’re taxed.
You also need to know your goals. Are you just wanting to build a savings you can easily dip into? You may want to go with a platform that also offers a debit card tied to your account. Or maybe you’re interested in growing your trading knowledge and trying to make real money off smart stock picks. That makes a brokerage with education and data resources essential.
Once you’ve chosen a brokerage and account type that’s right for you, it’s time to open an account. Here’s what you’ll need to do:
- Visit the brokerage’s site and click to “open an account”
- Fill out the data, including personal information like your name, birth date and Social Security number
- Speak with a broker. Brokers are required by law to speak with you and ask you a set of questions used to ensure your identity
- Link your bank account and start reading, researching and investing
Commission Fees And Account Minimums: What To Know
Many brokerages charge commission fees on trades. These are per-trade fees that can add up over time. The brokerages mentioned here offer free trades on a selection of securities. Some charge commission fees on options trading or on mutual funds.
In the past, if you were opening a brokerage account, you needed to have a set amount of money. This is no longer universally true. Most online brokers do not have account minimums for most security trading.
Where account minimums are usually required is when investing in a mutual fund. Mutual funds require account minimums largely because of the amount of paperwork and account maintenance involved.
The Bottom Line: It’s Never Been Easier To Start Investing
Whether you’re interested in building your savings or experimenting with day trading and don’t know where to start, we hope this article gave you some clarity. All four of these platforms are good options to begin your investing journey. It really comes down to your goals, risk tolerance and if you’re ready to do your due diligence.
Before you start investing, it’s always a good idea to speak with a financial professional to figure out what’s best for you.
Want some more general tips on investing? Read our article on the best stocks to buy.
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