2018 top rated, best online stock brokerage firms for beginner investors and new traders.

How to Choose Your First Brokerage Company

For anyone who never had any experience investing, the stock market appears as very complicated and hard to understand. Beginner investors often feel confused because of hard-to-deal-with trading platforms, up and down activities on stock charts, unknown risks, etc. But all of that can be learned and understood, especially after some real-life practice, just as any other skill.

The very first and very important step before starting investing – is to choose friendly to new investors and easy-to-use brokerage company (online broker). Right now, there are dozens of firms on the market. Some companies are managing money that clients handed to them, while others prefer to deal with professional and knowledgeable traders, who feel comfortable workong with complicated trading platforms and fully understand account management.

On the other side, there are “starter brokerage companies” that are very friendly to new investors. They offer lots of learning tools, such as online training, webinars, and trading simulation platforms that help obtain experience in trading without any risk. Also, at some companies new investors could find tips and advice at online investor communities, where other traders share their experiences and ideas. Some investment firms even allow beginners to make a trade with the actual live broker’s help and don’t take any additional commission for that.

Best Online Brokers for Beginners

Let's review the best online brokerage firms for beginners in 2018:

-  Firstrade (read review) offers the lowest commissions on most investment products. Their pricing is $2.95 for stock or ETF trades, and $9.95 for mutual funds transactions.

Promotion link: Up to $300 Cash Rewards + 500 Free Trades.

Open Firstrade Account


-  Ally Invest (read review) offers great online community for investors, and provides a lot of educational materials and highly rated customer service. New investors can open practice account with $0. Ally Invest's pricing is $4.95 for stock or ETF trades (same rate applies for trades made with broker's help) and $9.95 for mutual funds transactions.

Promotion link: Up to $3,500 cash bonus + commission free trades for new accounts.

Open Ally Invest Account


-  TD Ameritrade (read review) offers a straightforward $6.95 commission on stocks and exchange traded funds, and $49.95 rate on mutual funds. There is no minimum deposit required to open an account at TD Ameritrade. You are dealing with one of the best-known and largest brokerage houses in the U.S., that has one of the highest customer loyalty ratings in the industry. However, broker-assisted trades are very expensive at $49.99. The firm provides huge selection of educational resources on its website.

Promotion link: Trade free for 60 days + get up to $600.

Open TD Ameritrade Account


Recommendations

If you are new to investing and looking for the best overall package, then go with Ally Invest. You can read the full review here.

Firstrade is the way to go if you want the lowest pricing. See the full review here.

You should open account at TD Ameritrade if you are looking to invest with one of the largest financial firms in the United States or you are looking for an IRA account. Read detailed TD Ameritrade review at this link.


Overview of Stock Market Brokerage Companies

Stock market brokers offer their clients (both experienced and beginner investors) a range of products and services. When you open an account, you get a financial partner who is supposed to help you succeed. Some brokers do a better job of that than others, although their services may cost more. Whichever securities firm you choose, you should be aware of the services that are available to you.

Financial Advice

Some brokers provide investment advice for an additional charge, some brokers offer a basic level of advice for free, while others don’t give financial advice out for any price. If you need extra help in making trading decisions, seek out a broker that offers investment advice.

Betterment, for example, provides one phone call per year with a licensed financial advisor to customers who sign up for its Plus investment plan. This is a robo-advisory service that costs 0.40% annually. It does require a rather steep $100,000 minimum deposit. Paying 50 basis points per year qualifies for unlimited phone calls with the broker’s investment advisors, a pretty attractive offer.

As noted above, Betterment offers portfolio management, which is more commonly offered nowadays. Many securities firms today provide robo management, which uses a computer program to make trading decisions. Typically, the fee for software-managed accounts is significantly lower than what human-advised accounts cost. TD Ameritrade’s robot, for example, costs just 30 basis points and has a $5,000 minimum.

Fidelity is willing to give its customers basic investment advice over the phone about the buying or selling of securities. It does not charge anything for this generous service.

If you want more personal service, traditional brokerage houses like Edward Jones and Raymond James have thousands of local offices with human advisors who will sit down with you and develop a financial roadmap specific to your circumstances and needs. However, this model of financial planning can cost 2.0% of assets or even more in some cases.

Trading Technology

If you decide to go it alone, you’ll want good trading tools to help you place orders and find investment opportunities. Some stock market brokers provide very advanced technology. These firms include TradeStation and TD Ameritrade. They offer desktop platforms that have powerful charting tools and effective screeners. These can be very helpful if you’re making all the trading decisions in an account.

Some brokerage firms will charge fees for using its trading tools, or they might impose account balance minimums. TradeStation, for example, offers its software for free, although there is a annual account fee. This can be waived by maintaining at least $2,000 in your account or placing 5 trades per year. TD Ameritrade attaches no requirements or fees to its software.

The quality of tools can vary widely as well. There is no comparison between TD Ameritrade's most advanced platform thinkorswim and Ally Invest’s basic platform Ally Invest LIVE. Some brokers don’t have a desktop platform at all. These brokers include WellsTrade and Capital One Investing.

Educational Materials

It’s important to have an adequate level of financial understanding before jumping into a trade. Many stock market brokers provide learning materials on their websites, but there can be a large difference in both quality and quantity from company to company. The Schwab website, for example, has a wide range of resources in article and video formats. They cover many financial topics, including retirement, estate planning, securities, and much more. Other brokerage houses, such as Robinhood, have virtually no learning materials.

Stock Market Brokerage Firms Pricing

All stock market brokers publish a fee and commission schedule, which spells out what traders will pay for specific services. A broker’s equity commission is the most common charge found on a pricing schedule, and like everything else, this varies widely.

A broker may charge a fee just for having an account open with the firm. Many brokers will charge fees for transferring an account to another broker, for wiring funds out of your account, or for closing a retirement account. Be sure to read over a company’s pricing schedule (always available on its website) before opening an account.

Customer Support

All brokers provide some level of support, and yes, this issue varies widely as well. Firstrade does not have representatives available 24 hours a day, but it does have an on-line chat feature on its website. Merrill Edge provides service around the clock, but its website doesn’t have on-line chat. E*Trade has brick-and-mortar locations, while Vanguard does not. Make sure you have the customer service tools you need before choosing a broker.

Range of Funds

Mutual and exchange-traded funds are popular securities in the investment world today. All discount brokers provide ETF’s, but not all of them provide mutual funds. M1 Finance, for instance, does not offer mutual funds; although its trading model does buy and sell ETF’s.

Brokerage houses that do offer mutual funds differ in the number they provide, the fund families that are available, and the cost of trading them. Capital One Investing offers fewer than 1,000 mutual funds in total, while Schwab has more than 3,000 no-load, no-transaction-fee funds.

Banking Features

When you buy and sell securities, you’ll have cash in your brokerage account. So it’s a nice service for a brokerage firm to add banking features to a trading account. Some brokers do this for free. Merrill Edge gives its customers checks and a debit card at no cost. Other firms charge steep fees for cash management tools. WellsTrade customers, for example, must pay $100 every year.

Best Brokerage Firms For Beginners Summary

These are the standard features that best brokerage houses offer beginner investors and experienced traders. Although they can be considered standard, wide variation exists among brokers regarding the quality and cost of the services. Do your homework before choosing a broker.

If you are still not sure where to start, then start with TD Ameritrade - you won't be disappointed.

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