Before you decide how to invest your hard-earned money, you need to figure out what platform you're going to do it through. And, yes, the old days of picking up a phone and calling your broker are over.
Nowadays, you can use your computer or phone to buy and sell stocks – but you have to choose the right online broker to do so. So, what's the best online stock broker today? It's hard to tell. More importantly, there's no correct answer – because it depends on who you are.
In this article, we're going to tell you the top online brokers you should consider and how you can choose the right one for you.
What to Consider When Choosing an Online Broker
Below are some of the most critical factors to consider when choosing an online broker.
- Accessibility - User-friendliness is crucial. Even if a platform meets every other requirement on this list, it won't benefit you if you can't figure out how to buy or sell stocks there. Make sure you understand the broker you want to use – or find one that you can use.
- Commissions - You need to figure out how much commissions will hurt you. Every time you buy or sell a stock, your online broker might want a piece of the action – and you need to figure out how much they want. The good thing is that since there's a lot of competition, commissions tend to be on the lower side of things.
- Fees - Unfortunately, paying a commission isn't the only time you're going to put money down. All online brokers have fees you must consider. Opening or closing an account, withdrawing money, and other actions may require paying a fee. If you're running on a thin margin, one too many fees might put you in the red zone.
- Minimum Amounts - Different brokers have different requirements. Most of them will ask you for $1000 to open an account. Others will ask for ten times that much. Some will ask for nothing at all. Depending on your experience level and needs, a minimum amount might not hurt you – or it might put you out of the picture entirely.
- Reliability - From time to time, you might face technical issues when trading online. And, while these issues are possible, the important thing is knowing you're always one call to customer services away from fixing them.
- Safety - Will your money be safe? How about your personal information? These two questions should determine whether you use an online broker or not. Your information is as valuable as your money – and both should be kept safe from hackers, scammers, and other criminals. Sharing user information with third parties is a red flag.
- Track Record - Suppose a website has a poor track record (not paying in time, poorly executed stock purchases, information leaks, etc.). In that case, you should not trust it to solve those problems. And it would be best if you didn't trust it with your money.
- Tools - Suppose you're a beginner (or an intermediate-level trader). In that case, you can and should benefit from educational resources and other tools that will make your life as an investor easier. Several online brokers offer these resources for free; others, for a small fee.
- Yourself - This list is full of suggestions. You may not care about minimum amounts as much as you do fees and commissions. Perhaps, you're more interested in how easy-to-use a website is instead of any tools a broker might offer. You have to figure out what you're looking for and pay attention to that.
Best Online Stock Brokers Today
Charles Schwab - Best for Long-term Planning
Charles Schwab isn't the best platform, but it's far from the worst. It's the go-to option for long-term planning. It's full of pleasant surprises here and there. The rarest one is how good their customer service is. You're always a few minutes away from having someone help you with what you need. That's a luxury nowadays.
Speaking about the human element, they have hundreds of brick-and-mortar offices where you can go and talk to their representatives face-to-face. More importantly, this online broker has made its primary strategy to help its customers with their investment plan.
With that in mind, you can probably guess this option isn't for the aggressive trader. Instead, it's for investors who want to put money down for their retirement fund, minimizing risk and going for a nice reward in the long run.
Another great thing about Charles Schwab is how they deal with commissions and fees. They tend to offer low fees – and, sometimes, clients might get a refund under specific scenarios. In contrast, their interest rate is relatively poor. Another thing you have to pay attention to is their layout, which is rudimentary at best. None of these things will hurt you long-term, though.
E*TRADE - Best Place to Learn
E*TRADE is the right place for the curious investor, the kind of person who wants to make a lot of money and also wants to know as much as possible about finance. This online broker offers tons of educational resources and webinars and has many analysts ready to explain what's going on in the market. You can learn as much (if not more) as you invest, all in one place.
But here's the thing, though: they will offer nothing for traders who want to experience the entire market. You can trade American stocks – and that's it. While going international is not an option if you're doing business with E*TRADE, that shouldn't deter you from opening an account there.
Especially if you're an active and aggressive trader, this platform will give you a 25% discount on several commissions after your past 30 trades. If you're a beginner, this might be the right place for you. As you know, they have enough resources for you to learn anything stock-related. They also have incredibly easy-to-use platforms you will learn how to use overnight.
And, if there's something you don't understand, their customer service is available day or night.
Fidelity Investments - Overall Best
You might be looking at the best broker available today. Fidelity Investments hits all the rights spots – and does so with little to no disadvantages. It's the whole package: friendly interface, low fees and commissions, excellent customer service, and a clean track record. Sure, it has a couple of bad things here and there – but they are nothing to worry about.
Let's start with the good stuff. Most people agree Fidelity offers a well-rounded platform to trade, one that's not hard to understand at all. It has plenty of features for you to use, and they all come at a small price since this online broker strives to reduce commissions and fees every year. Sometimes, they might even offer commission-free trades to compensate for lost revenue.
Not only that, but most trades going on at Fidelity come at a better price than in any other platform. And, when we say most trades, we mean over 90% of them all. You can't beat that number anywhere else.
Unfortunately, you can't open an account if you're not an American citizen. And, if you have any questions, you must call them during business hours since there's no 24/7 customer service available.
Interactive Brokers - Best for Veteran Traders
This one is for the experienced trader. It has many advantages and benefits you can use – but only if you manage to understand their platform. That's the thing about Interactive Brokers: they offer a superb product, but it's an intimidating one. There's too much going on at once, and you need to be ready to understand it all.
Thus, beginners will not be able to make the most out of this platform before getting experience somewhere else.
Once you can stand your ground, this is a fantastic option to consider. It has an incredible (yet, as you know, complex) platform, great tools, a wide range of features, and, more importantly, low fees and commissions.
Remember, if you're not experienced enough to handle their platform, it's best to learn how to play the stock market somewhere else and come back later. Because, let's say, for example, that you have an issue you cannot solve: their customer service is far from reliable. You're on your own here.
Merrill Edge - Best Customer Service
Like Charles Schwab, this online broker is for people who want to invest long-term – but it's not the one you should choose unless you're a certain kind of person. Simply put, Merrill Edge is for people who meet two requirements: one, they have a Bank of America account; two, they have over $100,000 ready to invest.
Why is that? Because Merrill Edge provides terrific customer service, probably the best in the business. You can walk to any Bank of America and solve any issue face-to-face, and that includes deciding on an investment plan.
On the other hand, this online broker provides advantages and benefits for people who invest over $100,000 – things that make it worthy to at least consider Merrill Edge. If you don't meet both requirements, it's best to take your business elsewhere. Their fees and commissions tend to be high, and they offer a limited amount of options.
Even if you don't have $100,000 but value face-to-face business interactions, you should consider using this platform. But keep in mind it might not be worth the trouble. Charles Schwab is the better option, at least for long-term financial planning.
Robinhood - Best Phone App
Robinhood is tough to figure out. They became a mainstream sensation almost overnight, thanks to their user-friendly trading app. But, at the same time, they might have ruined their reputation rather quickly as well.
If you haven't heard, Robinhood is in somewhat of a scandal after restricting access to certain stocks – and going up to the point of selling stocks without user permission. This scandal is part of an ongoing news story related to GameStop stock, which has yet to develop fully.
Although this platform has far from the cleanest track record, it is still a good option for people who want to play around in the stock market, figure out how things work, and do so from their phone.
That's the great thing about Robinhood: it's user-friendly at its core. You can do everything from the comfort of your phone and quickly at that. They have low fees, which makes it even better for beginners who are afraid of losing money. Unfortunately, the GameStop scandal has shed light on Robinhood's shoddy practices. We'll have to wait before we can tell if Robinhood slipped or showed its true face.
TD Ameritrade - Best for Beginners
Last but not least, TD Ameritrade. This online stock broker is perfect for traders who are starting and want to take investing seriously. Ameritrade offers countless courses, seminars, videos, and events for you to enjoy. Some of them are online; others are face-to-face.
Not only that, but they have a wide range of information for beginners, intermediate, and advanced traders. Their trading platform is easy to use, intuitive and presents no problems at all. In a way, Ameritrade is making an effort to make trading accessible to everyone. They are making all the right choices for that to happen.
The only downside to using Ameritrade is their fees. Sometimes, they tend to be on the higher side of things. Then again, the fees might be worth it for the educational resources alone.
To create an objective list, we surveyed multiple and reputable websites across the internet, including Forbes, Investopedia, and other well-known sites dedicated to business and finance.
We haven't ranked the seven online stock brokers presented to you in any way whatsoever. Our reasoning is simple. We don't want to influence your decision – and we also understand that different traders will have better results on other platforms.
When choosing an online broker, you should visit all seven sites. That way, you'll know what everyone is offering. And that's the only way to make an intelligent choice.
All in all, the intelligent choice is the one that's right for you. You might be looking for a user-friendly interface. Or, perhaps, you want low fees. The good thing is, you can always switch brokers to make more money.