Do you want to know one of the biggest investment secrets? Get started as soon as possible. It sounds simple, but it’s vitally important to investment success. You see, the sooner you begin investing, the more time your money will have to grow.
Once you’ve made the all-important decision to begin investing, the next big step is choosing the broker where you’ll make that happen. With that in mind, here’s our list of the seven best brokerages for beginners.
What to Look for in Brokerages for Beginners
There are dozens of investment brokers available; how do you determine which are the best for beginners?
We’ve boiled it down to the following criteria:
Low minimum initial investment requirement. Brokers with either no account minimum requirement or a very low one are the best for most beginners.
Available accounts offered. Typically, this includes both taxable investment accounts and retirement accounts.
Investments available. Most investors are looking to trade stocks and ETFs. But you may be more interested in other investments, like mutual funds, options, or even cryptocurrencies.
Fractional shares. This is one of the most important considerations for beginning investors. Fractional shares are slices of shares. For example, you may be able to buy 1/100 of a $500 stock for just $5. If a broker doesn’t offer fractional shares, you may not be able to invest in individual stocks or funds with a limited account balance.
Customer support availability. This is an important criteria for most investors, but especially for beginners. Sometimes you just need a little bit of help. Be careful though – getting general help is one thing – but even brokers offering commission-free trades have steep fees on broker assisted trades.
Once you determine these capabilities, the next step is to decide what type of investing will work best for you.
For many, that’ll be trading in individual stocks. For others, the emphasis will be on funds, like exchange traded funds (ETFs) and mutual funds. With still others, it may mean tiptoeing into options trading.
Once you know what type of investing you want to do, and what services and features each broker offers, it’ll be much easier to choose a broker.
That’s the “formula” we’ve used to determine our list of the seven best brokerages for beginners.
And here it is:
1. SoFi Invest
Best for: Best all-around brokerage for beginners.
Why SoFi Invest is a good broker for beginners:SoFi Invest takes top honors on our list because it’s designed specifically for beginning investors, especially new college graduates. SoFi is best known for student loan refinances, which is their original service. So, if you have student loans you need to refinance, you can take care of those on the same platform.
On the investment side, SoFi Invest offers SoFi Active Investing for investing in individual stocks, ETFs and even cryptocurrencies. You can begin trading with as little as $1, and participate in the SoFi community where you can exchange investment ideas with other members. And if you prefer professional investment management, you can have some or all your portfolio managed through SoFi Automated Investing. Best of all, your portfolio will be managed free of charge!
SoFi Active Invest Promotion
$5 to $1,000
in a free stock for users who sign up via mobile app!
SoFi Invest Basic Features:
Minimum Initial Investment: None, but minimum of $1 to begin investing.
Available accounts: Individual and joint taxable investment accounts, plus traditional, Roth and rollover IRAs, as well as Keogh plans.
Investments available: Stocks, ETFs and cryptocurrencies.
Fractional shares available?: Yes, through “Stock Bits”.
Fees: None on stocks and ETFs.
Customer support: Phone, email and live chat, Monday through Thursday, from 5:00 AM to 5:00 PM; Fridays, 5:00 AM to 4:00 PM, Pacific time.
SoFi Invest Pros:
No trading commissions charged on stocks and ETFs.
No minimum initial investment required to open an account.
You can take advantage of professionally managed investing through SoFi Automated Investing.
You can also refinance your student loans through SoFi, which is what the company is best known for.
Participation in the SoFi community, to swap ideas and investment strategies with other investors.
Access to certified financial planners at no additional cost.
SoFi Invest Cons:
Not all stocks are available for fractional investing through Stock Bits.
Why Charles Schwab is a good brokerage for beginners:Charles Schwab is the largest retail brokerage firm in the world, and there are plenty of good reasons for that. The company is good at everything! You can trade just about any type of investment, as well as take advantage of professional management through their robo-advisor, Charles Schwab, Intelligent Portfolios.
But the biggest advantage may be in the area of mutual funds. They offer more than 4,000 no-transaction-fee funds. It’s the perfect broker if you want to invest in mutual funds, along with other security types.
They also offer abundant investor tools, as well as research and educational materials. And their customer service – which is one of the best in the industry – is available on a 24/7 basis.
Charles Schwab Basic Features:
Minimum Initial Investment: None.
Available accounts: Joint and individual taxable investment accounts; trusts; traditional, Roth, rollover, SIMPLE, and SEP IRAs.
Why Fidelity is a good brokerage for beginners:Fidelity is the second-largest retail trading broker in the world and matches Charles Schwab in most categories. But where it’s particularly strong is ETFs with very low expense ratios. Since these fees, which are charged within each ETF, are assessed each year, lower fees means a higher net investment return.
Like Schwab, you can open a brokerage account with no money at all and take advantage of commission-free trading on many securities. And if you want a managed option, they offer Fidelity Go. The service is available with no advisory fee on the first $9,999 managed.
Fidelity Basic Features:
Minimum Initial Investment: None
Available accounts: Individual taxable investment accounts, and traditional, Roth and rollover IRAs.
Why Webull is a good brokerage for beginners:Options have become a popular alternative to investing directly in individual stocks. Webull rates as our best broker for options trading because not only do they charge no commission on option trades – which has become typical in the industry – but there’s no contract fee, either. That could make Webull the lowest-cost options broker in the industry.
There is a limitation we need to point out with Webull, however. Though this broker is a leading choice for options trades, and also popular for stocks and ETFs, it’s not an optimal platform for beginners. That’s because the broker is light on investor tools and support. But if you want to dive into options trading, Webull is a low-cost broker to do it with.
Webull Basic Features:
Minimum Initial Investment: None
Available accounts: Individual taxable investment accounts; traditional, Roth, and rollover IRAs.
Investments available: U.S. stocks, ETFs, options and cryptocurrencies.
Fractional shares available?: Yes
Fees: No commissions on stocks or ETFs. No commissions or contract fees on options.
Customer support: Email only.
No minimum balance requirement.
No trading fees on stocks for ETFs.
Not only are there no commissions on options, but there are no contract fees either.
Perfect broker for quick, easy trading.
Does not offer mutual funds or individual bonds.
Very limited investment tools, or research and educational resources.
Why Robinhood is a good brokerage for beginners: Much like Webull, Robinhood is a brokerage app that targets younger investors. They have a similar product offering but were one of the first brokerage platforms to offer trading in cryptocurrencies. It’s a very basic app designed for fast and easy trading of stocks, ETFs and options.
But we do have to caution that it is designed primarily for intermediate level investors and higher. In that regard, it offers little in the way of investment tools or customer support. However, it’s become a popular platform among younger investors looking to invest for the first time.
Robinhood Basic Features:
Minimum Initial Investment: None
Available accounts: Individual taxable investment accounts only.
Investments available: U.S. stocks, ETFs, options and cryptocurrencies. Limited trading of foreign securities through American depositary receipts (ADRs).
Why Public is a good brokerage for beginners: Most investment brokers now offer the capability to invest through fractional shares. But fractional shares are a primary aspect of the Public trading app. Public even refers to them as “Slices”.
Like Webull and Robinhood, Public is part of a growing number of investment apps offering simplified trading. But it also offers a social component, enabling you to participate in its community of traders. There, you can share investment strategies and tips.
They also offer dividend reinvestment on dividend paying stocks, completely free of charge.
Public Basic Features:
Minimum Initial Investment: None, but at least $1 required to invest.
Available accounts: Individual taxable accounts only.
Investments available: More than 5,000 individual US stocks and ETFs.
Fractional shares available?: Yes, referred to as “Slices”.
Fees: No trading fees.
Customer support: Phone or live chat, Monday through Friday, 9:00 PM to 5:00 PM.
Specializes in fractional shares.
Participate in the Public investment community.
Free dividend reinvesting on dividend paying stocks.
Best for: A robo-advisor that lets you choose your own investments.
Why M1 Finance Expert Pies is a good brokerage for beginners: Even though M1 Finance Expert Pies isn’t an investment broker, it does have similar capabilities. They use a system called “pies”, which are mini-portfolios. Each can hold up to 100 individual stocks or ETFs, and you can create an unlimited number of pies on the platform.
What makes M1 Finance Expert Pies unique is that it’s something of a hybrid between brokers and robo-advisors. It’s like a broker, in that you can choose the securities you’ll invest in. But it’s all robo-advisor from there. Once you create your pies, they’ll be automatically managed for you, with no annual advisory fee. You can’t trade individual stocks through the pies, but it’s an excellent platform to build your own portfolios while turning the management over to M1.
M1 Finance Expert Pies Basic Features:
Minimum Initial Investment: None to open your, but at least $100 to begin investing.
Available accounts: Joint and individual taxable investment accounts; traditional, Roth, rollover, and SEP IRAs.
Investments available: ETFs and individual stocks.
Fractional shares available?: Yes
Fees: No annual advisory fee and no trading commissions.
Customer support: Phone, Monday through Friday, 9:00 AM to 5:00 PM, Central time.
M1 Finance Expert Pies Pros:
No minimum initial investment required, though $100 is required to begin investing.
No advisory fee or trading fees.
You can choose the investments in your pies, then have them professionally managed by M1 Finance.
Choose from one of 80 prebuilt pies or create your own custom pies. Either way, your pie(s) will enjoy automated investment management.
M1 Finance Expert Pies Cons:
Investment options are limited to stocks and ETFs – no bonds or mutual funds are available.
Though you can choose individual stocks for your pies, they cannot be actively traded.
We’ve covered the basic criteria you should be looking for in one of the best brokerages for beginners. Use this list as a starting point, do your own investigating, then pick the broker you will work with.
But do it quickly – the clock is ticking. Time really is money in the investment universe, and the sooner you begin investing, the faster and bigger your portfolio will be.
Kevin Mercadante is a freelance professional web content writer for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has extensive backgrounds in both accounting and the mortgage industry. In fact, it was his career crash-and-burn from the mortgage business in 2008 that led him into blogging and freelance professional web content writing. Kevin and his family live in New Hampshire, after long stints in New Jersey and Georgia.