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In the competition for customers, investment brokers are competing with one another fiercely. Not only are they offering many of the same services, including trading tools and managed investment options, but they’re also closely matching one another in fees – which are now usually zero.
Choosing the best online broker for stock trading will really depend on what type of trading you plan to do.
Some firms are more general in their investment approach. Others are niche-oriented, focused on options trading or more advanced investing. You can choose the broker that best matches your investment style.
Though we have declared two co-winners as the best online brokers, we’re providing a list of the 11 best online brokers for stock trading, without providing a specific ranking within the group. Each is good at something specific, so we’ll leave it to you to choose which will work best for you.
It would be tempting to assign a numeric rank to all the major brokerage firms available. And while we have put two at the top of the list, it’s impossible to come up with a concise ranking for each.
That’s because there’s been an increasing standardization in the services and fee structures offered by most brokers. For example, while two or three years ago, no-fee trading was a novelty offered by only one or two firms, it’s increasingly becoming standard practice by all brokers.
What might be the best brokerage firm for one person may be completely unsatisfactory for another. It really comes down to the various nuances that make each firm specialize in a certain niche. If you know what your niche is, you’ll have found your top broker.
Here is our list of the top 11 brokerage firms, in no special order:
- Charles Schwab
- Ally Invest
- Merrill Edge
- TD Ameritrade
- M1 Finance
- Interactive Brokers
To help you decide which broker will be best for you, the table below summarizes the highlights of each of the 11 brokers, and what each specializes in:
Which Is The Best Online Brokerage for Beginners?
How about a tie between Charles Schwab and Fidelity? Not only are the two the largest investment brokerage firms in the industry – which provides the stability beginners need – but there’s a long list of tangible benefits to make any new investor happy.
Let’s start with this – neither Fidelity nor Charles Schwab require an initial investment minimum. Though you will certainly need to have funds in your account to begin investing, you can open your account with no money at all, then make periodic additions until you have enough funds to begin investing.
Then there’s the fact that neither firm charges fees on trading of stocks, exchange traded funds (ETFs) or options. Since beginning investors will likely start out with small portfolios – maybe just a few hundred dollars – the last thing they need are trading fees eating into their accounts and their profits.
But equally important, both platforms provide round-the-clock customer service. You can reach a live representative by phone or live chat, and if you prefer face-to-face, each company has an extensive network of local branch offices.
But let’s not stop there. Charles Schwab and Fidelity offer a wealth of trading tools and investment research to help beginning investors up their game and get the knowledge needed to become experienced investors.
The Best Online Brokers Offer Robo-Advisors
Still another benefit offered by both are managed portfolio options. Each platform offers its own robo-advisor option. Robo-advisors are online, automated investment platforms that provide full portfolio management at a very low fee. In fact, Charles Schwab charges no management fee at all on their robo-advisor, Charles Schwab Intelligent Portfolios.
When you invest through a robo-advisor, your only “job” is to provide funds for investing. The robo-advisor will design and manage your portfolio, which will include periodic rebalancing and reinvesting of dividends.
With a robo-advisor option, both Charles Schwab and Fidelity offer beginning investors an opportunity to have some or all their portfolio professionally managed. You can even choose to have some of your money managed through the robo-advisor, while you cut your teeth on self-directed trading with the rest of your portfolio.
The point is, both Charles Schwab and Fidelity give you that option, as well as everything else you’ll need to begin investing as a new investor.
Who Is The Cheapest Online Brokerage?
In this category, we have a nine way tie! That is, nine of the 11 brokers we’ve included on our list of the best online brokers charge no fees for trading of stocks, ETFs, options, and often mutual funds.
The nine cheapest brokers are as follows:
- M1 Finance
- Charles Schwab
- Ally Invest
- TD Ameritrade
- Interactive Brokers
The only two brokers missing from the list are Vanguard and Merrill Edge. But Vanguard is primarily a platform for fund investors. They offer more than 1,800 ETFs and over 3,000 mutual funds commission-free. So, if you primarily invest in funds, Vanguard will be your go-to broker.
Merrill Edge charges a fee of $2.95 per trade on stocks, ETFs and options. But that fee will be waived if you’re a Bank of America Preferred Rewards Client.
The moral of the story is that fees are going away quickly in the investment brokerage industry. We can thank the Internet for that, since it’s automated the entire process, and forced the various major brokerage firms to compete with one another for the lowest fees.
Put another way, fees may no longer be a major determining criteria between brokers. You’ll need to look more closely at the features, benefits and tools each platform provides, as well as its specialized niches to choose the best online broker for you.
What Online Broker Website Is Best?
We’re going to declare another tie here, this time between Fidelity and Charles Schwab. That’s because while neither may be the absolute leader in any single category (except for beginner investing), each is near the top in virtually every category. And the proof is that the two are the largest diversified investment brokers in the industry.
Fidelity offers no minimum account balance, and $0 for trades on stocks, ETFs and options. They also offer the ability to trade in just about any investment available. Fidelity enables you to invest in more than 10,000 mutual funds, which includes Fidelity’s own funds, of which it’s one of the largest providers in the world.
One of the major factors making it one of the two best all-around investment platforms is its award-winning customer service. Not only do they offer 24/7 live customer service by phone, but they also have more than 150 local branches in major metropolitan areas around the country. And apart from customer service, the investment tools and research they offer is second to none in the industry.
Like many of the large investment firms, Fidelity also offers managed portfolio options. This includes their Fidelity Go robo-advisor, and Fidelity Wealth Management Advisory for larger portfolios, among other managed options. Simply put, Fidelity is an outstanding platform to use if you’re a beginning investor or a seasoned veteran.
Charles Schwab and Fidelity are often mentioned in the same sentence, and there’s good reason for that. As the two largest brokerage firms in the industry (Schwab is THE largest), they’re close competitors, offering largely the same services and benefits. Like Fidelity, Schwab charges no trading commissions on stocks, ETFs and options, and also offers thousands of no-load, no transaction fee mutual funds.
Customer service is available on a 24/7 basis by both phone and live chat, and the company has more than 300 local branch offices if you prefer face-to-face contact. It also has an excellent suite of trading tools and investment research that will benefit investors at every level.
If you prefer to have your portfolio professionally managed, either partially or entirely, you can take advantage of their no-fee robo-advisor, Charles Schwab Intelligent Portfolios. But for larger investors, seeking a higher level of service, they also offer Schwab Private Client and the Schwab Advisor Network.
Like Fidelity, Charles Schwab has everything needed for a beginner or a veteran investor, and everyone in between.
Whether you choose Fidelity or Charles Schwab, you can’t go wrong with either broker.