Every investor is different, with distinct financial objectives, timeframes, and needs. So it is critical to select a broker that best meets an individual's personal requirements. We have researched numerous brokers that are suitable for beginner investors, and while they appear quite similar on the surface, there are several differences. We will take a more in-depth look at the nuances of each platform and the amenities and products offered by each broker to help you decide which may best fit your specific needs.
We conducted hundreds of hours of comprehensive research, data analysis, and live broker platform demos to find the best brokerages for beginners. Charles Schwab is our best overall online broker for beginners because of its massive library of evergreen educational materials, unmatched live coaching and training programs, and top-tier customer service. Charles Schwab is just one of 26 online brokers that we evaluated based on 89 criteria, ease of use, costs, user experience, and additional features.
Best Online Brokers for Beginners of 2024
- Best Overall: Charles Schwab
- Best Broker for Investor Education: Charles Schwab
- Best Broker for Customer Service: Charles Schwab
- Best Broker for Ease of Trading Experience: E*TRADE
- Best Broker for Research: Merrill Edge
- Best for Young Investors: Fidelity
Best Overall: Charles Schwab
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0.65 per contract for options
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Why We Chose It
Best Overall
Charles Schwab serves investors of varying experience levels, from brand-new investors to very sophisticated ones. Schwab is a leader among discount brokers for its educational and research materials, extensive investing and trading tools, and the ease with which clients can open an account and start investing, with $0 account minimums and $0 commission trades. The company has also been able to integrate help centers across various user-friendly platforms.
Best Broker for Investor Education
Charles Schwab offers investors a vast array of investing and trading education and coaching, with the most frequent programming schedule in the industry. Not only does Schwab offer abundant educational materials, guides, and articles in its online magazine, "Onward," but the company also has Schwab Network, which is free live-streaming financial news throughout the day during market hours, plus a library of on-demand clips. Additionally, investors have access to Schwab Coaching, where they can view live webinars on various investing topics or listen to a podcast to gain further insight into the markets, financial planning, policy, or the economy.
Best for Customer Service
Charles Schwab shines in the area of customer service, providing a client-centered experience with 24/7 customer service support via telephone or online chat. Additionally, investors can visit their local Schwab branch or search the FAQs to find answers to commonly asked questions. Schwab also offers investors access to licensed brokers and advisors.
Pros & Cons
Pros
Low barriers to start investing
$0 account minimum, $0 commissions
User-friendly platforms
Offers wide range of educational investing materials
Excellent customer service
Cons
No fractional-share ETF trades
No direct investments in cryptocurrencies
Low interest rate for uninvested cash
Overview
Charles Schwab is one of the largest and most well-known full-service brokers in the industry, serving individual investors, registered investment advisors, and employers. Founded over 50 years ago, Schwab has been a leader in wealth management, continually innovating and growing, with a focus on the core company value of putting the client first. As part of its merger with TD Ameritrade in 2020, Charles Schwab relocated its corporate headquarters from San Francisco to Westlake, Texas.
While Charles Schwab has long been a major broker in the industry, its acquisition of TD Ameritrade has bolstered the company in the area of customer service. Schwab is so confident with its level of customer service offered via telephone, online chat, and in-person branch locations that it offers a satisfaction guarantee to all clients if they are not completely satisfied.
In addition to offering strengthened customer service, the TD Ameritrade acquisition also significantly increased the company’s ability to offer unparalleled investor education and a state-of-the-art trading platform. Schwab Trading powered by Ameritrade offers investors advanced trading simulators, along with powerful charting and analytical tools. Further, Schwab has been able to incorporate several hallmark elements of TD Ameritrade’s educational offerings, including a vast digital library of articles, coaching, videos, podcasts, live events, courses, and other helpful resources.
Charles Schwab’s ability to provide wealth management across the spectrum of investors, from new investors to sophisticated and high-net-worth investors, with a plethora of platforms and investing options has also earned the company the Best Overall title for beginner investors.
Best Broker for Ease of Trading Experience: E*TRADE
- Account Minimum: $0
- Fees: No commission for stock, ETF, and mutual fund trades. Options are $0.50-$0.65 per contract, depending on trading volume.
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Why We Chose It
E*TRADE offers investors an intuitive desktop and mobile experience. The company has been able to integrate a powerful suite of easy-to-use tools that support both passive and active traders and investors.
Pros & Cons
Pros
Intuitive trading platform
Wide range of assets in which to invest
Offer several account types
Excellent range of account amenities and tools
Strong educational resources, including market research and analysis
Cons
No option to invest in forex
Low interest rate for uninvested cash
No direct crypto investing
No direct purchase of fractional shares (only available through a DRIP, employee compensation plan, stock split, or corporate acquisition)
Overview
E*TRADE was founded in 1982 as TradePlus and became E*TRADE in 1991. Steadily growing until the early 2000s, when the housing bubble burst and E*TRADE suffered losses, the company never really regained its footing—naming several different CEOs over the years—until merging with Morgan Stanley in 2020. E*TRADE is headquartered in Arlington, Virginia, with parent company Morgan Stanley headquartered in New York City. E*TRADE’s investing platform has always focused on making investing easy and available to the masses, an area that Morgan Stanley seemingly underserved, making this acquisition a mutually beneficial business move.
E*TRADE has two robust trading platforms: E*TRADE and Power E*TRADE. E*TRADE is focused on any client wanting to simply invest and gain access to an all-inclusive experience of investing, banking, trading, and research. Power E*TRADE is designed with the active and advanced trader in mind. This type of investor will appreciate the speed and ease with which they can trade options, stocks, futures, and ETFs. This robust platform offers investors the amenities that allow them to get streaming quotes, track the markets, and perform technical analysis.
Best Broker for Research: Merrill Edge
- Account Minimums: $0
- Fees: $0 per stock trade. Options trades $0 per leg plus $0.65 per contract
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Why We Chose It
Merrill Lynch provides some of the most robust research in the industry, putting out proprietary reports on stocks, news, and market commentary, along with research from Morningstar and Lipper.
Pros & Cons
Pros
Strong proprietary and third-party research
$0 fees and $0 minimums for self-directed accounts
Partnership with Bank of America provides clients with additional products and features
Cons
No crypto, forex, or futures
No advanced platform capabilities
Overview
Merrill Lynch was founded in 1914 as an investment bank, becoming the largest brokerage in the county by the 1930s. The company grew and thrived until the housing crisis in the early 2000s brought growing scrutiny over questionable business practices and major liquidity issues. This made it necessary for Merrill Lynch to be sold to Bank of America in 2008. Although the merger came as a result of shoring up the company’s reputation and gaining access to liquidity at a time when many other banks were failing, Merrill’s partnership with Bank of America has been a positive one.
Since then, Merrill Lynch launched Merrill Edge in 2010, presenting investors with an all-in-one platform to manage their banking and brokerage needs. Clients can be self-directed, work with financial advisors, or access portfolio management through Merrill Edge Guided Investing. Proprietary research tools, such as Stock Story and Portfolio Story, provide an uncomplicated way to obtain key information about a particular stock, its performance, and how it might fit into your portfolio strategy. These tools truly make Merrill Lynch an industry stand-out in the area of easy-to-understand research.
Best for Young Investors: Fidelity
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trades
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Why We Chose It
Fidelity offers a youth account, Fidelity Youth, that is unique within the industry. Fidelity Youth is geared toward 13- to 17-year-olds and provides teens with the ability to save, spend, and invest their own money while keeping parents in the loop.
Pros & Cons
Pros
Extensive educational materials
Simple, intuitive platform
Distinctive accounts for young investors
Several account types to choose from
Fractional share investing is available
Cons
No futures or forex investing
Limited crypto investment options
Overview
Fidelity was founded in 1946 in Boston and has been headquartered there ever since. Founded on the idea of "take intelligent risks rather than follow the crowd," Fidelity has been able to continue to meet the evolving needs of its customers and implement innovative strategies to be competitive.In an industry full of innovative companies competing for the attention of a diverse universe of traders and investors, Fidelity is also Investopedia's choice best online broker overall because it delivers the most well-rounded product offering to suit the needs of nearly every investor.
One such innovation that makes Fidelity stand out is the company’s dedication to reaching teen investors to educate them on investing. Unlike custodial accounts, where the custodian makes the investment decisions on the minor's behalf, Youth accounts are teen-owned brokerage accounts, allowing the minor to make all the investment decisions. Besides the Fidelity Youth account, which caters to teens ages 13 to 17, cultivates interest in investing, and potentially helps Fidelity gain and retain lifelong clients, the company also has a strong social media presence on platforms such as TikTok and Discord, which are popular among younger generations.
The Bottom Line
Every investor is unique and has different financial goals, timelines, and requirements, so it is important to choose the broker that best fits the individual’s specific needs. We have taken a look at several companies that are all great for beginner investors, but they all have nuanced platforms and products that are aimed at accommodating slightly different audiences.
Investors looking for a myriad of educational resources and accessible customer service will certainly appreciate Charles Schwab, which provides 24/7 customer service, access to representatives at local branches, and a vast library of articles, podcasts, and live educational seminars. Those looking for an easy-to-use platform or active traders may choose E*TRADE, which has an intuitive platform that offers investors several account amenities and investment product lines. Merrill Lynch has been around for a while and truly shines when it comes to providing investors with both proprietary and external research options. Fidelity has created a niche in the area of providing investing education and account amenities to young investors, meeting them where they are with apps and social media, and providing account options that give teens the freedom to start investing while still keeping parents involved.
Compare the Best Online Brokers for Beginners
| Company | Account Minimum | Fee & Commissions | Educational Content |
|---|---|---|---|
| Charles Schwab | $0 | $0 for stock/ETF trades, $0.65 per contract for options trades | Articles, videos, webcasts, live branch events, podcasts |
| E*TRADE | $0 | $0 for stock, ETF, and mutual fund trades. $0.50-$0.65 per contract for options trades, depending on trading volume | Articles, videos, webinars, VLEs (virtual learning environment), in person |
| Merrill Edge | $0 | $0 for stock/ETF trades, options trades are $0 per leg plus $0.65 per contract | Articles, videos, webinars, online courses |
| Fidelity | $0 | $0 for stock/ETF trades, $0.65 per contract for options trades | Articles, videos, webinars, live events/seminars |
Everything You Need to Know About Brokerage Accounts
Trading vs. Investing
Generally, when people talk about investing, they are referring to the practice of purchasing assets to be held for a long period of time. Investors hold their assets long-term so that they may reach a retirement goal or their money can grow more quickly than it would in a standard savings account.
In contrast, trading involves buying and selling assets in a short period of time with the goal of making quick profits. Trading is typically seen as riskier than investing, and those new or inexperienced in trading should do so cautiously.
Before selecting an online broker to use, you'll need to ask yourself questions including:
- Am I a beginner? If so, you'll want to find a broker with solid education resources and ideally a paper trading account to practice in. You'll also want calculators and analysis tools to help you plan, invest, and manage your portfolio. The quality of tools and resources can vary widely by broker, but generally, the larger brokers have a much wider selection.
- How much can I afford to invest right now? Some brokers require a larger initial investment to open an account and access the trading platform. If you have a small amount of money, you'll want a broker with a low or $0 account minimum.
- Am I a trader or an investor? While investors can usually get away with a web platform or app, the complex needs of traders generally require a customizable desktop platform with all the bells and whistles.
- What kind of assets would I like to invest in? While most brokers offer the basics of stocks and exchange-traded funds (ETFs), you may find other seemingly standard offerings like bonds and options are far from universal. If you are interested in trading forex, futures, cryptocurrency, and so on, you will need to look to larger brokers with asset offerings far beyond the basics.
How to Pick a Brokerage
You’ll also need to decide the type of brokerage account you’ll want, the fees involved, and how involved you want to be, day-to-day, with your account.
Also consider your investment preferences, such as your need for research, tools, and portfolio tracking features, to ensure the broker you end up choosing will be a match.
You can read our guide to choosing the right online broker for additional assistance in choosing the right brokerage account.
What Is a Brokerage Account?
A brokerage account is an investment account held at a licensed brokerage firm. In a brokerage account, the account owner may put their money in a wide range of investment vehicles, such as stocks, bonds, mutual funds, ETFs, options, futures, crypto, or forex, depending on the products offered by the brokerage firm.
What Is the Best Online Broker for Beginners?
Overall, Charles Schwab is the best online broker for beginners. The company functions as a full-service broker and a discount broker, offering multiple platforms to fit the needs of its diverse client base. Investors looking for a vast library of educational investing resources, user-friendly platforms, or the ability to reach customer service or even meet with a financial advisor at a local branch will likely be satisfied with the amenities offered by Schwab.
How to Open a Brokerage Account?
Opening an online brokerage account is simple and can be done in a matter of minutes. Most investment brokers offer clients a secure website on which they can enter all of their personal information and even walk through a questionnaire regarding investing goals and preferences. In most cases, any documents or verification that are necessary can be uploaded through the website or dashboard. Once this has taken place, the investor simply needs to fund the account and then they are ready to invest.
Are Brokerage Accounts Insured?
The investments that a client makes in a brokerage account are not covered by insurance. Investing in any type of market-related investment vehicle comes with varying levels of risk, so there is no guarantee that an investor will make a profit or hedge against loss on a specific investment.
However, there are ways in which brokerage accounts are insured. Investors’ accounts are covered by Securities Investor Protection Corporation (SIPC) insurance if the broker-dealer files for bankruptcy. The SIPC will reimburse investors for up to $500,000, including $250,000 in cash, in the event that a firm becomes insolvent.
Terms Beginners Should Know
- Cash account: A cash account is a brokerage account in which a customer is required to pay the full amount for securities purchased, and buying on margin is prohibited. The Federal Reserve's Regulation T governs cash accounts and the purchase of securities on margin. This regulation gives investors two business days to pay for securities.
- Margin account: A margin account is a brokerage account in which the broker lends the customer cash to purchase stocks or other financial products. The loan in the account is collateralized by the securities purchased and cash, and comes with a periodic interest rate. Because the customer is investing with borrowed money, the customer is using leverage, which will magnify profits and losses for the customer.
- Retirement account: Brokerages offer all types of retirement accounts like traditional individual retirement accounts (IRAs), Roth IRAs, and 401(k)s.
Anyone who would like to get involved in the stock market should know some basic terminology:
- Stock: A stock (also known as "shares" or "equity") is a type of security that signifies proportionate ownership in the issuing corporation. This entitles the stockholder to that proportion of the corporation's assets and earnings.
- Price-to-earnings ratio: The price-to-earnings ratio (P/E ratio) is a ratio for valuing a company that measures its current share price relative to its earnings-per-share (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple.
- Market capitalization: Market capitalization, commonly referred to as "market cap," refers to the total dollar market value of a company's outstanding shares. Market cap is calculated by multiplying a company's outstanding shares by the current market price of one share.
- Dividend: A dividend is the distribution of reward from a portion of the company's earnings and is paid to a class of its shareholders.
- Exchange-traded fund (ETF): An exchange-traded fund (ETF) is a collection of securities—such as stocks—that typically tracks an underlying index.
- Bond: A bond is a fixed-income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower which includes the details of the loan and its payments.
- Mutual fund: A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains or income for the fund's investors.
- Limit order: A limit order is the use of a pre-specified price to buy or sell a security. For example, if a trader is looking to buy XYZ’s stock but has a limit of $14.50, they will only buy the stock at a price of $14.50 or lower. If the trader is looking to sell shares of XYZ’s stock with a $14.50 limit, the trader will not sell any shares until the price is $14.50 or higher.
- Market order: A market order is a request by an investor—usually made through a broker—to buy or sell a security at the best available price in the current market. It is widely considered the fastest and most reliable way to enter or exit a trade and provides the most likely method of getting in or out of a trade quickly. For many large-cap liquid stocks, market orders fill nearly instantaneously.
If you're interested in learning more about the stock market, you can check out our guide to investing.
How We Picked the Best Brokers for Beginners
Providing readers with unbiased, comprehensive reviews of online brokers and trading platforms is a top priority for Investopedia. We combined our industry research, subject matter expertise, and investor survey data to guide the research and weightings for our 2024 online broker awards. To collect the data, we sent a digital survey with 110 questions to each of the 26 companies we included in our rubric. Additionally, our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process spanned from Feb. 19 to March 19, 2024.
We then developed a proprietary model that scored each company to rate its performance across 11 major categories and 89 criteria to find the best online brokers and trading platforms. The score for each company’s overall star rating is a weighted average of the criteria in the following categories:
Additionally, during our 2024 research, many of the companies we reviewed gave us live demonstrations of their platforms and services via video conferencing methods and also granted our team of expert writers and editors access to live accounts so they could perform hands-on testing.
Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top online brokers and trading platforms.
Learn more abouthow we review online brokers.
