One of the first steps in investing in the stock market is deciding what your investing goals are and whether or not those goals are best accomplished through self-directed investing or having someone manage the process and decisions for you. Self-directed investing is accomplished through online brokerages. If you’re searching the market for the best online brokerages and have done any research at all, you already know that there are dozens of online brokers to consider. The abundance of options offers choice but can also make your decision more difficult.
How do you know which is the best online brokerage for you? Your investing philosophy, investment plan, and comfort level with self-directed investing are just a few of the main factors you must consider. Then there’s the tools offered, fees charged, customer service level and safety of the brokerages themselves to consider. Where, how and who I invest my money with matters to me and I am sure it’s important to you as well. I’ve put this page together as a resource of the best online brokerages for those exploring self-directed investing. I either have personal experience with or am very familiar with all of the brokerages listed here and consider them to be some of the best online brokers out there. You’ll find reviews of a few online brokerages here as well as links to brokers which you can use to explore their offerings yourself.
One of my favorite online brokerages is Scottrade. We have several different brokerage accounts through Scottrade because we enjoy their high quality of service. Scottrade is best known for its $7 stock trades, which is a very competitive rate when you look at most other established online brokerages. They have a wide array of investing options, especially if you’re looking to save for retirement through vehicles like a mutual fund or ETF.
One aspect that I really appreciate about Scottrade is its branch network, which boasts over 500 branch locations nationwide that you can visit to get your account serviced or simply speak with a representative face to face. For a more in-depth review, read my Scottrade review which provides a fuller look at their offerings. If you’re interested in opening an account with Scottrade make sure to check out what promotions they’re running so you can get rewarded for bringing them your business.
Etrade is likely the most well- known of the online brokerages listed on this page. Many know them for their talking baby commercials that have been running on TV for the last several years. Beyond that image though is a solid online brokerage to house your investments. While they fall behind in terms of commission at $9.99 a stock trade, they more than make up for with the tools and services they offer.
E-Trade offers a wide range of mutual funds, powerful investing tools, wonderful customer service and even access to foreign markets. If you’re in the need of a new online brokerage, then check out my more in depth Etrade review and you might find that they are someone you should go with. Also keep in mind that they’re always offering promotions so keep an eye on that as you might even qualify for some nice cash back in the process.
OptionsHouse is more of a newcomer on the online brokerage scene that has been around for roughly eight years. Do not take their youth as lacking in offerings as they can hold their own with virtually any online broker out there. If you’re an investor who does not need many bells and whistles, then OptionsHouse may be for you.
Optionshouse offers a clean and formidable platform without loading the site down with sales pitches and gimmicks. What they lack in mutual fund offerings, they more than make up for with dirt cheap commissions of $4.75 per stock trade and excellent customer service. If OptionsHouse sounds like a broker that would fit you, then check out my more in depth OptionsHouse review and you’re likely to see that they are someone you should consider. Like Etrade, OptionsHouse also offers several different promotional programs. You can check out my Optionshouse promotional code post to see the details on the different promotions they offer.
Like OptionsHouse, TradeKing is more of a newcomer to the online brokerage space. Don’t let their youth fool you though as they offer a wide array of services that make them worth considering for your investment needs. Thanks to their merger with Zecco in 2012 they now offer Forex trading. If you’ve never traded in Forex, but want to, offers a $50,000 virtual Forex trading account to get your feet wet. In addition to that, they have added social media and forums to their site which offers considerable real time support from their representatives as well as other real time traders. Having been regularly honored by Smart Money for being at the top of the game in terms of customer service, TradeKing is worth a look when it comes to investing platforms. Still need convincing? You can check out my TradeKing promotional code post for more info on promotions you could qualify for by bringing your business to them, not to mention their $4.95 commission.
Motif Investing is an alternative online brokerage. Instead of buying and selling individual stocks or mutual funds, you set up your own grouping of ETFs which create a “motif” and invest in that for a cost of $9.95 per motif. What if you don’t know what grouping of funds to select? Easy; they have pre-made ones for you to choose from. The beauty behind these motifs is they allow you to focus your investing in specific niches or specialized industries that you might not be able to otherwise, or at least as simply.
Motif Investing has very straightforward pricing and could be a great way to supplement your investing with a small amount of your portfolio. Motif does normally offer different promotions, so make sure to check out my Motif Investing promo code post to see what their current promotions are. If Motif sounds like it has an interesting approach, make sure to check out my full Motif Investing review.
Personal Capital isn’t an online brokerage, but they still very much belong on my list. What I like about Personal Capital is they make my life simpler to manage. You see, Personal Capital is like Mint with a twist of investing thrown in. How Personal Capital works is can you link all of your brokerage accounts, bank accounts, credit cards, etc. to your platform. This allows you to view all of your financial accounts in one location. You choose which accounts to link, and I use mine strictly for my investments.
Since I invest with multiple brokerages this makes managing them much simpler. Personal Capital has a great tool which analyzes investment expenses, as well as a 401(k) analyzer. The best part of Personal Capital…it’s completely free to use. If you’d like to learn more, check out my Personal Capital review to see how I use them to make my financial life simpler to manage.
As with OptionsHouse or OptionsXpress, TradeStation is a brokerage you’re going to want to consider if you’re a very active trader. If you consider yourself a buy and hold kind of investor, then TradeStation is likely not going to be for you due to the steep learning curve required to use their platform. That said, if you’re a very active trader and you’re looking for a solid brokerage, then TradeStation could be a great fit for you.
TradeStation has been in business for more than 30 years and are regularly awarded as best online platform for frequent traders and platform technology. If you’re interested in TradeStation, then make sure to read my TradeStation review to see how their competitive pricing and stellar platform could be a fit for you.
The first among the more alternative brokerages is Betterment. While the other brokerages listed are all similar in that you’ll be managing the investments on your own, Betterment offers more of a managed approach. If you consider yourself a beginner investor who either lacks the time or desire to manage your investments, but know that you need to start investing then Betterment might be a good option for you.
Betterment allows you to set up a direct transfer from your bank account, in the frequency of your choosing, and then you decide how your money is invested. They give you numerous funds to choose from, based off of your risk tolerance and it’s as easy as that. They handle the rebalancing, they handle the management. They have very minimal fees to manage the investment for you and as a result take care of all the heavy lifting related to investing so you can do other things. If you’d like to learn more about Betterment, make sure to check out my Betterment review to see how you can get up to six months commission free!