Choosing the best online brokerage can be like finding a needle in a haystack. There are many to choose from – hundreds, if not thousands. If you are new to investing in the stock market or want to move to a different online broker this can be overwhelming. I used to work as a stockbroker and it overwhelms me at times.
It doesn’t have to be that way.
I get asked on a regular basis who is the best when it comes to online brokerages. My answer is almost always the same – what are you looking for and what are your needs? The answer to those questions will help narrow down what brokers to consider. It will help you get past their sales tactics to truly see what services they offer and what fees they charge to see if they’re the right broker for your needs.
With that in mind, I’ve compiled this list of the best online brokers. I’ve broken it up into two sections. The first is for the traditional brokerages where you do it yourself. The second section is for robo-advisors, those that help manage your investments.
Some of the links below are affiliate links. If you click on them you’ll be taken to a third-party site. If you choose to open an account the site will receive a small commission as compensation. This will not affect your pricing or anything else. Thank you for your support of the site.
Overwhelmed by which is the best online brokerage to choose? Just provide some of the details of what you’re looking for and I’ll point you in the right direction. Click here to contact me.
Traditional Online Brokers
Are you a DIY investor? Do you like to manage your own investments without oversight from someone else? A traditional online broker is for you. Here are some of the best traditional online brokerages.
E*TRADE is one of the more well known 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. Behind the clever ads is a solid online brokerage to house your investments. While they fall behind in terms of commission at $6.95 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 access to foreign markets. If you’re in the need of a new online brokerage, then check out my more in depth E*TRADE review. Also keep in mind that they’re always offering promotions so keep an eye on that as you might even qualify for up to $600 for bringing them your business.
Ally Invest (formerly known as TradeKing) is becoming a real player in the online brokerage space. Thanks to their merger with Zecco in 2012 they now offer Forex trading. If you’ve never traded in Forex, but want to, Ally Invest offers a $50,000 virtual Forex trading account to get your feet wet. They now also offer advisory service, known as Ally Invest advisors, if you want more of a hands off approach to your investing. 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, Ally is worth a look when it comes to investing platforms. Still need convincing? You can check out my in-depth Ally Invest review to learn more about the cheapest, per price, broker in the industry.
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 being said, if you’re an 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 is regularly recognized as having the 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.
Vanguard is the preeminent online brokerage. Many consider them to be among the best, and I’m one of them. Why is Vanguard so well regarded? It’s quite simple. They hate fees and they have a long-term view to investing. The two ideals, together, are vital to have when you invest.
Vanguard specializes in low-cost index funds, which helps you keep pace with the stock market – not chase gains. This may not be sexy or exciting, though investing in the stock market should be neither. Admittedly, Vanguard is not for everyone. Their minimums to start investing are a little higher – at $1,000 or $3,000 depending on the fund. That notwithstanding, they’re a solid brokerage to consider. Check out my Vanguard review to learn more about what they have to offer.
Do you want a hands off approach to investing? Do you feel you’d benefit from guidance over investment decisions? Robo-advisors offer such service, for a fraction of the cost of a traditional financial advisor. Here are some of the best automated retirement programs.
The first among the more alternative brokerages is Betterment. Betterment is one of the larger players in the robo-advisor space managing over $2.5 billion in investor assets. If you consider yourself a beginner investor who either lacks the time or desire to manage your investments, but know 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 lets you decide how to invest your money. They give you numerous funds to choose from, based on 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!
Motif Investing is a quasi robo-advisor. 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 over 150 pre-made ones for you to choose from. The beauty behind these motifs is that 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 for additional details.
Personal Capital isn’t an online brokerage, but they still very much belong on my list. What I like about Personal Capital is their ability to make life simpler to manage. You see, Personal Capital is like Mint with a twist of investing thrown in for good measure. The platform lets you link all of your brokerage accounts, bank accounts, credit cards, etc. to your Personal Capital account. 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 is that 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.
Wealthfront is the major competitor to Betterment. In fact, Wealthfront and Betterment share a lot of similarities, which you can read about in my Betterment vs Wealthfront post. They manage your investments for you through an algorithmic approach to investing. Through roughly a dozen different Vanguard and Schwab index funds, Wealthfront constructs a portfolio that is optimized for your needs.
Wealthfront stands out in one specific area – their advisory investment committee. The committee is led by Burton Malkiel, author of ‘A Random Walk Down Wall Street,’ so you know they have a solid approach to investing. Like Betterment, Wealthfront manages your rebalancing, mitigates your tax implications and is light in fees. In fact, Frugal Rules readers can get their first $15,000 managed for free with Betterment. For a further breakdown, read my Wealthfront review for additional details.
I hope you’ve found what you’re looking for in an online brokerage (or at least a good place to start). If you’re still not sure where to begin, I can help. Click here to contact me, and I’ll help narrow down your options.