online stockbrokers
Updated June 14, 2020

Best Online Brokerage Accounts of 2020

Stocks

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TD Ameritrade

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    TD Ameritrade: Best Overall
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    • Basics: In voting for TD Ameritrade as the number one online brokerage, we weren’t alone. In fact, the company is happy to brag about its No. 1 status across the board with stockbrokers.com, taking the top spot for education, platform and tools, and overall broker.
    • Pros: Beyond being No. 1, zero is the key number with this broker. It sets no account minimums, no commissions on ETFs,  stocks, or options, no annual fees, no account inactivity fees; and it offers more than 4,000 no-transaction-fee mutual funds to choose from. You can choose from more than 13,000 mutual funds total.
    • Cons: The only real downside to TD Ameritrade’s online brokerage accounts is that if you opt for broker-assisted trades, the cost can be pretty pricy, $25 per trade. 
    • Commissions

      $0

    • Transaction Fee–free Funds

      4,000+

    • Local Branches

      Yes

Ally Invest

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    Ally Invest: Best for Beginners
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    • Basics: Ally Invest is a fee-free online brokerage designed to make investing simple for anyone while also saving you money.
    • Pros: Opening an account is easy and takes only a few minutes online. It requires no account minimums and charges $0 commissions on ETFs, stocks, or options. Investors can choose from more than 8,000 mutual funds, and Ally maintains a robust online resource center that makes it easy to learn more about investing.
    • Cons: Ally doesn’t offer any transaction-fee-free mutual funds, and it doesn’t operate local branches you can pop into for face-to-face help.
    • Commissions

      $0

    • Transaction Fee–free Funds

      None

    • Local Branches

      No

Fidelity

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    Fidelity: Best for Low Trading Fees
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    • Basics: Fidelity isn’t the only online brokerage in this list to offer $0 commissions on ETFs, online stocks, and options trades. However, it is the first brokerage to introduce zero-expense-ratio target funds, in addition to removing all minimums from even its proprietary mutual funds.
    • Pros: Fidelity has long been a respected name in the world of online brokerages. It charges no account minimums, no account fees, and no commissions on stocks, ETFs, or options. Fidelity doesn’t even charge fees for account closures — something you can expect to pay around $50 for with other brokerages.
    • Cons: While Fidelity offers more than 3,700 mutual funds with no transaction fees, quite a few brokerages offer even more options.
    • Commissions

      $0

    • Transaction Fee–free Funds

      3,700+

    • Local Branches

      Yes

Merrill Edge

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    Merrill Edge: Best for Low Account Minimums
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    • Basics: You can open an online brokerage account through Merrill Edge without any deposit minimum, making this an easy choice for investors who are just starting out, don’t have much to invest, or want to test the waters before depositing all of their savings.
    • Pros: Aside from the $0 account minimum, you’ll enjoy more than 3,800 mutual funds to choose from, of which more than 3,200 are transaction-fee-free. Trades are only $2.95 per, though this fee is waived for Bank of America Preferred Rewards members. You’ll also pay no annual account fees.
    • Cons: Trade commissions are low, but the fees can still add up quickly if you are an active trader. Additionally, Merrill Edge charges $24.95 for domestic or international wires, $49.95 for account transfers, and $49.95 if you ever want to close your account.
    • Commissions

      $2.95 but can be waived

    • Transaction Fee-free Funds

      3,200+

    • Local Branches

      Yes

Charles Schwab

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    Charles Schwab: Best for Plenty of Investment Choices
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    • Basics: A respected name in banking and investing, Charles Schwab brokerage accounts are designed for discerning investors. The free accounts come with 24/7 customer service support, more than 300 brick-and-mortar locations, and $0 commissions.
    • Pros: Schwab has made many changes in the last couple of years. Now, you can enjoy $0 account minimums, $0 commissions on trades, $0 annual account fees, and a slew of investments to choose from to design the perfect portfolio.
    • Cons: Most investors expect to pay a fee for broker-directed trades, but Charles Schwab also charges $5 for automated phone trading, which some customers might not expect to encounter.
    • Commissions

      $0

    • Transaction Fee-free Funds

      3,000+

    • Local Branches

      Yes

E-Trade

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    E-Trade: Best for Active Trading
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    • Basics: Do you like to buy and sell, rather than let your portfolio sit stagnant? E-Trade might be right for you. With $0 commissions, no account fees or minimums, and a massive selection of investments to choose from, the site helps you build the portfolio you want.
    • Pros: If you enjoy actively trading with $0 commissions, you’ll appreciate what E-Trade has to offer. The platform offers a wide variety of investments — including more than 9,000 mutual funds, about half of which are transaction-fee-free — with a robust mobile app that makes trading easier than ever.
    • Cons: While this brokerage offers three free online trading platforms and mobile apps, you might find it a bit less user-friendly than competitors.
    • Commissions

      $0

    • Transaction Fee-free Funds

      4,400+

    • Local Branches

      Yes

Vanguard

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    Vanguard: Best for ETF Investors
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    • Basics: Want to buy and sell some of the market’s best ETFs with low expense ratios and without worrying about commissions or fees? Consider Vanguard.
    • Pros: The brokerage offers a large selection of mutual funds, with Vanguard’s own being some of the better performing and lower-cost available. There are no account minimums to get started.
    • Cons: Unlike many of the online brokerages on this list, Vanguard does charge for trading — $7. You’ll also pay a $20 annual fee on your brokerage account.
    • Commissions

      $7 on stocks

    • Transaction Fee-free Funds

      3,100+

    • Local Branches

      No

Robinhood

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    Robinhood: Best for Educating Yourself
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    • Basics: A newer stock-trading app on the scene, Robinhood was founded in 2013. In only a few years, though, this commission-free platform has already grown to be one of the more respected names in the space.
    • Pros: Robinhood offers a streamlined, technology-driven brokerage app that makes it easy to build a portfolio, see where you stand, and learn more about investing along the way. This brokerage is commission-free, doesn’t have account minimums, and won’t charge annual fees or fees for inactive accounts.
    • Cons: Robinhood is app-based, so you won’t find any local branches to pop into, and its customer service options are limited. The platform does not support mutual funds, bonds, or retirement accounts, limiting your portfolio to stocks and ETFs.
    • Commissions

      N/A

    • Transaction Fee-free Funds

      N/A

    • Local Branches

      No

Best Online Brokerage Accounts Compared

Commissions Transaction Fee–free Funds Available Mobile App Local Branches Sign Up

$0

Yes, 4,000+

Yes

Yes

$0

No

Yes

No

$0

Yes, 3,700+

Yes

Yes

$2.95 but can be waived

Yes, 3,200+

Yes

Yes

$0

Yes, 3,000+

Yes

Yes

$0

Yes, 4,400+

Yes

Yes

$7 on stocks

Yes, 3,100+

Yes

No

N/A

N/A

Yes

No

Everything You Need to Know About Online Brokerages

What Is a Broker?

A “stock broker” may refer to either a person or a firm who is licensed to buy or sell within the stock market on your behalf, helping you to build or adjust an investment portfolio as you see fit.

These stock market exchanges aren’t anything like what you see in old movies, with brokers answering calls on the New York Stock Exchange floor and yelling transactions at one another. Instead, most stock market transactions are conducted online, brokers buying or selling with a few simple clicks.

Stock brokers can fall into one of two categories:

  • Full-service brokers.
  • Online discount brokers.

Full-Service Brokers

Full-service brokers are  a more complete brokerage. These providers will both facilitate your portfolio transactions, and advise you on specific stocks, keep an eye out for relevant activity in the market, and even create a long-term investment strategy for you.

Full-service brokers are the pricier of the two broker types. In many cases, they may also require a minimum portfolio value to take you on as a client.

Online Brokerages

While full-service brokers are generally humans — or a group of humans — assigned to help you with your investment transactions, online brokers are platform- or website-based.

You may find an online broker that also offers wealth management services with a live adviser, the benefit of online brokerages is they are more affordable because they are digital.

Online brokers don’t typically provide investment advice, nor will they let you know when your favorite stock has dropped in price. Instead, their concerns primarily lie with buying and selling the investments you choose.

If you need recommendations or portfolio management (such as rebalancing), you will need to either find an online brokerage offering robo-adviser or wealth advisory services, or hire a full-service broker to help.

Why Use an Online Broker?

The idea of a dedicated stock broker may sound great, but for many of us, an online broker is a better choice.

A full-service broker is not usually worth the expense if you aren’t investing large sums of money.

Full-service providers can charge 1% to 2% (or more) of assets under management, meaning thousands of dollars a year in management fees alone for many investors. In contrast, online brokers are typically free, only charging for trades conducted.

Additionally, the per-trade commissions charged by full-service brokers are often significantly higher than those charged by online brokers. Whereas an online broker may charge somewhere in the neighborhood of $3 to $7 per trade (if they’re not free), a full-service brokerage may charge hundreds of dollars per transaction.

Lastly, online brokerages won’t charge you for services you don’t need. If you aren’t investing large sums of money, are opting for target date funds, or simply know what you want to do with your portfolio, a full-service brokerage would likely waste your money.

With an online brokerage, you’ll only pay for what you want: specific purchase or sale transactions.

Online Brokerage vs. Robo-Adviser

Some online brokerage companies also offer another automated investment product, called a robo-adviser. These platforms make certain trades on your behalf and configure and rebalance your portfolio over time.

Robo-advisers typically charge a flat fee for services, either as a percentage of assets under management, or as a monthly or annual rate. They don’t charge a fee per trade, however, and some of them are even free.

With an online brokerage, you will initiate transactions and be responsible for the allocation of your portfolio. With a robo-adviser, you’ll take a more hands-off approach as these platforms manage and rebalance a portfolio for you.

A robo-adviser may not appeal to you if you’re interested in active management. Very few robo-advisers allow you to buy or sell specific stocks that interest you.

Types of Investments Your Online Brokerage Can Manage

You can use an online brokerage to manage any investments you’d like in your portfolio. This includes:

  • ETFs.
  • Mutual funds.
  • Stocks.
  • Bonds.
  • Index funds.

Some online brokerages may also offer options, futures, cash accounts, and even access to safer, short-term investments like CDs.

How Much Money Do You Need to Start Investing?

Online brokerages usually have much lower investment minimums than full-service brokers. In fact, many online brokers have no account minimums, so anyone can open an account and get the ball rolling on investing.

Typically, you can begin investing with around $500 to $1,000. This will grant you access to most mutual funds, and you can continue adding to your portfolio with regular contributions. It’s not necessarily about how much you have when you start investing — just start as early as you can and commit to saving whenever possible.

Many brokerages also offer a cash account, which you will use to buy and sell investments. Some online brokers offer competitive interest rates on these cash accounts, helping your money grow more even before you invest.

3 Things to Keep in Mind If You Use an Online Brokerage

Investing with an online brokerage is, for many investors, an excellent decision. However, there are a few things you will need to remember along the way.

Online Brokerages Are Not Automated

These platforms will not automatically invest your monthly contributions, nor will they rebalance your portfolio for you. You will need to do the research into your investments and portfolio allocations over time, and make the changes yourself through your brokerage.

Online Brokerages Aren’t Proactive

Online brokerages aren’t going to offer you personalized investment advice, like a full-service broker would. Sure, they often have excellent resource centers and they do a ton of research into specific investments so that you can make informed decisions.

However, they won’t call you up with recommendations when the market shifts, nor will they remind you when it’s time to rebalance like a robo-adviser would.

Online brokerages won’t keep you on track when times get tough.

It doesn’t matter when, what, or how you invest. If you invest for a while, you’re going to watch your portfolio dip at times. Stocks will take a dive, the market as a whole will go down… you never know what is going to happen.

As long as you know this and plan ahead for the long game, you should be OK. However, if you’re inclined to jump ship as soon as your investments lose value, an online brokerage might not be enough. It won’t be there to convince you to ride out a dip in the markets or keep you on track with your investing goals when life threatens to get in the way.

That confident voice on the other end of the line might be what you need to avoid a critical financial error.

Finding the Right Online Brokerage

To pick the brokerage that’s right for you, first know what kind of investor you are going to be. The online brokerage that’s right for a very active trader is not necessarily the right one for a long-term-mutual-fund investor.

Also pay attention to the fees and requirements a platform includes. If you want to get started with $100, don’t pick a brokerage with a $1,000 account minimum. If you’re planning to buy and sell stocks throughout the year in an attempt to time the market, don’t pick one that charges $7 per trade.

Take some time to browse each brokerage’s website and go through the wealth of knowledge provided there. You will not only learn how that company will help grow your investment portfolio, but you might also learn something new about investing as a whole.

Stephanie Colestock

Stephanie Colestock is a personal finance expert and writer who enjoys teaching people how to be financially independent and confident about their money choices, regardless of obstacles in their path (such as the crippling student loan debt she once held). Stephanie graduated from Baylor University, and is currently working toward her CFP certification. Her work can be seen on sites such as Forbes, Dough Roller, and Johnny Jet, among many others.

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