August 2023’s Top 7 Online Brokerages

August 2023's Top 7 Online Brokerages

The Best Online Brokerages: A Comprehensive Guide

Our experts answer readers’ investing questions and write unbiased product reviews (here’s how we assess investing products). Paid non-client promotion: In some cases, we receive a commission from our partners. Our opinions are always our own.

Investing can be a daunting task, but with the right brokerage account, it becomes more accessible and manageable. A brokerage account is like a checking account for your investments, providing a safe place to hold your investments and access to the investment markets. These accounts can hold various types of investments such as cash, stocks, bonds, ETFs, mutual funds, and more. For most investors, a long-term, passive investment strategy is ideal, focusing on building a diverse portfolio of low-cost index funds rather than picking individual stocks or engaging in riskier active trading tools.

When choosing an online brokerage, it’s essential to consider factors such as low fees, market access, financial tools, portfolio diversification, customer support, and research accessibility. To help you find the best online brokerage that suits your needs, our team of experts, including financial advisors, investing experts, and our own wealth-building reporter, have carefully evaluated and selected the top options for you.

Best Online Brokerages

Here are the best online brokerages, handpicked by our editors:

• Charles Schwab: Best online broker overall
• SoFi Invest: Best online brokerage for beginners
• Fidelity Investments: Best online brokerage for retirement savings
• TD Ameritrade: Best online brokerage for experienced investors
• Interactive Brokers: Best online brokerage for active traders
• Public Investing: Best online brokerage for mobile use
• Stockpile: Best online brokerage for kids and teens

Let’s dive into each of these options and find out what makes them stand out from the rest.

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Charles Schwab

Charles Schwab is a major discount brokerage and one of the largest investment management firms in the United States. It offers a wide range of brokerage accounts and products, making it suitable for almost any investor. Schwab stands out for its competitive accounts with no minimum balance requirements and no recurring fees. In late 2019, Schwab became one of the first major brokerage firms to lower commissions on stock and ETF trades to zero, making it a leader in low-cost pricing for retail investors.

The basic Schwab self-directed brokerage account is ideal for hands-on investors, providing access to a vast array of investment choices. For those seeking more assistance, Schwab offers the option to sign up for a managed Schwab Intelligent Portfolios account, also known as a robo-adviser, which doesn’t charge any fees. Additionally, Schwab offers fractional shares, its own family of mutual funds and ETFs, as well as alternative investment options like cryptocurrencies.

While Charles Schwab offers a great overall experience, it is worth noting that its rates for cash balances in your account are relatively low compared to some competitors. Additionally, there are extra costs for phone and broker-assisted trades.

SoFi Invest

SoFi Invest may not have the same storied history as some other brokerages, but it offers innovative features and a technology-forward experience that makes it ideal for newer investors. SoFi initially began as a student lender but expanded to include banking, investing, insurance, and other financial products. It charges almost no fees for its investment accounts, including self-directed and automated investing options with no recurring fees and a low $1 minimum to get started.

The self-directed “Active Investing” account at SoFi has no fees for trading stocks, ETFs, and even cryptocurrencies. Fractional shares, referred to as “Stock Bits,” are also available. SoFi offers its own exchange-traded funds that could be a suitable addition to your portfolio. The platform features an easy-to-navigate dashboard, collections of stocks and other investments to browse, and integrated links to educational resources.

On top of the investment features, SoFi customers also have access to banking and lending services, including free access to a personal finance data aggregator called SoFi Relay. They also receive free career coaching and financial planning sessions.

Keep in mind that SoFi does not offer investments like mutual funds or bonds, and fees on SoFi ETFs may be higher compared to some other ETFs.

Fidelity Investments

Fidelity is a leading brokerage that offers just about anything a typical investor might need. It provides a wide variety of account types, a long list of available investments, and competitive pricing with industry leaders. Fidelity stands out for its excellent retirement investment options and its selection of low-cost ETFs and mutual funds.

The basic brokerage account at Fidelity has no minimum balances or recurring fees, and it offers commission-free stock and ETF trades with fractional shares available. Fidelity also offers international investing in 25 foreign markets and foreign currency exchange between 16 different currencies. The platform provides access to tools like retirement calculators and various tax-advantaged retirement plans.

If you prefer passive investing in funds, Fidelity’s selection of low-cost ETFs and mutual funds is impressive. It even offers zero-expense ratio Fidelity Flex mutual funds. For investors with a long-term retirement focus, Fidelity is an excellent choice.

However, keep in mind that fees for mutual funds outside of the no-fee list can be relatively high, especially when compared to some competitors. Additionally, Fidelity charges higher margin rates.

TD Ameritrade

TD Ameritrade is a top choice for both new and experienced investors. Beginners will appreciate the simple online platform, while experienced investors will benefit from the advanced trading platform, thinkorswim, and other expert resources offered by TD Ameritrade. However, please note that TD Ameritrade was acquired by Charles Schwab on October 6, 2020, and the company is undergoing changes as a result.

TD Ameritrade offers a wide variety of brokerage accounts and access to nearly any kind of investment you could want. It stands out due to its extensive list of tradeable assets, including stocks, bonds, options, mutual funds, and even less common investments like futures, foreign exchange, and cryptocurrencies.

The thinkorswim platform provided by TD Ameritrade offers professional-level trading tools, advanced charting, and various order types. It also includes an embedded CNBC TV widget, providing real-time market updates. With access to NASDAQ Level I and Level II quotes, as well as real-time quotes for OPRA, AMEX, and NYSE, serious options and active traders will find the platform particularly useful.

It is important to note that while TD Ameritrade is still conducting business as usual, there may be changes and potential updates as the integration with Charles Schwab progresses. Additionally, mutual fund trades off of the no-transaction-fee list may have higher fees.

Interactive Brokers

Interactive Brokers is a top choice for active traders who trade at higher volumes and require tools optimized for their needs. It offers multiple pricing options depending on your level of trading activity and personal preferences. Interactive Brokers stands out for its competitive pricing, advanced trading platform, and the ability to access market data and execute trades with incredible speed.

The IBKR Lite account at Interactive Brokers provides commission-free stock and ETF trades, making it suitable for most investors. However, active traders may be interested in the IBKR Pro account, which offers additional features, access to market data, and automated trading through API integration.

With its tiered or fixed pricing models, Interactive Brokers caters to various trading styles. The fixed-rate plan allows trades starting at .005 cents per share with a $1 minimum per trade for US stocks and ETFs. The tiered pricing structure is best for traders with very large order sizes. Additionally, Interactive Brokers now offers cryptocurrency trading, with fees ranging from 0.12-0.18%.

It is worth noting that not all accounts and trades are free, so choosing the right account level for your investment goals and experience is crucial. IBKR Pro also charges a monthly fee if certain criteria are not met.

Public Investing

Public stands out among other brokerages with its mobile-first investment app, offering a unique and easy-to-navigate experience for both beginner and experienced investors. Public differentiates itself by allowing users to connect with other investors on the platform, creating a built-in social network for investors. You can follow others, chat about investment ideas, and even join group chats for live interaction.

The platform provides various themes that group stocks by industry or other categories, making it easier for investors to find companies that align with their investment strategy. Furthermore, Public uses a commission-free pricing model, making it suitable for those starting with smaller amounts of money. Fractional shares are also available for over 2,800 stocks and ETFs, making it accessible for investors who want to purchase stocks in round dollar amounts.

Public recently launched cryptocurrency trading, offering more than 25 digital assets for investors. However, it’s important to note that there is a markup fee for each cryptocurrency transaction. Additionally, Public now offers trading for alternative assets like art, collectibles, and NFTs, with a fee of 2.5% per transaction.

It is essential to consider that Public offers a more limited set of investments compared to some other platforms and may not be suitable for expert investors or active traders seeking a more comprehensive trading experience.

Stockpile

Stockpile is a brokerage uniquely designed for kids and teens, offering brokerage and custodial accounts with no recurring fees, no minimums, and no gift card fees. It provides a user-friendly platform that helps kids and teens understand the stock market by including familiar logos and companies in their portfolios. Stockpile also allows parents or family members to purchase gift cards redeemable for stock in Stockpile accounts, encouraging financial education and investment from an early age.

Parents and kids alike will appreciate the built-in educational resources provided by Stockpile, including “mini-lessons” that teach stock market basics. Additionally, the platform supports fractional shares, making it easy to invest in stocks with smaller amounts of money.

While Stockpile primarily focuses on stocks and ETFs (and recently launched cryptocurrency trading), it does not provide access to the full investment landscape and does not support other types of investments.

Other Considerations

In addition to the top online brokerages mentioned above, there are several other options worth considering:

• ETRADE: Known as the original online brokerage, ETRADE offers a good experience for active traders with competitive pricing.
• Webull: Webull is a newer brokerage that provides a no-commission model and a high-tech web platform suitable for more active traders.
• TradeStation: TradeStation offers powerful tools and resources for professional and institutional traders.
• Ally Invest: Ally Invest pairs well with Ally’s checking and savings accounts and offers low-cost options for beginner stock and ETF traders.
• Merrill Edge: Merrill Edge, a division of Bank of America, caters to loyal Bank of America customers but may be less exciting for those with smaller balances.
• Vanguard: Vanguard is known for its low-cost index funds and offers brokerage and managed portfolio products.
• Robinhood Investing: Robinhood pioneered the no-commission brokerage model but faced some controversies in recent times.
• tastytrade: tastytrade is an online trading platform primarily focused on options and futures trading.

When choosing the best online brokerage for you, it’s essential to consider factors such as your investment goals, account types, available investments, and costs. Take the time to carefully evaluate your investment style and preferences to find the brokerage that best suits your needs.

Methodology

In evaluating and selecting the best online brokerages, we rate investing products based on criteria such as pricing, account types, investment availability, platforms, and overall customer experience. We consulted a panel of investing experts, including financial advisors and our own wealth-building reporter, to gather insights and opinions. With their expertise and our comprehensive evaluation process, we have identified the top online brokerages to help you make informed investment decisions.

Conclusion

Finding the right online brokerage can make a significant difference in your investing journey. Whether you’re a beginner or an experienced investor, there is a brokerage that can cater to your needs. Charles Schwab, SoFi Invest, Fidelity Investments, TD Ameritrade, Interactive Brokers, Public Investing, and Stockpile are among the best online brokerages available today. Each of these options offers unique features and advantages, providing a range of choices for investors with various preferences and goals.

Remember to carefully consider your investment style, account types, available investments, and costs before making a decision. By choosing the best online brokerage for your needs, you can embark on your investment journey with confidence and ease. Happy investing!

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