One of the biggest hurdles beginning investors must overcome is option overload. With countless investment services, websites and apps to choose from – not to mention the abundance of investments themselves – getting started with investing can feel overwhelming.
An online brokerage is an easy place to start. This is a digital platform that allows you to buy and sell stocks, mutual funds, exchange-traded funds and other investments using a website or app on your phone. Things to consider when choosing an online broker include any fees, or commissions, charged to execute trades, the broker’s menu of investment offerings, the minimum investment required to open an account and educational offerings that allow you to brush up on the basics or learn new trading strategies.
To help you find the right fit for your financial situation and goals, here are five of the best investment websites for beginners:
Among the major brokers, Charles Schwab offers some of the most affordable platforms for automated investment management. Investors answer questions about financial goals, risk tolerance and investment preferences, and the firm’s robo advisor, Schwab Intelligent Portfolios, can create, monitor and rebalance a diversified portfolio from a set of about 50 ETFs covering asset classes including stocks, bonds and real estate. Opening this type of account requires a $5,000 minimum investment, but investors don’t pay commissions or an advisory fee.
Schwab offers commission-free trading on more than 4,000 ETFs and thousands of no-transaction-fee proprietary mutual funds. There’s no minimum deposit required to open a standard brokerage account, so getting started couldn’t be cheaper.
While the educational materials available at Schwab may have been lacking in the past, the finance giant grew even larger when it acquired TD Ameritrade, along with its robust catalog of educational content. Through the integration of the two firms, Schwab investors gained access to a host of webinars, videos and a simulated trading platform on which investors can practice trading strategies. Through Schwab Coaching, investors can also participate in interactive webcasts and workshops on a range of financial topics with education coaches.
Fidelity Investments also has a solid educational platform, but where it really shines is investment research. Fidelity’s suite of high-quality research from in-house and external analysts can be advantageous in generating investing ideas, understanding market sectors and exploring trending topics. It also offers plenty of free tools and calculators that make it easy for beginning investors to find the best-fit investments.
Fidelity also ranks among the lowest-cost brokers, with no account minimums and no commissions on U.S. stock, ETF and options trades, as well as thousands of mutual funds that you can buy and sell with no transaction fee. The broker also offers a set of proprietary expense-ratio-free mutual funds, called Fidelity Zero funds.
The brokerage’s robo advisor, Fidelity Go, doesn’t require a minimum investment to open an account, but you need at least $10 before it will start investing for you. Advisory fees are waived if your balance is less than $25,000. When your account reaches $25,000, fees are 0.35% per year, but you’ll effectively have a hybrid robo advisor with access to unlimited one-on-one coaching calls.
Vanguard, which pioneered low-cost index investing, is a favorite of beginning investors looking to save money. The brokerage offers more than 200 index mutual funds and ETFs across U.S. and international stock and bond markets. Many of these funds follow similar strategies but come in different formats (mutual funds and ETFs), and Vanguard’s broader lineup includes more than 120 actively managed funds.
Vanguard is a proponent of long-term investing, which doesn’t need to be complicated, costly or time-consuming. It offers a wealth of calculators and tools, including a portfolio tester that simulates how changes to your portfolio will affect your asset mix.
You can take a DIY approach or use the firm’s Digital Advisor, which requires a $100 minimum investment and charges a 0.15% net advisory fee that is waived for the first 90 days.
Although cryptocurrency has historically been absent from Vanguard’s menu of investments, the firm now allows trading of select third-party cryptocurrency ETFs and mutual funds through a Vanguard brokerage account, but it does not offer its own crypto products.
The E-Trade platform rose from good to great following its acquisition by Morgan Stanley in 2020. Investors now get the best of both brokerages: E-Trade’s strong digital offering combined with access to banking, in-person support and financial advisors at Morgan Stanley locations.
E-Trade caters to investors of all levels, from beginners to advanced traders, making it easy to grow as investing needs evolve. The brokerage offers commission-free trades on U.S.-listed stocks, ETFs and many mutual funds.
New customers can take advantage of promotional offers, which currently include bonuses of up to around $1,500 for brokerage accounts. That said, it’s generally better to choose a broker based on your needs – not just promotional incentives.
M1 Finance doesn’t often top lists of online brokers, but it shines in its simplicity of use for beginning investors.
This online broker guides you to thinking of your portfolio as a “pie,” with each investment representing one slice of the whole. “Assign a target percentage for each slice – then automate trading that intelligently adjusts to market performance,” touts M1’s website. The broker also offers pre-made model portfolios.
M1 does not charge commissions for standard trades in self-directed accounts. While trading is commission-free, the platform charges $3 per month for accounts with balances of less than $10,000, though the fee is waived if your balance hits $10,000 or more during the billing cycle or if you meet other conditions like having an active personal loan with M1.
