What is a Stockbroker?

A stockbroker is someone that buys and sells stocks on behalf of clients. While this only revolved around stocks of companies previously, stockbrokers nowadays cover a wide variety of asset classes. There are various kinds of brokerages and brokerage accounts. Traditionally, stockbrokers used to double as investment advisors. Not only would they perform the trades for their clients, but they would also guide them on what to purchase. Nowadays, the advent of discount brokerages has changed all that. Many stockbrokers no longer offer investment advice. Instead, they just execute the trades on behalf of their clients. Another huge shift that has occurred is the switch to online trading. Instead of placing your orders by phone, you can now trade instantly through your computer. The automation of the trading process has led to some of the lowest trading fees in history.

What Kind of Online Brokerage Account Should I Choose?

the type of account that you should choose should depend on your needs and investment goals. One important thing to remember is that you do not need to be constricted to a single account type. If you want, you can have a standard brokerage account along with a retirement account. How you divide your money between them is entirely up to you. One important thing to remember is that if you have a large amount of capital in your hand and want to open up multiple accounts, it is better to utilize multiple brokerages as opposed to a single one. This is because SIPC insurance only provides limited protection that applies to all your accounts at a particular brokerage. For example, if you have two different accounts with a total of $1 million at the same brokerage, you will only be covered for up to $500,000 in case the brokerage fails. Having that amount across two brokerages will cover you for the entire amount.

What is Micro-Investing?

Micro-Investing is a term that has become quite popular in recent times. Essentially, micro-investing allows you to purchase fractions of shares, thereby allowing you to invest in tiny increments. Previously, if a share was worth $100, then you would have no choice but to spend $100 on one share, $200 on two shares, and so on…

How do Stockbrokers Compare?

There are a ton of ways to compare different stockbrokers. However, as a beginner, there are three specific things that you need to be aware of. They are: Ease of use Brokerage fees Educational Tools

How do I Start Investing with Little Money?

One of the central concepts to investing is diversification. Diversification is based on the fact that no matter how sure you are about an investment; it can still fail. As such, it is best to spread your risk by investing in multiple assets and reducing your exposure to each of them. If you only have access to a little bit of money, then diversification can be difficult. A good alternative to that are various funds that let you expose yourself to many stocks at once. For example, an S&P 500 index fund would allow you to invest in 500 different stocks, even if you only have $100 to invest. If you don’t like the idea of that, then it is best to diversify across multiple industries that are not related to each other. For example, let’s assume you are invested in airlines but are worried about a possible rise in oil prices. The easiest way to hedge your risk would be by purchasing oil production companies, as their price would rise in this case. There are numerous advanced financial instruments to manage your risk as well, but you should stay away from them as a beginner. Alternatively, you can also micro-invest i.e. purchase fractional shares. We explore micro-investing in detail towards the end of the guide.

What Should I Invest in as a Beginner?

The world of investing is incredibly tricky. It is quite easy to get lost looking up futures, options, and other alternative investments. However, as a beginner, you should stick to the basics. You should have two goals when investing as a beginner: Not to lose my money. Learn as much about investing as possible. To achieve this, it is best if you only invest in stocks with low volatility and large caps. On top of that, it is best to have some sort of diversification. Whether you achieve that with stocks or funds is up to you. Make sure to avoid high-risk, high-return assets such as penny stocks. You may be tempted by the returns some of these stocks have had, but hindsight is always 20/20. Chances are that you will almost always lose money when investing in these assets.

What Information Will I Need to Open an Online Brokerage Account?

The SEC has a complete guide on all the data that you need to provide to a brokerage when opening an account. If you just want to know simply about the documents and information that your brokerage will require from you, it is: Name Social Security Number (or equivalent) Telephone number and E-mail address Residential address Government-issued identification (e.g. passport or driver’s license) Date of birth Occupation and employment status Net worth and annual income Your basic investment goals Apart from this, any additional information that you need to provide will not be required by the government but the brokerage instead. As such, if you feel like the brokerage is asking for too much information when you sign up, feel free to question them on why they require i

How Are Brokerage Fees Calculated?

Brokerage fees are calculated in different ways. It would be impossible to list all of them here. However, here are the types of fees that you need to be aware of: Trading commissions Maintenance fees Equity fees Additional charges Trading commissions may be based on a percentage or a fixed fee per trade. However, a lot of online brokerages now charge no trading commissions. Maintenance fees are charged to maintain your account. These are annual fixed fees that you must pay to use the brokerage. Equity fees, on the other hand, are usually a percentage of your total account value and charged annually. Some brokerages do not charge this fee, so you may be better off using them if you have a lot of money to invest. Lastly, other charges include anything that you may incur when using additional services provided by the brokerage. For example, zero-commission brokers usually charge a lot of money if you need assistance (e.g. a phone call to a broker) when placing an order.

How Much Money do I Need to Open an Online Brokerage Account?

To be quite frank, as little as $5 will be enough. There are a few online brokers, especially those that utilize Robo-advisors, that will allow you to open an account with almost nothing. However, most proper online brokerages will require at least a few hundred dollars of deposit at the beginning. This is not bad, as building a proper portfolio that will allow you to achieve sufficient diversification will require at least a few thousand dollars. If you do not have that much cash at hand right now, you might be better off investing in funds until you do. What’s more important is that if you deposit enough money, you can avail promotions that will make investing very easy for you. We discuss some of these promotions later on.

What can we Learn From J.D Power Research About The Different Brokers?

In early 2020, J.D Power Research conducted a study into the various online wealth management services. Their findings concluded that the main cause of concern for investors was the website downtime and other network issues that the wealth management firms faced. This is something that you must keep in mind when looking for a broker. It is best to read their reviews and determine their website uptime before you select a brokerage. If you have a hot investment idea and the window of opportunity passes because the brokerage service is down, you will never be able to make that investment again. Additionally, you also need to have human support to fix any problems that arise. Timing is everything when it comes to investing, and brokerages that are unable to solve your problems in a pinch will only hamper your progress as an investor.

Can a Non-US Citizen Open a US Brokerage Account?

Yes, non-US citizens can open a brokerage account in the US. Most of the larger brokerages offer foreigners the option to directly open an account with them. However, a select few countries may be prohibited from opening an account in the US. It is best to check with a brokerage whether it supports your country before you begin the registration process. Alternatively, you can also open a brokerage account in the name of a Limited Liability Corporation. This will require a little bit of work on your end and will cost around $150. However, once you do that, you will be able to open a brokerage account through that LLC.

Is My Money Safe in a Brokerage?

For the most part, your money is safe in a brokerage. Brokerages are heavily regulated to make sure that they do not go under. That said, you should still stay on the safe side and go with a well-respected, large, and experienced brokerage. This will reduce your risk as it will take a lot of mistakes from the brokerage for it to go bankrupt. On top of that, we have already discussed how brokerage accounts are insured by the SIPC for up to $500,000 per person per brokerage. If you are worried about the default risk, you may want to utilize multiple brokerages. Just remember that the SIPC insurance only covers cash of up to $250,000. If you have $500,000 in a brokerage account that is made up for $100,000 of stocks and $400,000 of cash, you will only be covered for $350,000 ($250,000 cash and $100,000 of stocks). Make sure that your brokerage is covered by SIPC insurance if you are going with a firm that is not that well known. Many smaller firms that offer some of the best fee structures and promotions do so because they are not bound by SIPC regulations, and thus are a risky way of investing in stocks.

What Are Online Brokerage Promotions?

The world of brokerages is more competitive now than ever before. With an increasing number of online brokerages, it is extremely difficult for even the leading brokerages to differentiate themselves from the competition. As such, most brokerages now offer promotions of some sort to encourage you to sign up with them. These promotions can be of big help to beginner investors, and you should try to look for a promotion yourself!

How to Look for an Online Brokerage Promotion?

The easiest way to look for a promotion is to go on the brokerage’s website. Promotions are usually visible on the Home Page or the Signup Page. Remember that you should only start looking for promotions once you have narrowed down the list of brokerages that you want to use to your favorite ones. Picking a subpar brokerage just because they have an enticing offer will work very well for you in the short-term but will eventually be detrimental to your investment goals.

Can I Withdraw Money From a Stockbroker?

It should go without saying, but yes! You can withdraw money from a stockbroker. The money that you give to a brokerage is yours, and the only job of a stockbroker is to provide agency. They are supposed to make trades on your behalf and are not allowed to use your money without your consent. However, different brokerages have different withdrawal methods. Make sure that the brokerage you choose can deposit the money through the method that is the most convenient for you. You should also confirm how long it takes to usually make withdrawals. Suppose you have an urgent expense that will require a few thousand dollars from your brokerage account. There is no point in receiving those funds two weeks from now, is there? A brokerage that can quickly provide you the funds you need will save you a lot of hassle later.

Investing » The Best Online Brokers For Beginners (November 2024)

The Best Online Brokers For Beginners (January 2025)

The Smart Invesor experts summarized the best online brokers that can help you start growing with all investing tools beginners need.

Article update: November 30, 2024

Article update:November 30, 2024

We earn a commission from our partner links on this page. It doesn't affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money.

When it comes to starting your investment journey, choosing the right online broker can make all the difference.

For beginners, it’s crucial to find a platform that offers user-friendly features, educational resources, and low costs to help build confidence in the world of investing.

With a wide array of online brokers and apps available today, selecting the best one can seem overwhelming.

However, the right choice depends on what you value most, whether it’s simplicity, automation, low fees, or hands-on learning opportunities. Here are our top brokers for beginners:

Robinhood

Monthly Fee

Minimum Deposit

Our Rating

4.4

★★★★★ 4.4/5

APY Cash Account

Overview
Platform Screenshots

Robinhood is a great choice for beginners looking to start investing because it offers a simple and user-friendly platform that makes it easy to buy and sell stocks, even if you have no prior experience.

The app's clean, straightforward design is another big advantage. Robinhood makes the process of trading as easy as possible, with just a few taps to buy or sell stocks.

It also offers fractional shares, so you can invest in big companies like Apple or Tesla with just a few dollars.

This helps new investors get into the market without needing a large initial investment.

Robinhood also provides educational resources through its “Snacks” news feed, which offers bite-sized financial updates and investing tips in everyday language, helping beginners stay informed without feeling overwhelmed.

Pros	Cons
Fractional Shares, Crypto Access	Lacking Mutual Funds and Bonds
Advanced Charting And Research Tools	No Automated Investing
Robinhood Gold Features	No Advisory Services
IPO Access	Reliability Issues
Manage Retirement Accounts

Merrill Edge

Monthly Fee

Minimum Deposit

Our Rating

4.3

★★★★★ 4.3/5

APY Cash Account

Overview
Platform Screenshots

With its combination of educational resources, easy-to-navigate platform, and helpful tools, Merrill Edge is an excellent pick for anyone new to investing and looking for a solid, supportive start.

The platform offers a variety of articles, videos, and webinars to help beginners understand the basics of investing and make informed decisions.

The platform also includes an intuitive interface with easy-to-use tools that make buying and selling investments simple. Users can trade stocks, bonds, mutual funds, ETFs, and other investment products

Morningstar fund rating on Merrill Edge app

Pros	Cons
Extended Range of Investment Possibilities	No International Clients Accepted
Bonus For Opening a New Trading Account	Demo Trading Unavailable
Impressive Customer Service	Fees and Services
Impressive Trading Education Services	Limited Options For Cryptocurrency
Easy to Open a New Account

Interactive Brokers

Monthly Fee

Minimum Deposit

Our Rating

4.5

★★★★★ 4.5/5

APY Cash Account

Overview
Platform Screenshots

Interactive Brokers is a solid choice for new investors looking to get started with an online broker, especially if you’re serious about growing your knowledge and skills.

Interactive Brokers offers advanced trading tools such as charting capabilities, and research tools that can be beneficial for investors who want to take a more active approach to their investments.

Beginners can leverage the Interactive Brokers Lite option, which offers commission-free trading for U.S. stocks and ETFs.

There is a free access to educational resources and paper trading. Paper trading allows you to practice with virtual money before risking real funds, helping you get comfortable with how the platform works and learning how to trade without any financial risk.

Pros	Cons
Extensive Global Market Access	Steep Learning Curve
Low-Cost Trading	Limited Wealth Management Services
Advanced Trading Platform	$10K Minimum For High APY On Cash
Comprehensive Research Tools
Cash Management Account

Acorns

Monthly Fee

Minimum Deposit

Our Rating

4.2

★★★★★ 4.2/5

Savings Rate APY

4.52%

Overview
Platform Screenshots

Acorns is a unique investment app that makes it easy for beginners to start investing with small amounts of money. It's designed to be user-friendly and accessible, making it a great option for those who are new to investing.

One of the standout features of Acorns is its “round-up” functionality. This feature automatically rounds up your purchases to the nearest dollar and invests the difference. For example, if you spend $12.34 on coffee, Acorns will round it up to $13 and invest the remaining 66 cents. This is a great way to start investing without having to make large deposits.

Acorns also takes the guesswork out of investing by offering pre-built portfolios based on your financial goals and risk tolerance. You don't need to worry about picking individual stocks or understanding complex financial terms—the app does that for you.

Pros	Cons
Automated investing with pre made experts portfolio	High Fees For Low Portfolios
Cash management account with high savings rates	Rebalancing can be better
Invest in individual stocks	No tax strategies to minimize tax bills
Earn rewards when you shop with hundreds of brands	No Budgeting or personal finance tools
Retirement Plans benefiting from tax advantages

Stash

Monthly Fee

Minimum Deposit

Our Rating

3.9

★★★★★ 3.9/5

APY Cash Account

N/A

Overview
Platform Screenshots

Stash is a great option for new investors who are just starting out and want an easy-to-use platform with lots of guidance.

One of its best features is that it not only lets you invest in stocks and ETFs but also teaches you how to do it along the way. The app offers personalized investment advice, helping you make smarter decisions based on your goals and risk preferences.

It also offers customizable investment portfolios. You can choose from a variety of pre-built portfolios that are designed to suit different risk tolerances and financial goals. Alternatively, you can create your own portfolio by selecting individual stocks and ETFs.

Stash provides articles, videos, and other resources to help you understand the basics of investing and make informed decisions.

Pros	Cons
Good Selection of Investment Assets	No Interest on Banking Account
Managed Portfolios	No Human Advisors
Online Banking Account with Budgeting Tools	No Tax Loss Harvesting
Stock Rewards with Debit Card Purchases	No Minimal Free Option

M1 Finance

Monthly Fee

Minimum Deposit

$100

Our Rating

4.1

★★★★★ 4.1/5

M1 Savings APY

Earn 4.00%

Overview
Platform Screenshots

M1 Finance is a unique investment platform that offers a variety of features designed to make investing easier for beginners.

One of the standout features for beginners is the ability to invest in “pies,” which are essentially customizable portfolios that allow you to mix and match individual stocks and ETFs. You can even choose from pre-built pies designed by experts, making it easy to start investing without having to create your own portfolio from scratch.

Another key advantage for beginners is M1’s automation. Once you set up your portfolio, M1 automatically handles rebalancing and makes sure your investments stay aligned with your goals. M1 Finance also offers fractional shares, and there are no trading fees or commissions.

Pros	Cons
Customization and Control	No Real-Time Trading
No Trading Commissions	No Tax-loss harvesting
Automation	Limited Investment Options
Fractional Shares	Limited Account Types
Low Minimum Investment

How to Choose the Best Broker for Beginners?

Choosing the best broker for beginners is all about finding a platform that is easy to use, offers educational resources, and supports your financial goals. Here's a quick guide to help you pick the right broker:

Some brokers require a minimum deposit to open an account. Choose a platform with low or no minimums, so you can start investing with any amount of money.

Minimize your costs by choosing a broker with low or no trading fees, especially if you plan on making smaller trades. Look for no-commission stock and ETF trading options.

Some platforms offer demo accounts that allow you to practice trading without using real money. This can be a helpful feature when you're just starting out.

Look for a broker with a simple, intuitive interface. The best platforms for beginners make it easy to navigate, place trades, and check your account without feeling overwhelmed.

A good broker for beginners will offer resources like tutorials, webinars, and articles to help you learn how to invest and understand the market. This helps you make informed decisions as you start.

Strong customer support is crucial when you're new to investing. Look for brokers with reliable, easy-to-reach support teams, whether through phone, email, or live chat.

A solid mobile app is important if you want to manage your investments on the go. Choose a broker with a well-reviewed, easy-to-use app.

Fractional Shares: Great Way To Start Small

Fractional shares are a great way for beginners to start investing without needing a lot of money. Instead of buying a full share of a stock, which can be expensive, fractional shares let you buy just a small portion.

Here’s how brokers use fractional shares to help beginners start small:

Invest with Less Money: Fractional shares allow you to buy part of a stock for as little as $1. You don’t need to save up hundreds or thousands of dollars to invest in big companies like Apple or Amazon.
Diversify Even with a Small Budget: Instead of putting all your money into one stock, fractional shares let you spread your investment across several companies, helping you diversify and reduce risk.
No Need to Wait: You can start investing right away with whatever money you have. Fractional shares make it easy to get into the market and start learning.
Reinvest Dividends: Some brokers automatically reinvest dividends by purchasing more fractional shares, which helps your investment grow over time without extra effort.

Demo Accounts: Learning to Trade Without Risk

Demo accounts are an excellent way for beginners to learn how to trade without risking real money. They let you practice investing in a simulated environment, using virtual funds to make trades and test strategies.

Here’s how demo accounts help you learn to trade:

Practice Without Risk: With a demo account, you can make trades and test different strategies without losing any real money. This is perfect for learning how the stock market works and building confidence.
Get Comfortable with the Platform: Demo accounts let you explore the broker’s platform, so you can learn how to place trades, check your portfolio, and use different tools, all without the pressure of real investments.
Test Investment Strategies: You can experiment with different strategies, like day trading or long-term investing, and see how they would perform in real market conditions—without any financial consequences.
Build Your Skills Over Time: Using a demo account helps you practice and improve your trading skills. You’ll learn how to read charts, spot trends, and make better investment decisions.

A demo account is a risk-free way for beginners to learn the ropes of investing, so you’re ready to use real money when the time comes.

Robo-Advisors vs. Self-Directed Trading: Which Is Best For Beginners?

Robo-advisors and self-directed trading offer different approaches for beginners. Robo-advisors automate everything, requiring little effort or knowledge, with low fees and long-term, lower-risk strategies—ideal for hands-off investors.

On the other hand, self-directed trading gives you full control, allowing you to pick and manage your investments, which offers learning opportunities and the potential for higher rewards but requires time, research, and a higher risk tolerance.

Feature	Robo-Advisors	Self-Directed Trading
Control	Automated, little to no decision-making	Full control over what to buy or sell
Effort	Low effort, “set-it-and-forget-it”	High effort, requires active involvement
Fees	Low management fees	May have no fees for ETFs & stocks
Learning Curve	Minimal learning needed	Great for learning by gaining experience
Time Commitment	Minimal, designed for long-term	Requires time to research and monitor
Investment Strategy	Long-term, steady growth	Flexible, short-term or long-term,
Risk	Lower risk, more conservative	Higher risk, depends on decisions made
Customization	Limited to preset portfolios based on risk tolerance	Full customization of your investment portfolio
Best For	Hands-off approach	Beginners, active traders

If you prefer a passive approach, go with a robo-advisor. If you want to actively learn and manage your investments, self-directed trading is the better option.

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Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.

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