A Guide to Choosing Online Stockbrokers for Beginners 

Online stockbrokers make it a lot easier for beginners to start investing in the stock market. However, if you are just getting started, it can be difficult to decide which online stockbroker is right for you.  

The decision will come down to what kind of investing you want to do. From there, you will want to look at what fees, commissions, and required minimums work for you. Other factors to consider include a website and mobile app that are easy to use and educational resources that will guide you to better understand the various investment products.  

This guide will provide an overview of how to choose an online stockbroker that will be right for your unique needs and goals as well as tips for getting started. 

What is an Online Stockbroker?  

An online stockbroker is an online platform that allows investors to manage their investments without using a traditional broker.  

With an online stockbroker, you can buy, sell and trade stocks, mutual funds, ETFs, bonds and other securities anywhere you have internet access. Through robust web platforms and mobile apps, you are able to make investments and buy stocks at will. Some platforms even offer automated trading.  

Online stockbrokers offer a wide range of features such as real-time quotes, analysis tools, and educational resources to help guide you in your investing decisions.  

They are typically cheaper than traditional brokers, provide more flexibility when it comes to managing your investments, and allow you to easily access markets around the world. 

How Do Online Brokerage Accounts Work? 

Online brokerage companies allow you to make investments through their websites or mobile apps.  

You will start by opening the type of investment account you decide you need to meet your financial goals.  

Once the account is open, you will need to link it to a bank account that you will use for funding your investments such as a checking account or savings account. Some brokers will also allow you to link your debit card to add money to your account.  

In most cases, you will have to wait until the funds transfer clears into your investment account before you can start using them.   

How Much Money Do You Need to Start Investing?  

There are plenty of online stockbrokers who require no minimum deposit to open an account with them.  

For example, Fidelity, SoFi, TD Ameritrade, and Robinhood all have a $0 minimum to get your account set up.  

Of course, you will need to make a deposit before you can get any investments started. Some online brokers will offer incentives to new investors, such as depositing some money into your account so that you can get started.   

The amount of money you will need to start investing will depend on two factors: the type of investment you want to make and your broker.  

Some investment platforms allow you to start with as little as $1. 

The robo-advisor Betterment allows investors to start with as little as $10. Other investment firms may require minimums that are much higher. For example, Vanguard requires a minimum of $50,000 to start investing.  

If you’re investing in individual stocks, the amount of money you need to start investing will depend on the price of the stock. For example, if you want to invest in a stock that is currently priced at $50, you will need at least $50 to buy one share.  

How to Choose Online Stockbrokers for Beginners 

There are a lot of variables to consider when choosing an online stockbroker. The platform you choose will depend on your personal financial goals and aspirations, what types of investment products you are interested in, any minimum deposit requirements, costs and fees, and more.  

Here are some factors you will want to consider before making your final decision.  

1. Know Your Financial Goals

The first factor you will want to evaluate is your financial goals. What are your financial goals and how does investing align with those goals? 

Are you planning to save for retirement? Did you just have a child and want to open an account to save for your child’s education? Are you trying to save to buy a house? Or do you simply want to build some wealth over time? 

You will want to think through both long-term and short-term goals so that you will know what kind of investments you want to make.  

2. Decide What Kind of Investments You Want to Make

After evaluating your financial goals, you should have an idea of what kind of investments you want to make.  

If you want to save for retirement, you will want to make sure that the brokerage you work with offers IRAs or 401(k) plans. If one of your goals is to save for your child’s education, you will want a broker that offers 529 Accounts.  

If you are wanting to invest in mutual funds or individual stocks, you will want to be sure to look for those types of products.  

3. Compare Fees and Other Costs

Robinhood disrupted the online trading industry when it launched in 2014 and required no account minimums or trading fees. After Robinhood had 100,000 people create accounts in the first month and reached 4 million accounts by 2018, the industry leaders took notice. In 2019, several major brokerages gave in and began offering no-fee stock trading.  

As a result, working with the top brokers in the country is more affordable than ever, but there are still costs and fees you will want to look out for when shopping for an online broker.  

These are the most common types of fees and costs you can expect to see:  

• Commissions/Trading Fees. This fee may be a flat fee charged no matter how many stocks you trade or a fee you pay per share traded. The average trading fee is $8.90, according to ValuePenguin.  
• Account Maintenance Fees. Investors may be charged an account maintenance fee for inactivity if the account drops below a required minimum balance or if the account becomes dormant. According to ValuePenquin, the average account maintenance fee is $32.50.  
• Miscellaneous Trading Fees. Other fees to be aware of include paper statement fees, annual checking account fees, transfer fees, and wire transfer fees. 

• Minimum Deposit Requirement. Some online brokers may require a minimum deposit to open an account. While plenty of brokers do not have an opening minimum deposit, some do, so you will want to pay attention to this. Note that a minimum deposit requirement is different from a required minimum balance, which is the amount a broker may say you have to maintain in your account to avoid paying a fee.  
• Mutual Fund Fees. If you are investing in mutual funds, you can expect to pay an annual fee known as the operating expense ratio (OER), load fees, and transaction fees.  
• Exchange-traded Funds (ETFs). If you are investing in ETFs, you will also be charged an operation expense ratio (OER) annually. Other costs may include trade commissions and changes in premiums and discounts.  
• Bonds. If you purchase a bond, you can expect to pay a transaction fee, which can range from $10 to $250. 
• Portfolio Management Fees. For those who want to have their investments managed by a professional broker, you can expect to pay a fee for the additional service.  

To know for sure the fees that each company charges, look for their “Investing and Fee Disclosures” that should be easy to find on any online investing site.  

4. Educational Resources

One element that helps online trading companies stand out from the rest is the educational resources they offer. As a beginner, this is something you will especially want to consider.  

The top online brokers offer the following:  

• In-person workshops 

• Self-paced curriculum 
• News articles 
• Research articles 
• Videos 
• Webcasts 

• Chat rooms to interact with other investors and experts 
• Practice platforms where you practice investing with pretend money to learn how the platform works before having to use your own hard-earned money. 
• A responsive customer service to ask questions 

5. Consider the User Experience of the Website and App

Since all major brokers have online platforms and mobile apps, you will want to research the user experience of these platforms.  

Here’s how we recommend going about this:  

• Professional Reviews. We highly recommend reading or watching reviews by both business professionals and consumers. We recommend starting with experienced investors because they have likely taken the time to test out various platforms. In addition, since they have experience investing, they will know what to look for.  
• Customer Reviews. You will also want to research customer reviews for feedback on ease of use and issues they’ve had. Everyone has a different level of comfortability with technology, so something that’s a problem for one person may not be a problem for you. But that’s something you will want to evaluate.  
• Test Out the Platforms. Once you’ve narrowed down the top online brokers you are considering, you may be able to test out the different platforms for yourself. This may not be possible with all brokers, but there are some that will allow you to create a free account and have a look around. Some companies that will let you create an account without a minimum deposit or a very small deposit (as in $1). Companies with no account minimum deposit include Charles Schwab, TD Ameritrade, E*Trade, and Fidelity. Robinhood will let you create an account with $1.  

6. Research the Broker’s History

Reputations matter, and this is especially true when it comes to companies you’re going to trust with your money. Of course, every company is going to advertise themselves as the best, so you will need to look elsewhere for this information. 

Here are some of the factors to consider: 

• Years in Business. We think it’s important how long a company has been in business. While this is only one factor, longevity can be a sign of a healthy company. It shows that it’s able to weather the ups and downs of an ever-changing market and industry.  
• Better Business Bureau (BBB) Ratings. The BBB is the gold standard when it comes to rating companies on their credibility and trustworthiness. The highest rating a company can receive is an A+. Each company is evaluated on the business’s complaint history with the BBB, the type of business, time in business, transparency, how it honors commitments to the BBB, licensing, and government actions, and advertising practices.  
• Check FINRA and the SEC. The Financial Industry Regulatory Authority (FINRA) is supervised by the U.S. Securities and Exchange Commission (SEC). They both serve to protect investors by ensuring that the financial markets maintain their integrity and that brokers operate fairly. You can search the name of the brokers you are considering by going to BrokerCheck.Finra.org. Enter the name of the broker, and it will give you a report that will include general information such as the states it’s licensed in and what it calls “disclosures,” which is where you will be able to see how many actions have been taken against the firm.  

• Talk to a Financial Advisor. A financial advisor may also be able to help guide you to the brokers that will be best for you and your unique situation.  
• Read Third-Party Reviews. It’s a good idea to check out third-party reviews by review platforms, like Review Counsel, who spend a lot of time evaluating investment platforms according to strict criteria.  
• Read Customer Reviews. Reading customer reviews will also give you an inside look at what the customer experience is like and if you like what you hear.  
• Read the News. Go to Google and search the broker and click on the “news” button to see what the broker has been in the news for in recent months.

7. Research Requirements for Opening an Account

Most online investors will have some requirements you will have to meet or information you will need to provide in order to open an account, including but not limited to the following:  

• Personal information. This includes details such as a social security number, driver’s license, date of birth, and address. 
• Employment information. Expect to have to provide information about your employment status and the type of work you do. The SEC says to expect to be asked if you are employed by a brokerage firm.  
• Financial information. This will include things like annual income and net worth.  

• Investment objectives. You will also be asked about your investment goals and assessed for your risk tolerance.  
• Minimum deposit. Some brokers will require a minimum deposit in order to open an account.  

While the information the brokers request may seem invasive, the companies are required to collect this information in order to comply with government regulations. The main purpose is to help prevent identity theft and prevent terrorists from opening accounts.  

8. Research How Deposits and Withdrawals are Made

Once you open an account with your chosen platform, you will need to fund the account so you can start investing.  

Here are some of the ways you’ll be able to deposit money into your account: 

• Link your bank account to your investment account. This is probably the easiest method. Linking your bank account to the investment account will require that you have your bank account number and routing number ready to input. Sometimes there will be a waiting period until the connection is established and the money clears. 
• Wire transfer. Doing a wire transfer will be the fastest method for getting money into your account as it can often take minutes.  
• Write a check and mail it. This will be the slowest option in terms of how quickly you’ll be able to start investing, but this is typically a method you can use.  
• Asset transfer. An asset transfer may be an option if you are rolling funds over from one broker to another as you might do with a 401(k) or IRA. 

• Monthly transfers. If you are working to fund a retirement account or mutual fund, this is something you will want to make sure you are able to do with the platform you choose.  

Investors in the United States are not allowed to use a credit card to fund an account.  

Just like with depositing money, you should be able to withdraw money from your brokerage account through a wire transfer, an electronic funds transfer, or by sending a check. You may be charged a small fee for a wire transfer.  

In order to withdraw money from your stocks, you will need to sell them first.  

9. Research the Safety of the Platform

Since an online broker is going to have so much of your personal information, it’s a good idea to spend some time researching the safety of the platform.  

For example, has the company had any data breaches? What happens if the investing firm goes under? Will you lose all your money? 

10. Evaluate Customer Support Availability

One major feature you will want to make sure you get with any platform is solid customer service. You will want to know that you will 

11. Test Out the Platform

If you are able, take the platforms for a test drive. Not all platforms will allow you to do this, but if they do, definitely take advantage of this feature.  

Bottom Line 

If you want to know more about which investment company to choose, check out our reviews of the following companies:  

How We Rate Banks that Online Investing Companies 

We independently identify investment companies. The investing companies are evaluated based on six factors that we believe are important for consumers: years in business, product types, customer service availability, Better Business Bureau (BBB) Ratings, and the inclusion of a mobile application and how much functionality it has. Please find a full description of our ratings system here.

Disclosure: We do receive advertising compensation from some partners, which influences what companies appear on our site and where they appear. For additional details please click here.