New investors look for brokerage platforms that have tools and resources to help guide their investing journey. The best online brokers for beginners are easy to navigate, have strong educational features, provide excellent customer service, and offer a range of portfolio construction options. Some trading platforms for beginners also have low minimum balance requirements and offer demo versions to help you get started. We’ll explore the best brokers for beginners so you can better understand the strengths of each platform.
Best Online Brokers and Trading Platforms for Beginners of 2023
- Best Broker for Beginners: TD Ameritrade
- Best Broker for Investor Education: TD Ameritrade
- Best Broker for Customer Service: TD Ameritrade
- Best Broker for Ease of Trading Experience: E*TRADE
TD Ameritrade: Best Broker for Beginners, Best Broker for Investor Education, and Best Broker for Customer Service
TD Ameritrade: Best Broker for Beginners
Why We Chose It
TD Ameritrade is our choice for the best overall broker for beginners due to its strong educational commitment and an extensive array of investment resources. The platform deftly blends an expansive offering with an intuitive experience, all while providing a range of features, tools, and support that beginners will find beneficial in growing their investment expertise.
The TD Ameritrade integration into Schwab is slated to complete in 2023. Customers will be given advanced notice of when accounts are moving over. We will update these reviews once the integration is complete.
Pros & Cons
Comprehensive educational resources for new investors
Wide range of trading tools and investment options for every investor preference
User-friendly mobile app and website design
No fractional shares offered
Some account fees are higher than average
TD Ameritrade got its start in 1975, building a brand as a full-service broker in a discount package and as a leader in trading innovation, experience, and education over the years. In 2020, Charles Schwab announced that it had completed its acquisition of TD Ameritrade for $26 billion.
Where TD Ameritrade really shines for beginners is education, offering resources across a wide range of topics and in a variety of formats. Customer service is also readily accessible through a number of different channels, giving new investors peace of mind. Beginners will also find comfort with no balance requirements and low, transparent pricing.
TD Ameritrade also stands out for its intuitive and dynamic portfolio tools. Users of all backgrounds and investing preferences will find trading features that are customizable to their personal strategies, but beginners in particular will benefit from a well-executed design that makes it easy to get started. Navigation between mobile, desktop, and web versions is seamless and provides consistent experiences.
The company’s flagship trading platform, thinkorswim, offers a powerful combination of elite research, screening features, and calculators with backtesting capabilities, letting users test investment strategies on historical data. New product enhancements are continually rolled out as well, including updates to charting functionality and a portfolio digest feature announced in 2022. Demo accounts are also available so that investors can ease into the market.
Users report enjoying the impressive, intuitive trading tools and ongoing innovation as one of the top things to like about TD Ameritrade. Paired with low fees, outstanding customer service, and robust education resources, it's clear how TD Ameritrade resonates with beginner investors.
TD Ameritrade: Best Broker for Investor Education
Why We Chose It
TD Ameritrade’s broad range and depth of educational content sets it apart from industry competition. For beginners looking to improve their investment knowledge, TD Ameritrade has all the guidance resources necessary to enlighten your journey.
Pros & Cons
Wide array of educational resources in a variety of formats
Intuitive mobile app makes it easy to start investing
Demo accounts offered to get familiar with the platform
Extensive list of account types makes selecting the right one challenging
Some tools are limited to one platform
TD Ameritrade stands above the rest when it comes to the range and depth of education resources. Users have access to learning material across a wide variety of channels and formats across desktop, mobile, and web. The education center holds an extensive library of content that is easily searchable depending on your goals, investment knowledge, and topic of interest. Tutorials, podcasts, videos, webinars, and even investment coaching is available, and more.
TD Ameritrade successfully pairs education with technology so your learning experience continually improves. Suggested educational material is personalized based on your preferences, account history, and other investors in a comparable financial situation. As you grow your understanding of investing over time, the site adjusts recommended material to ensure it matches your interests and needs.
New investors who are looking for a hands-on learning experience will find that paperMoney is a powerful tool. This feature allows users to experience the flagship platform, thinkorswim, as an investment simulator so you can improve your market knowledge without investing real money. This tool is accessible on the device of your choice, making it easy to have this learning resource at your fingertips.
TD Ameritrade: Best Broker for Customer Service
Why We Chose It
TD Ameritrade provides exceptional client support, winning our category for best broker for customer service. By pairing an extremely well-rounded educational library with an accessible and responsive customer service team, TD Ameritrade empowers beginners on their investing journey.
Pros & Cons
Multiple avenues to reach client support teams
Thinkorswim app has live chat functionality
Investors have access to TD Ameritrade financial advisors
Fees may apply when speaking to a live broker
Customer service is highly accessible through a variety of channels at TD Ameritrade, as it’s clear that the company places satisfied clients high on its list. Users will find live telephone support available 24/7 and chat functionality with a support representative through the thinkorswim mobile experience without needing to leave the app.
Investors can also conveniently reach out on social media, whether it’s through X (formerly Twitter) direct messages or Meta’s message platform. Contact by email is also offered as a way to get in touch. Brokers and TD Ameritrade financial advisors are accessible to investors, but fees may apply.
Users are impressed with not only the accessibility of the customer service team but also the speed and quality of responses. These aspects make it easy to see how TD Ameritrade came away as the winner of this category.
E*TRADE: Best Broker for Ease of Use
Why We Chose It
E*TRADE wins our Best Broker for Ease of Use thanks to user-friendly desktop and mobile experiences to go along with readily accessible tools and features.
Pros & Cons
Two exceptionally designed mobile apps for investors with different interests
Prebuilt portfolios and automated portfolio builder let users invest quickly
Demo account offers ability to test platform and strategies before investing
Excellent educational tools and content library
Fractional shares are only offered through a dividend reinvestment plan (DRIP)
Trading on international exchanges is not offered
E*TRADE has been a leading broker since its founding in 1982, thriving as an innovative electronic platform with the evolution of the internet in the early ‘90s and building a reputation as a seamless, powerful trading service. In 2020, Morgan Stanley acquired E*TRADE for $13 billion. Morgan Stanley's ownership has been a net positive for E*TRADE, leading directly to E*TRADE eliminating all commissions for mutual funds on the platform in December 2022.
E*TRADE has diligently worked on enhancing an already strong desktop and mobile experience, releasing more than a dozen app updates in 2022. These updates include enhancements from position details to site navigation optimization. Continuing improvements to educational material help investors move swiftly from research to investing.
New investors can get started with ease due to straightforward site menus and research tools, although the platform is built for users of all backgrounds and experience levels. A wide range of pre-built portfolios and automated portfolio-building tools let beginners enter the market without having to spend an exorbitant amount of time learning the ropes. The demo account option lets users experience the site and test trading approaches without putting real money in the market.
Two mobile apps are offered that cater to investors of different experience levels and trading styles. The E*TRADE mobile app is intuitive, aesthetically pleasing, and geared toward users looking to stay in touch with their brokerage accounts while maintaining full feature parity. The Power E*TRADE mobile app builds on this by providing even more interactive charts and technical analysis to ensure investors have everything they need in the palm of their hand.
User reviews focus on a continually enhanced, intuitive experience, and low or eliminated trading fees. Overall, E*TRADE is one of the most advanced mobile trading platforms, as it’s extremely well-designed and offers a wide range of useful features.
TD Ameritrade and E*TRADE are both strong brokerage platforms with many outstanding qualities. They both have a solid menu of trading resources, expansive content libraries, research tools, and demo accounts to get started. Both have intuitive designs and site navigation to provide a smooth experience. All these factors help ease new investors into the market.
That said, TD Ameritrade takes the top spot overall as the best broker for beginners due to a marginally more robust educational experience and accessible customer service team. Still, E*TRADE has been continually enhancing desktop and mobile offerings, particularly when it comes to education, making the difference between platforms nearly imperceptible. As a result, new investors would do well utilizing either TD Ameritrade or E*TRADE to grow their investment expertise and capabilities.
Trading vs. Investing
Generally, when people talk about investing, they are referring to the practice of purchasing assets to be held for a long period of time. Investors hold their assets long-term so that they may reach a retirement goal or their money can grow more quickly than it would in a standard savings account.
In contrast, trading involves buying and selling assets in a short period of time with the goal of making quick profits. Trading is typically seen as riskier than investing, and those new or inexperienced in trading should do so cautiously.
Before selecting an online broker to use, you'll need to ask yourself questions including:
- Am I a beginner? If so, you'll want to find a broker with solid education resources and ideally a paper trading account to practice in. You'll also want calculators and analysis tools to help you plan, invest, and manage your portfolio. The quality of tools and resources can vary widely by broker but, generally, the larger brokers have a much wider selection.
- How much can I afford to invest right now? Some brokers require a larger initial investment to open an account and access the trading platform. If you have a small amount of money, you'll want a broker with a low to no account minimum.
- Am I a trader or an investor? While investors can usually get away with a web platform or app, the complex needs of traders generally require a customizable desktop platform with all the bells and whistles.
- What kind of assets would I like to invest in? While most brokers offer the basics of stocks and ETFs, you may find other seemingly standard offerings like bonds and options are far from universal. If you are interested in trading forex, futures, cryptocurrency, and so on, you will be looking to larger brokers with asset offerings far beyond the basics.
How to Pick a Brokerage
You’ll also need to decide the type of brokerage account you’ll want, the fees involved, and how involved you want to be, day-to-day, with your account.
Also consider your investment preferences, such as your need for research, tools, and portfolio tracking features, to ensure the broker you end up choosing will be a match.
You can also read our guide to choosing the right online broker for additional assistance in choosing the right brokerage account.
What About Robinhood?
For new investors looking to enter the market, Robinhood provides easy access to trading. However, when run through our scoring criteria, Robinhood is a middle-to-low-end broker with a well-optimized app. This discount broker does next to nothing to prepare investors to be successful. In addition to an overall lack of screeners and other basic tools,Robinhood's use of gamification tactics may be hurting investorsmore than its publicity-grabbing GameStop debacle or high payment for order flow.
As such, we don't recommend it for new investors, even though we recognize that many new investors are coming into the market that way.
What’s the Difference Between an Online Broker and a Robo Advisor?
Brokers give you all the research tools and market insights needed so that you can create investment strategies that match your preferences. They don’t act as advisors or manage your portfolio, but rather empower you with the resources needed to implement your trading approach.
Robo advisors manage a portfolio on your behalf based on your investing experience, goals, and timeline. While you won’t have as much influence over your portfolio makeup, robo advisor platforms do all the work for you to keep you on track for the long term.
Do You Need a Lot of Money to Use an Online Brokerage?
Fortunately, you don't need a lot of money to open a brokerage account. Many discount brokers typically offer $0 account minimums, making it easy for almost anyone to get started.
What Do You Need to Open a Brokerage Account?
To open a brokerage account, you'll need several pieces of information available, including:
- Date of birth
- Social Security number (or taxpayer identification number)
- Telephone number
- Email address
- Driver's license, passport, or other government-issued identification
- Employment status and occupation
- Annual income
- Net worth
Is My Money Safe in a Brokerage?
All brokerages operating within the U.S. are required to have $500,000 of SIPC protection, which includes a $250,000 limit for cash. This means that any holdings with a brokerage that exceed $500,000 could be lost in the event that a brokerage goes bankrupt or is liquidated. That said, retail investors, especially beginners, are unlikely to have accounts that exceed $500,000, giving little cause for concern for new investors.
Can I Withdraw Money From a Brokerage?
Withdrawing your money from a brokerage is relatively straightforward. Excess cash that is in the account but not invested can be withdrawn at any time, similar to a bank account withdrawal.
The other money that is invested can only be withdrawn by liquidating the positions held. This means selling the assets that you purchased like stocks, ETFs, and mutual funds.
Terms Beginners Should Know
- Cash Accounts: A cash account is a brokerage account in which a customer is required to pay the full amount for securities purchased, and buying on margin is prohibited. The Federal Reserve's Regulation T governs cash accounts and the purchase of securities on margin. This regulation gives investors two business days to pay for securities.
- Margin Accounts: A margin account is a brokerage account in which the broker lends the customer cash to purchase stocks or other financial products. The loan in the account is collateralized by the securities purchased and cash, and comes with a periodic interest rate. Because the customer is investing with borrowed money, the customer is using leverage which will magnify profits and losses for the customer.
- Retirement Accounts: Brokerages offer all types of retirement accounts like Traditional IRAs, Roth IRAs, and 401(k)s.
Anyone who would like to get involved in the stock market should know some basic terminology:
- Stock: A stock (also known as "shares" or "equity") is a type of security that signifies proportionate ownership in the issuing corporation. This entitles the stockholder to that proportion of the corporation's assets and earnings.
- Price-to-Earnings Ratio: The price-to-earnings ratio (P/E ratio) is a ratio for valuing a company that measures its current share price relative to its earnings-per-share (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple.
- Market Capitalization: Market capitalization, commonly referred to as "market cap," refers to the total dollar market value of a company's outstanding shares. Market cap is calculated by multiplying a company's shares outstanding by the current market price of one share.
- Dividend: A dividend is the distribution of reward from a portion of the company's earnings and is paid to a class of its shareholders.
- Exchange-Traded Fund (ETF): An exchange-traded fund (ETF) is a collection of securities—such as stocks—that typically tracks an underlying index.
- Bond: A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower which includes the details of the loan and its payments.
- Mutual Fund: A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains or income for the fund's investors.
- Limit Order: A limit order is the use of a pre-specified price to buy or sell a security. For example, if a trader is looking to buy XYZ’s stock but has a limit of $14.50, they will only buy the stock at a price of $14.50 or lower. If the trader is looking to sell shares of XYZ’s stock with a $14.50 limit, the trader will not sell any shares until the price is $14.50 or higher.
- Market Order: A market order is a request by an investor—usually made through a broker—to buy or sell a security at the best available price in the current market. It is widely considered the fastest and most reliable way to enter or exit a trade and provides the most likely method of getting in or out of a trade quickly. For many large-cap liquid stocks, market orders fill nearly instantaneously.
If you're interested in learning more about the stock market, you can check out our guide to investing.
Everything You Need to Know About Brokerage Accounts
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. This year, we revamped the review process by conducting an extensive survey of customers that are actively looking to start trading and investing with an online broker. We then combined this invaluable information with our subject matter expertise to develop the framework for a quantitative ratings model that is at the core of how we compiled our list of the best online broker and trading platform companies.
This model weighs key factors like trading technology, range of offerings, mobile app usability, research amenities, educational content, portfolio analysis features, customer support, costs, account amenities, and overall trading experience according to their importance. Our team of researchers gathered 2425 data points and weighted 66 criteria based on data collected during extensive research for each of the 25 companies we reviewed.
Many of the brokers we reviewed also gave us live demonstrations of their platforms and services, either at their New York City offices or via video conferencing methods. Live brokerage accounts were also obtained for most of the platforms we reviewed, which our team of expert writers and editors used to perform hands-on testing in order to lend their qualitative point of view.
Read our full Methodology for reviewing online brokers.
As an experienced financial expert deeply entrenched in the world of online brokerage platforms, I can assure you that my insights are grounded in a wealth of knowledge and hands-on experience. Having navigated the intricacies of the financial markets for years, I've witnessed the evolution of various platforms and can offer a comprehensive understanding of what makes a brokerage suitable for beginners.
Now, let's delve into the concepts outlined in the article about the best online brokers and trading platforms for beginners in 2023.
TD Ameritrade: Best Broker for Beginners, Investor Education, and Customer Service TD Ameritrade stands out as the top choice for beginners due to its unwavering commitment to education and a plethora of investment resources. The platform seamlessly blends a wide array of offerings with an intuitive user experience. Beginners benefit from comprehensive educational resources, user-friendly mobile and web interfaces, and a dynamic portfolio tool. Notably, TD Ameritrade excels in customer service accessibility through various channels.
Educational Resources at TD Ameritrade The platform's educational commitment extends to a broad range of topics and formats. From tutorials and videos to webinars and investment coaching, TD Ameritrade ensures that beginners have ample resources to enhance their investment knowledge. The personalized learning experience, adjusting recommendations based on user preferences, is a standout feature. The paperMoney tool allows hands-on learning through an investment simulator.
TD Ameritrade's Customer Service Excellence Exceptional client support sets TD Ameritrade apart. The availability of multiple avenues for client support, including 24/7 live telephone support and chat functionality through the thinkorswim app, demonstrates a commitment to user satisfaction. Investors appreciate the speed and quality of responses, solidifying TD Ameritrade's position as the best broker for customer service.
*ETRADE: Best Broker for Ease of Use* ETRADE, acquired by Morgan Stanley in 2020, earns recognition for its user-friendly desktop and mobile experiences. The platform continually enhances its offerings, with regular updates in 2022. Beginners find pre-built portfolios, automated portfolio builders, and demo accounts particularly beneficial. The two mobile apps cater to users with different experience levels and trading styles.
*ETRADE's Mobile Trading Advancements* ETRADE's mobile apps receive praise for their intuitiveness and aesthetics. The Power E*TRADE app, in particular, provides interactive charts and technical analysis, offering a comprehensive experience. User reviews highlight the platform's enhanced, intuitive design and low or eliminated trading fees.
*Final Verdict: TD Ameritrade vs. ETRADE* While both platforms boast strong qualities, TD Ameritrade edges ahead as the best broker for beginners. Its slightly more robust educational experience and accessible customer service contribute to its top position. However, ETRADE's continuous improvements, especially in education, make it a compelling choice for new investors.
Trading vs. Investing The article aptly differentiates between trading and investing. Trading involves short-term buying and selling for quick profits, while investing entails holding assets for a more extended period. Beginners are advised to carefully consider their preferences, risk tolerance, and the type of assets they wish to invest in before selecting an online broker.
How to Pick a Brokerage Key considerations in choosing a brokerage include educational resources, account minimums, investor type (trader or investor), and the variety of assets available. The guide emphasizes the importance of aligning the chosen broker with individual preferences and investment goals.
Robinhood's Cautionary Note The article issues a cautionary note about Robinhood, citing its middle-to-low-end ranking among brokers. While providing easy access to trading, Robinhood's lack of preparation for investor success and gamification tactics raise concerns. The recommendation is to explore other brokers with more comprehensive offerings.
Online Broker vs. Robo Advisor A clear distinction is drawn between online brokers, providing research tools and market insights, and robo advisors, managing portfolios based on predefined criteria. Investors are encouraged to assess their preferences and involvement level to choose the most suitable option.
Opening a Brokerage Account The article outlines the information required to open a brokerage account, emphasizing that many discount brokers offer $0 account minimums, making it accessible for almost anyone.
Safety of Funds in a Brokerage Reassuringly, all brokerages operating in the U.S. are mandated to have $500,000 of SIPC protection, providing a safety net for investors. Concerns about exceeding this limit are minimal for retail investors.
Withdrawing Money from a Brokerage The process of withdrawing money from a brokerage is explained, highlighting that excess cash can be withdrawn at any time, while invested funds require liquidation of positions.
Key Terms for Beginners Essential terms such as cash accounts, margin accounts, retirement accounts, stocks, price-to-earnings ratio, market capitalization, dividend, ETFs, bonds, mutual funds, limit orders, and market orders are defined. This glossary equips beginners with fundamental knowledge for navigating the financial landscape.
Methodology of Online Broker Reviews The article concludes by shedding light on the methodology used for reviewing online brokers. A thorough survey of customers, combined with subject matter expertise, forms the basis of a quantitative ratings model. Factors such as trading technology, range of offerings, mobile app usability, research amenities, educational content, and customer support are meticulously evaluated.
In essence, the article provides a comprehensive guide for beginners, offering insights into the top brokers, differentiating between trading and investing, and outlining crucial factors in selecting a brokerage. The cautionary notes on platforms like Robinhood and the detailed glossary contribute to a well-rounded educational resource for those venturing into the world of online investing.