Among the four main tenets of financial wellness – save, spend, earn and grow – putting your money in investments is a crucial part of building your wealth.
If you’re new to investing, an online investing platform is a great place to get your feet wet. While the account minimums may feel intimidating, some of these platforms have lower-than-expected minimums to open an account, plus commission-free exchange-traded funds or mutual funds to choose from. However, it might be a tad confusing to muddle through all the morose options. (There are quite a few to choose from, after all.)
As there is no cut-and-dried answer, the best stock trading platform really depends on your needs and situation. We’ll go over some of the most popular online investing platforms out there, and how to figure out which one to go with while shopping around:
With self-directed stock and ETF trades that start at the low cost of $4.95 and automated investing with as little as $2,500, Ally Invest is a solid option if you’re just starting out. For those who prefer the do it yourself route, there’s no minimum to open an account and no hidden fees. If you’re doing an option trade, it’s $0.65 cents per contract on top of the $4.95 base. There are more than 100 commission-free ETFs to choose from.
Plus, Ally boasts in-depth research and market analysis tools to help you with your investing decisions. While you’re not able to go into a physical branch and talk to someone, Ally offers 24/7 customer support over the phone and email.
If you’re curious about managed portfolios, Ally Invest can recommend and help you manage a portfolio based on your risk tolerance, personal goals and time horizon. Plus, it’ll automatically rebalance your account. Note there’s a 0.30% advisory fee for all balances. Some advisory firms will up the advisory fee in accordance with higher balances. So, it’s nice that Ally Invest charges the same fee no matter what your balance is.
While there’s no minimum amount to open an account with TD Ameritrade, or trade requirements, the $6.95 fee per trade is higher than competitors. While the trading fees are higher, TD Ameritrade offers in-depth research, 27/4 customer support and over 360 brick-and-mortar branches in the U.S. If you’re planning to do margins or options trading, there’s a $2,000 account minimum.
It received Barron’s top choice for long-term investing, so if you’re looking for an online investing platform for the long game, Ameritrade might be the best choice for you. As per their website, Ameritrade is offering a promotion of commission-free trading for the first 60 days after you open an account if you deposit $3,000 or more, plus earn up to $600 if you deposit $250,000 or more. (I know that’s quite a chunk of change, and there are bonuses at $25,000 and $100,000 levels.)
E-Trade’s popular online platform offers a lot of resources and tools. But you do pay a little more for these features. There’s a $1,000 account minimum. If you do 30 or more trades a quarter, it’s $4.95 per trade. It boasts an advanced trading platform, chock-full of tools, resources and information. There’s advance charting, customizable options, chain views to help you easily make choices and a trading ladder so you can stream prices and make orders. Plus, there are 225 commission-free ETFs to choose from.
If you’re not as active, it’s $6.95 per trade if you do 30 or less a quarter. For options trading, there’s an added fee of $0.75 per trade, or $0.50 per trade if you’re trading more than 30 per quarter. They currently offer commission-free trading for the first 60 days after you open an account, plus $600 if you have at least $10,000 in your account.
E-Trade is best for beginners who could use a lot of resources and information to make decisions, and for those who trade frequently.
The Charles Schwab Trading Platform features SmartEdge, which allows you to customize your workflow and draw insights from third-party resources. You can also tap into support from its in-house trading specialists.
What’s interesting is that although there’s a $1,000 minimum to open an account, this requirement is waived if you set up an automatic monthly transfer of $100 through direct deposit or an account linked to your brokerage account.
As far as fees go, it’s $4.95 per online equity trade plus $0.65 per options trade. Schwab is currently offering a promotion where investors that keep at least $100,000 in their account get 500 commission-free equity and options trades for two years. Plus, Schwab offers a money-back guarantee. If you’re not satisfied with your experience, Schwab will refund your fee or commission.
If you don’t have a lot of money to start with, there’s no minimum to open an account on the Fidelity Investments platform. It’s $4.95 per stock trade, plus $0.65 per contract on options. It boasts an easy-to-use, intuitive platform and mutual funds with no transaction fees, and index funds that don’t have an expense ratio. The only promotion Fidelity Investment is currently offering is 300 commission-free trades if you have $50,000 or more in your account.
If you want to talk to a human being, there’s 24/7 live support, plus 160 branches nationwide.
Fidelity offers a good value and is best for those who are active traders. Plus, there’s plenty of research and tools to draw from.
To make the best choice for you, here are a few pointers:
- Ask yourself if you value talking to people face-to-face or only prefer talking to someone on the phone. “More and more companies are becoming online only, so if you want to talk in person, it’s best to know about the branches,” explains Charles Horonzy, a certified financial planner and certified public accountant at Focused Up Financial.
- Do you want a one-size-fits-all portfolio, or a customized one based on your specifics? Many large companies will have you take a short survey or questionnaire, then put you in a class portfolio based on how you answer, explains Horonzy. “A custom approach will take into account any changes that happen in your life.”
- Take a careful look at the different fees, and into how the company is getting paid. “A common way companies make money is to take out of your investments,” says Horonzy. “Know how much they are charging. Ask yourself if it’s worth it to you.”
- To net the best rates, you may need a higher account minimum or trade more frequently. Be realistic with how frequent you’ll be trading, as well as what types of commodities you will be investing in. Plus, know that usually with increased service comes increased fees, which is why it’s important to know exactly how the company is getting paid.
Whichever online investing platform you go with, doing your homework and making sure it’s within your budget and meets your investing needs is of supreme importance. And ultimately, it’ll help your money grow.
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