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Online Stock Brokers: Compare and Review

You've done the research, you know what companies you want to invest in, and you know what kind of investment strategy you're capable of. Now the question is: how to make it happen? Which stockbroker is right for you? Should you immediately sign up with the one with the lowest fee or is there something else you should consider? We'll help you compare and decide.


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How to Choose a Stock Broker

Are you tired of earning just pennies on your savings every month? Are you looking for another way to build wealth? Do you want to invest in the stock market but don't know where to start?

Join the club. There are a lot of beginner investors out there who want a lot more out of their hard-earned cash than the measly 0.25% interest rate they’re likely to find with their bank account. But to invest wisely in the stock market, they can’t do it alone. They need a broker.

Finding the right one is similar to picking a stock or mutual fund — you wouldn’t pull the trigger without doing your homework first. If you're ready to start comparing brokers, CreditDonkey's got the skinny on how to choose one.

CreditDonkey Top Rated Online Brokers

ForOnline Broker
BeginnersE-Trade
DiscountAlly Invest
ResearchTD Ameritrade
Customer ServiceScottrade
PlatformOptionsXpress
OptionsOptionsHouse
Mutual FundsFidelity

How to Compare Online Stock Brokers
How to Compare Online Stock Brokers © CreditDonkey

Below you'll find our complete list of the top online stock brokers. You can skip below to compare online brokers for yourself and you don’t need to give up any personal information to do it.

Not ready to compare just yet? Read on to see what you’ll need to think about before you open a stock brokerage account.

Why You Need a Stock Brokerage Account

Stashing your money in a savings account is a good way to keep it safe, but you're not going to get rich that way. At best, you might be able to scrape up just 0.25% interest at a brick-and-mortar bank. You might get an APY as high as 1% at an online bank, but that's still peanuts compared to what you could get by investing wisely in the stock market.

Dipping your toes into the market for the first time can be a little scary (there are definitely risks involved along with the potential for rewards), and that's why it's so important to have the right broker in your corner. You need one that can help you move forward, not one that will force you backward under a pile of fees and hard-to-navigate information.

Is Investing in Stocks Worth It? 3 Reasons to Invest in Stocks

© CreditDonkey

If you're on the fence about whether to play the market or not, take a look at what you stand to gain. There are three specific advantages to investing in stocks:

  • You’re likely to get higher returns: Compared to a savings account, the returns that can go along with investing in stocks are astronomically higher. Historically, stocks have averaged an annual return of 10% over the last century. When you're looking at the long-term picture, stocks have, hands-down, the most potential for growth. (Short-term investing is riskier and less predicable.)

  • Time is on your side: If you've paid any attention to recent history at all, you know that the stock market is like a rollercoaster. Over time, you'll see some astonishing highs followed by gut-wrenching lows, but there are always some evening-out points. You’ll need to be able to stomach the dips as well as plan for investing when the market is low, so you can set yourself up for a boost in earnings when stocks start to climb once again.

  • Stocks offer diversity: Individual stocks are just one part of a solid investment portfolio. Smart investors mix things up so they’re better able to ride out the low times and can increase their odds of making good choices. With so many different stocks trading on the market, you can pick and choose which ones fit your comfort level and your overall investing style.

Weighing Rewards vs. Risk

© CreditDonkey

No discussion of investing in stocks would be complete with touching on the risks that go along with them. It's more fun to focus on the returns, but you can't afford to overlook the potential dangers.

  • The market could crash: As the history books show, the market can, and does, crash from time to time. There's nothing wrong with hoping for the best, but you also need to be prepared for the worst. You need to ask yourself how comfortable you are taking on the risks that go along with a volatile market. Impulsive investors who freak out at the first sign of a downturn are less likely to make as much money as those who can withstand the bad times.

  • You could lose money: Even if the market doesn't take a dive, returns aren't guaranteed. You could put thousands of dollars into a particular stock that's soaring one day, only to see it plummet the next. Again, you have to decide whether it's worth it to put your cash on the line for a payoff that may or may not come.

  • Inflation could eat into your returns: Inflation is a sneaky investment killer that you don't want to forget about. As of June 2015, the inflation rate was 0.1%, according to the Bureau of Labor Statistics. That's fairly low, but if it were to shoot up to nearly 3% (like it did during the peak of the recession), that could take a big bite out of your annual returns.

The bottom line?

There are a lot of unknowns involved when you're investing in stocks and it's not right for everyone.

If the thought of losing money or having to recover after a market crash leaves you feeling queasy, you might be better off playing it safe with bonds or certificates of deposit instead. These investments generally carry less risk, but there is a trade-off since they don't generate the same kind of returns as stocks.

On the other hand, if you're at ease with the idea of managing your own portfolio and you have a relatively high risk tolerance, then an online stock brokerage account may be the natural next step for you.

How Much Does It Cost? Understanding Brokerage Fees

Any time you buy or sell a stock, you're going to pay a commission fee. These fees are regulated by the Securities and Exchange Commission, but it's up to individual brokers to decide how much to charge. In general, the fee will depend on the kind of service the broker is providing. Lower fees typically mean fewer services.

Aside from the commission or trade fee, there are several other costs to keep in mind. If you're buying a mutual fund, for example, there's usually an upfront sales charge in addition to the trade fee. Your broker may also charge an annual account maintenance fee, inactivity fees if you go a certain amount of time without making a trade, minimum balance fees and fees for transferring assets between accounts.

    Ally Invest

    Ally Invest: Get $100 Cash Bonus

    New Ally Invest customers only with $25,000 minimum opening deposit. Account must be funded for at least 90 days to be eligible for cash bonus. Excludes retirement accounts.

    Expires 11/15/2017

While fees should be one of your top considerations, don't let it be the only one. We'll explain below.

Full-Service vs. Discount Brokers

Not all brokers are created equally. One of the things you need to be clear on before you choose one is what kind you actually need. They come in two basic flavors: full-service and discount, and there are some key differences between the two.

A full-service broker tends to offer more in terms of the kinds of financial products you can invest in and the level of advice they provide. For example, you may be able to buy stocks and an insurance policy through a full-service broker or get expert insight on a specific investment. Full-service brokers are typically paid on a percentage basis, which means the more you trade, the more they make, and their overall fees are generally higher.

Discount brokers, on the other hand, come with a much smaller price tag because they lack all the extra bells and whistles. You'll still be able to make trades but you're not going to get the same level of research or advice that you would with a full-service broker. Discount brokerages charge a flat trading fee, and they're the much less expensive option of the two.

What to Consider When Picking a Broker

© CreditDonkey

 Ally InvestScottradeOptionsHouse
 

Benefits and Features

Stock Trading$4.95 per trade ($3.95 per equity trade special pricing for high-volume/high-balance traders)
$6.95 per trade
$4.95 per trade
Stock Trading
Options Trading
Banking
Mobile App
Commissions and Fees
Ease of Use
Online Community
Research
Trading Platform
Customer Service

Now that you know what categories brokers fall into, the next step is comparing the details.

It's easy to make a mistake when choosing an online stock broker. A wrong click here and you'll end up blowing your life savings.

You have a few factors you need to consider carefully when choosing a broker:

  • Cost: One of the most important things to look at when choosing a broker is what you'll pay in fees. The typical service charge for making a trade with a discount broker ranges from $4.95 to $6.95, while the fee can go as high as $200 per trade at a full-service brokerage. If you're going to be making a lot of trades, minimizing those fees is essential. But don't let it be the only factor.

  • Research and tools: Some brokers cater to certain people over others. The majority of us fall into the buy-and-hold category, placing a high value on access to the latest research and investing tools above the need for cheap trades. Are you super active or pretty passive with your investments? Do the bells and whistles matter to you or could you go without them?

    Even seasoned investors need a little guidance every now and then, and it's particularly important if you're a novice. When comparing brokers, pay attention to the kinds of resources and investing tools that are available. You should also factor in what kind of customer support each broker provides in case you run into a problem or have a question.

  • Choice of investment options: You may be looking to just open an IRA and see how you do before dabbling in other investments. But leave open the possibility that you’ll want to expand and see whether your IRA broker can help you out when you’re ready. Most brokers will give you access to stocks, but will you want to branch out and get into bonds or riskier investments like options and penny stocks?

Tip: You can't swim without getting in the water, but when you're talking about your hard earned money, we know it can be terrifying to dip that first toe in. Brokers like Scottrade and OptionsHouse offer virtual trading platforms where you can make mock trades using virtual cash.

Identify Your Investing Style

The stock broker you choose should reflect your short- and long-term goals. Figuring out which kind of investor you are can guide you towards the appropriate brokerage.

  • You plan to trade frequently. If you are not just going to leave your account dormant for months at a time, look to minimize trade fees.

  • You're an active trader. When making multiple stock trades is the order of the day, keeping the cost as low as possible is a top priority. That means going with a brokerage that charges rock-bottom trade fees. Both Ally Invest and OptionsHouse fit the bill, with trade fees of $4.95 each. That's half of what you'd pay compared to other brokerages. Just keep in mind that there is a separate commission of $20 to $25 for broker-assisted trades.

  • You're investing for the long haul. If you're the kind of investor who likes to buy a stock and hold on to it, trade fees may be less important than having access to a variety of research tools. With Scottrade and E-Trade, for example, you'll pay $6.95 per trade and the fees for broker-assisted trades are also higher; however, you'll have a much larger pool of informational resources to draw from, including webinars, podcasts, and video tutorials.

  • You're new to investing. If you’re a newbie, just getting started with investing, it's easy to get overwhelmed, especially if you're not familiar with how stock trading works. And you’ll want tools that are easy to use and have access to good customer service. If you want to keep things simple, using a brokerage like E-Trade or OptionsExpress can put you on the right track without making investing harder or more expensive than it has to be.

Final Word

Choosing the right stock broker is not a decision you should make lightly. Weigh the services and benefits against the fees involved and the likelihood you’ll make full use of what the broker is offering. Map out your goals and figure out whether the broker you’re eyeing can help you get there. Do you understand their terms and offerings? Will they make investing easier or more difficult for you? Will they help you stay informed to make the right decisions going forward, and can you easily track the decisions you’ve made in the past? Can you find what you need on their website, or do you get lost?

A good broker should provide the tools you need and can use to make smart investing decisions at a reasonable cost.

Disclaimer: Opinions expressed here are those of the author's alone. Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.


Compare Stock Trading

    Ally Invest
    Read ReviewVisit Site

    Ally Invest

    • Stock Trading: $4.95 per trade ($3.95 per equity trade special pricing for high-volume/high-balance traders)
    • Options Trading: $4.95 base + $0.65 per contract (50 cents per options contract special pricing for high-volume/high-balance traders)
    • Minimum Deposit: $0

    Pros:

    • Low commission for stock trades
    • No account minimums
    • Online trader network

    Our Review: (4.4) Ally Invest (formerly TradeKing) offers one of the lowest trade fees, but is it good? Learn the pros and cons and see comparisons with other online brokers in this in-depth review... Read full review

    Get $100 Cash Bonus

    Fidelity
    Read Review

    Fidelity

    • Stock Trading: $4.95 per trade
    • Options Trading: $4.95 per online trade, plus $0.65 per contract
    • Minimum Deposit: $2,500

    Pros:
    • Research reports
    • Beginner-friendly tools
    • Mobile app
    Cons:
    • Restricted platform
    Our Review: (4.4) Thinking of opening a brokerage account with Fidelity? There are many reasons to love Fidelity and a few reasons to think about going elsewhere... Read full review

    Get 500 Free Trades for 2 Years

    OptionsHouse
    Read Review

    OptionsHouse

    • Stock Trading: $4.95 per trade
    • Options Trading: $4.95 + $0.50 per contract (only one base charge per spread, straddle, or combo)
    • Minimum Deposit: $0 minimum funding level to open a new account.
      $2,000 minimum funding for a margin account
      $2,000 account minimum to establish checking writing privileges and $10,000 account minimum to establish debit card privileges

    Pros:
    • Low fees
    • Trading platform
    • Extensive options tools
    Cons:
    • Limited mutual fund selection
    • Limited in-depth research
    • Complicated for novices
    Our Review: (4.3) OptionsHouse is one of the lesser known online brokerages, but we think it deserves attention. Read our in-depth review to see if it's right for you... Read full review

    Open an OptionsHouse account

    OptionsXpress
    Read Review

    OptionsXpress

    • Stock Trading: $4.95 per trade
    • Options Trading: $4.95 plus $0.65 per contract
    • Minimum Deposit: $0

    Pros:

    • Awesome interactive website
    • No fee for broker-assisted trades
    • Fantastic visual education resources

    Our Review: (4.2) Want to trade options but don't know where to start? Read our in-depth review to find out why OptionsXpress is one of the best options brokers... Read full review

    E*TRADE
    Read Review

    E*TRADE

    • Stock Trading: $6.95 per trade
      $4.95 per trade if you make 30+ trades a quarter
    • Options Trading: $6.95 + $0.75 per contract
      $4.95 + $0.50 per contract if you make 30+ trades a quarter
    • Minimum Deposit: $500 for brokerage accounts
      No account minimum for retirement accounts

    Pros:
    • Expansive set of resources and tools
    • Easy to use website
    • Industry leader
    Cons:
    • Trade fees
    Our Review: (4.2) E*TRADE is a highly well-known name, but does that mean it's that much better than its competitors? Read our in-depth review and see how it compares... Read full review

    Get 60 Days of Commission-Free Stocks and Options Trade

    TD Ameritrade
    Read Review

    TD Ameritrade

    • Stock Trading: $6.95 per trade
    • Options Trading: $6.95 + $0.75 per contract
    • Minimum Deposit: $0

    Pros:
    • Easy to Use
    • Thinkorswim Platform
    • Customer Service
    Cons:
    • Trade Fees
    Our Review: (4.2) Ameritrade fees are higher than competitors, but is it worth it? We say yes and here's why. We analyze and compare it for you in our in-depth review... Read full review

    Scottrade
    Read Review

    Scottrade

    • Stock Trading: $6.95 per trade
    • Options Trading: $6.95 + $0.70 per contract
    • Minimum Deposit: $2,500 for brokerage accounts
      No account minimum for retirement accounts

    Pros:
    • Low per trade fees
    • Physical locations
    • Easy-to-navigate website
    Cons:
    • No futures trading
    • High broker-assisted fee
    Our Review: (4.2) With low trade fees, excellent resources, and superior customer service, Scottrade is a highly trusted online broker. Read on for our in-depth review... Read full review

    Open an Account


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    Best Online Stock Broker for Beginners

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    Which online broker is best for beginners? Read this in-depth comparison to see which stockbroker is best for ease-of-use, fees, and educational materials.
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    TradeKing vs Scottrade

    January 2, 2015 - By Cynthia Cohen - Reviews
    When you're ready to invest, it's not wise to choose a broker just because it has the lowest per-trade fee. Discount brokers have others pros and cons (including other fees) that are worth assessing before making a choice.

    How to Choose Online Stock Broker

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    If you have a fair amount of savings and you're tired of watching your hard-earned cash earn less than 1% interest in a standard bank account, it's time to consider investing.

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About CreditDonkey®
CreditDonkey is a stock broker comparison website. We publish data-driven analysis to help you save money & make savvy financial decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.