Best Brokers for Beginners -- Used and Reviewed by Our Experts | The Motley Fool (2024)

We've done a deep dive into over 45 brokers to find the best brokers for beginners. Our experts rated each brokerage based on these factors:

• Is it easy to buy stocks or other investments?
• Is the broker free or low-cost?
• Does the stock broker offer other investments?
• How secure is the broker?

Keep reading for our picks for the best stock brokers for beginners.

Why SoFi Active Investing made the list: SoFi is more than just a brokerage. It is an all-in-one bank alternative, with checking and savings accounts, loans, credit cards, and more.

SoFi can be a great fit for beginning investors who want to keep their finances in one place. For this reason, we rate it as one of the best brokers for beginners looking for an all-in-one financial ecosystem.

Why Public made the list: Public makes it easy and affordable to buy stocks and ETFs, the bread and butter of beginner traders. But it goes a step further. Public makes it super easy to diversify out of stocks, even if you're new to investing.

You can buy fractional bonds, invest in music royalties, and put cash in a high-yield account. Many of Public's investments are speculative. But some are rock-solid, time-tested options. They include U.S. Treasury bonds and a top-tier cash account.

Why Fidelity made the list: Fidelity is one of the oldest and most respected names in the brokerage industry. It has evolved to also become one of the best beginner-friendly brokers in the industry.

Fidelity has some of the features beginners love, such as fractional share investing. It also offers resources and tools that you'd expect from a full-service brokerage.

Why Charles Schwab made the list: Charles Schwab is one of the largest brokers in the world, and it is also one of the most feature-packed brokerage platforms. This is especially true after its recent acquisition of TD Ameritrade.

Although it's one of the more traditional brokers on our list, Schwab offers one of the best trading platforms with beginner-friendly features.

Here are some of the important factors the best stock brokers for beginners have in common:

• Low costs: The best brokerage accounts for beginners charge no commissions for online stock and ETF trades (what you'll generally focus on as a beginner).
• Variety of funds: Stocks are great, but they're not for everyone. The best investing platforms for beginners offer low-cost exchange-traded funds (ETFs) and no-fee mutual funds to help you invest wisely without a ton of stock market knowledge.
• Educational resources: Many of the best online brokerages for beginners have an educational resources section loaded with information that can help you learn more about investing and gain confidence.

The process for opening a brokerage account is similar to the process for opening a checking or savings account. If you're using an online stock broker, it should take just a few minutes, and it'll involve filling out a few simple forms.

1. Determine the best broker for your needs, and the type of account you want (individual, joint, IRA, etc.).
2. Fill out your broker's application form. You'll need to provide identifying information, such as your Social Security number, and will also likely need to fill out tax forms.
3. Link your checking or savings account, or use an alternative method to fund your account.
4. Fund your account. Many brokers let you open an account before funding it.
5. Invest!

Follow these steps to get started investing in stocks:

• Determine your investing approach. You could be hands-on, selecting individual stocks, or hands-off, letting a robo-advisor manage your portfolio, or you could fall somewhere in between.
• Choose how much to invest. Don't invest money you'll need within five years -- your investments aren't liquid funds, and short-term investments are too vulnerable to volatility.
• Open an investment account with a brokerage. Choose a brokerage like the ones on our list of best investment accounts to manage your investments, making sure the features and platform are aligned with what you need.
• Diversify your stocks. If you're investing in a self-directed account -- where you pick individual stocks -- choose stocks from businesses you understand across an array of industries. Alternatively, choose an ETF or index fund to skip having to choose altogether.
• Invest often. Continue to contribute to your investment accounts and hold on to the investments long term to get the best and most stable returns on your investments.

With an online brokerage account, you can certainly buy and sell stocks and ETFs (exchange-traded funds). Beyond that, the exact mix of investments you can buy depends on what your brokerage offers. For example, some brokers facilitate trading in investments like options and mutual funds, while others don't.

This may not be an exhaustive list, but these are some of the investment types you might be able to buy in your online brokerage account:

• Stocks
• ETFs
• Mutual funds
• Options
• Bonds
• CDs
• Foreign currencies (Forex)
• Futures
• Cryptocurrencies

Most major stock brokers have no account minimum. A low- or no-minimum-deposit requirement lets investors who don't have a ton of spare capital get started investing early, so you can gradually build your first investment portfolio and take advantage of long-term gains.

This historically hasn't been the case. When I opened my first brokerage account over 20 years ago, I needed to deposit $2,000 just to get started. Now, with many top brokers allowing investors to buy fractional shares of stock, it is practical to get started with just a few dollars.

There are some important risks involved with trading stocks online. The biggest risk is that your stocks will go down in value and you'll lose money, but many of the risks depend on the specific investments you buy. For example, buying a basic S&P 500 index fund and investing in speculative biotech stocks have two completely different sets of risk factors.

Having said that, any stock investments can be rather volatile over shorter periods of time, so a good rule of thumb is not to put any money in the stock market that you'll need within the next three to five years.

An online brokerage account for beginners is a specialized account that lets you buy, sell, and hold investments, and it's probably beginner-friendly.

Brokerage accounts come in several different forms, including, but not limited to:

• Individual (taxable) brokerage accounts
• Joint brokerage accounts
• Traditional and Roth IRAs (individual retirement accounts)
• Custodial accounts to invest for minors
• Specialized retirement accounts
• College savings accounts, such as 529 savings plans

Online brokerage accounts are offered by many different financial institutions. Many are primarily based around a desktop platform or website, while others are centered around a mobile trading app.

At The Motley Fool Ascent, brokerages are rated on a scale of one to five stars. We primarily focus on fees, available assets, and user experience; however, we also take into account features like research, education, tax-loss harvesting, and customer service. Our highest-rated brokerages generally include low fees, a diverse range of assets and account types, and useful platform features.

See our full methodology here: Ratings Methodology