Choosing a good broker can be an easy and straightforward process that can get you started investing immediately. Selecting the right broker is not rocket science or magic, it’s a practical and personal choice.
The right brokerage for you comes down to defining your own investment goals and deciding how you’d like to achieve them. To find out how you develop these criteria for choosing the right investment broker, take some time to work through an investment plan that works for you.
Our guide to finding the best trading platform or stockbroker is made to help everyone from beginners to seasoned investors find reliable resources for investing.
What’s Your Investor Style?
There’s a wide spectrum of investors ranging from active traders to buy-and-hold investors.
Active traders take a hands-on approach to their investment choices, making decisions regularly on when to buy and sell their securities.
Some brokerage platforms support this strategy more than others. Active traders will want to minimize brokerage trading fees and commissions while gaining access to a wealth of up-to-date resources and data.
Buy-and-hold investors prefer to invest for the long haul, making minimal tweaks and changes over time. Generally, passive investors will make contributions to a security regularly, increasing their stake as their investment earns profits.
If you fall somewhere between the two extreme types of investing strategies, there are several options for you. Diversifying your investment portfolio to include both short-term and long-term investments can pay off. You’ll want to go with a brokerage platform that supports both styles of investing.
Your first step to finding the right brokerage is defining your goals and strategy, which will lead to deciding how you’d like to invest.
Know Your Broker
There are two types of brokers: direct and broker-resellers.
Direct brokers deal directly with clients while resellers act like middlemen, making purchases and sales on behalf of a client. You’ll also want to note that a broker-reseller separates an investor from the broker, sometimes delaying transactions and limiting investing opportunities.
For many investors, having direct access to their broker is a must.
What else to look for in a brokerage:
- Are they a member of the SIPC and FINRA?
- Are accounts insured by FDIC?
- What security features are available?
- Is there fraud guarantee protection?
- Does it have good reviews?
Among the available brokers, you will find companies that emphasize online tools for managing your investments closely.
Most, if not all, brokers offer an online view into your portfolio. However, brokers will vary on how much functionality they offer through their website and apps.
Get the Most for Your Money
There are two major distinctions with brokers: discount and full-service.
Generally, discount stock brokers don’t have upfront fees but charge for premium services. Brokers like Robinhood offer trading after hours for a monthly fee.
If you want help or advice on a certain trade, discount brokers generally charge for this type of information or service.
Full-service brokers make a commission off their trades and often include an annual fee. Related fees tend to be a percentage of each trade and differ depending on the type of investment. Full-service brokers have slightly more stake in their clients, making them invaluable for hands-off investors. These brokers will walk through investment strategies and help investors decide on how to best invest their money.
Each brokerage offers services catered to different styles of investing, which is why investors should take the time to choose a brokerage that’s best for them.
Some other fees to look out for:
- Minimums for initial investments
- Withdrawal fees
- Fees for individual services
- High minimum balances
In summary, you’ll want to look into a platform’s associated fee and make sure you find a broker that provides the services you need at a price that’s acceptable.
Popular Stock Trading Platforms
Each investment platform offers a handful of tools and resources catered to different investment styles. This short list of brokers can help you find a trading platform that will work with your investment plan.
Fidelity
Fees: $0 minimum, $0 for stock/ETF trades, $.65 per options contract
Who it’s for: Everyone, from beginners to seasoned veterans
What they offer: Fidelity offers a detailed dashboard with a customizable news feed, education for new investors and investment options for everything from CDs and bonds to ETFs and common stocks. They also offer an extensive amount of helpful research tools to aid in your security analysis.
E*Trade
Fees: $0 minimum, $0 for stock/ETF trades, $.65 per options contract
Who it’s for: More experienced investors
What they offer: E*Trade offers robust tools for researching securities and making investments. While E*Trade started as a platform for day-traders, it has evolved to offer a wider range of services, like professional advice from experts.
TD Ameritrade
Fees: $0 minimum, $0 for stock/ETF trades, $.65 per options contract
Who it’s for: Beginners to advanced traders.
What they offer: TD Ameritrade is an easy-to-use platform that offers research tools for making in-depth analysis on securities. TD Ameritrade offers a mobile and desktop app called Thinkorswim that’s used by many investors that don’t invest with TD Ameritrade.
Robinhood
Fees: $0 minimum, $0 for trades
Who it’s for: Everyone
What they offer: Robinhood is a simple way to get into investing. Their streamlined sign-up process makes it easy to create an account, transfer money and get started trading. Robinhood offers the most attractive interface, but at the expense of more robust research and analysis options.While simple and easy to use, investments opportunities on Robinhood are limited to stocks, options, cryptocurrency and ETFs.
Key Takeaways
There is no doubt that you can find the best trading platform for you. The four listed are just a few of the most popular options available.
The most important action items are to research each one and try them out for yourself. Find out what serves your needs and take the time to understand your broker.
