If you’re trying to make your money work for you, then investing in the stock market is a great way to make that happen (although 2018 was…you know…dicey).
The thing is, and this is both good and bad, there are SO many online brokerages to choose from right now.
Okay, maybe it’s not bad, but too many options can feel overwhelming when you’re trying to get started. I just know that wading through a bunch of options can feel like a huge undertaking, and you want to make sure you find an online broker that’s right for you.
Good news though, investing for your future is ALWAYS a good idea.
Finding the right online broker is going to have a lot to do with what you want out of your investments and how hands-on you want the experience to be.
Think, do you want to be actively trading or setting it and forgetting it?
Asking about the best online stock brokers is one of the questions that gets brought up in my M$M Facebook community on a near-daily basis. It seems like everyone has their favorites, so I figured it was time to dive in and talk about some of the most popular and reputable online brokers out there to help you start growing your money into the future.
Like I said, there are a ton of different options, so I decided to narrow it down to three of the most popular and reputable online brokerages for 2019.
Here are some of the most popular stock broker options out there right now:
Fidelity is a huge broker that has been around for a while and they made a name for themselves with their mutual funds, but they’ve been making some moves this past year that are getting them noticed for more.
They actually invited me to come out to their Boston headquarters last year, and I got to meet (and yes…have drinks with) some pretty high-level people at the company.
I can tell you this – they are REALLY trying to figure out how to make their company more appealing to Millennials as we start to earn more money.
For example – just a few months ago, in 2018, they introduced zero-fee index funds. These are Fidelity ZERO Total Market Index Fund (FZROX) and Fidelity Zero International Index Fund (FZILX).
I know a lot of my readers love index funds, but if you aren’t familiar with them let me break it down for you. Index funds are a type of mutual fund that matches or tracks the components of a market index. These are an excellent option for those planning for retirement because they offer broad exposure, lower operating expenses, and low portfolio turnover.
They’re also known to be passive investing because they respond to the performance of the market they track. That means these types of funds don’t require heavy analytical research which drives up the expense ratio.
When they launched their index funds in 2018, they saw nearly $1 billion dollars invested in the first month.
Back to their mutual funds. This is what Fidelity has been known for a while, and they have recently gotten rid of their account minimums on many of these accounts.
They would cut fees to $0 on online trades of U.S. stocks, eliminating $4.95 per stock and options trading. Another huge perk of Fidelity is that they don’t charge any annual, transfer, inactivity, or closing fees. That’s all pretty great!
M$M tip: Haven’t started investing yet, you can read more about getting started at Investing 101 for Millennials: The Basics.
One of the other things I love about Fidelity on a personal level is how robust their research tools are. Honestly, they have some of the best out there. For hands-on investors, you can use their Active Trader Pro platform which has over 60 indicators, advanced studies, and charting, plus up to ten combinations of time, frequency, and indicators.
The cool thing about this software is that it is very extensive yet still easy to use. For new investors who might feel overwhelmed, though, you can steer clear of it altogether. I really just love how they give you that option to get so involved in the process.
If you ever need any assistance, Fidelity offers 24/7 phone, email, and live chat assistance. If you want broker-assisted trading, it will cost $23.95 per trade, so know that before deciding to do so. They also have a number of brick and mortars around the country if you decide that you just want to go in a talk to someone about planning.
I’d say Fidelity has a lot to offer in terms of building a low-expense, hands-free retirement portfolio with the option of getting more involved when/if you want. This means they are a great option for new and seasoned investors.
Click over to see what Fidelity has to offer.
I think of Schwab as one of the industry leaders when it comes to investing because they are such a great overall brokerage. They have serious name recognition, with service and products to match their strong reputation.
They are also continually focused on low-cost and competitive pricing. They know there are a lot of options out there, and they are working hard to grow their customer base while maintaining strong relationships with those who are already investing with Schwab.
Schwab offers nearly every investment tool you could need, which makes them great for beginners all the way to advanced level investors.
As far as fees go, Schwab is eliminating commissions on U.S stocks, ETF and options trades. They also have zero annual or inactivity fees, but if you want to transfer or close your Schwab account, you will pay up to $50. They also have over 260 commission-free ETFs and more than 4,000 no-transaction-fee mutual funds.
They recently got rid of their account minimums on brokerage accounts and IRAs, which makes things even better for new investors who want to get all of the perks of a robust brokerage without having to make such a large financial commitment to get started.
Speaking of investment minimums, what do you think about micro investing for millennials?
One of the things I love about Schwab is their Personalized Portfolio Builder tool, which is designed to help you create a diversified portfolio that is based on your financial goals, risk tolerance, and time frame. This is a great way to see how you are on track for retirement.
They also have a ton of other great tools that let you track and play around with different investment options, like Schwab Ratings, side-by-side comparisons, StreetSmart Edge, and Trade Source. If you want to get to know your investments and see what’s possible, these are all great sources of information.
Their desktop and mobile platforms are easy to use and navigate, which should be a standard for all online brokerages by this point. But, if you want a more personal experience, they have over 300 branches nationwide. You can also receive free 24/7 phone and email support through Schwab.
For complete transparency, Schwab is who I use. I didn’t know much about investing when I started, so I just went with Schwab because of their reputation and because one of my mentors had most of his funds with Schwab. I’ve stayed with them because of how happy I’ve been with their service, fees, and products.
See what Schwab has to offer you.
This is another online brokerage that I hear my readers recommend pretty often. Actually, not a day goes by without a reader bringing up one of Vanguard’s index funds, and that’s probably because they offer way below average expense ratios on their index funds and exchange-traded funds.
I’ll be paying attention to how this all changes with Fidelity’s new zero-fee index fund release.
One of the things that I actually find really cool about Vanguard is how their company is run. It’s a client-owned brokerage, meaning as an investor in a Vanguard fund, you own a piece of the company. Plus, CEO John Bogle invented the first index funds, so you know that’s where they’ll shine.
They have a $0 account minimum, which seems to be more and more the standard these days, and I like that. They also have 70 branded Vanguard ETFs and thousands of no-transaction-fee mutual funds.
As far as their other fees, there aren’t any for closing, inactivity, or transfers. But, if you maintain less than $10,000 in your account, you’ll pay $20 per year, which they’ll waive if you sign up for e-delivery on your statements.
Back to their index funds, which are really what most of my readers talk about. They have some really popular ones, like the Vanguard Total Stock Market Index (VTSAX) with an annual 0.04% expense ratio.
They also have a product called Admiral Shares, which give you even lower expense ratios once your account hits the $3,000 threshold, which they recently lowered from $10,000. There are higher thresholds for different types of actively managed accounts, but Admiral Shares are one of the reasons why they are so good for long-term, retirement investors.
Compared to Fidelity and Charles Schwab, Vanguard has higher fees for stock and options trading, which are as high as $7 per trade, but that’s all based on how much you have invested – the more you have, the less you’ll pay.
The thing with these trading fees is that Vanguard’s principle is about long-term hands-off investing, which can be great for those who are focused on retirement planning, but it’s bad for those who want to pretend they’re on the trading floor. Part of that principle means they don’t offer a trading platform, but that doesn’t mean you couldn’t use another brokerage if you want to actively trade online.
M$M Tip: One of the best ways to stay on track for retirement, or start by seeing where you’re at, I highly recommend using Personal Capital. You can link your accounts, track your investments, and they have a great retirement planning too. Read more at my Personal Capital Review. Oh yeah…it’s free!
One of the biggest downsides with Vanguard is that with limited phone chat hours and no branches for in-person support, they don’t have nearly the same type of access to or a number of customer service options.
Believe it or not – sometimes it's nice to have a physical location near you. When I left my teaching job and needed to roll over my retirement into an IRA – going to the Schwab branch right down the road made it all go very smoothly. Just food for thought – I know we Millennials would rather do everything online in most cases.
The reality is this: You probably can’t go wrong with any of the three options above. Vanguard tends to be the most popular among the three listed above, and M$M readers (as well as many other personal finance bloggers) have done business with them for years.
Like I mentioned above, I use Schwab. It’s easy, the fees are low, and it’s just the one I started with. After visiting Fidelity’s headquarters in Boston, MA, and I can tell you this – they are WAY committed to helping millennials when we all get to retirement. You can expect to see all three of these companies cater to our investing needs over the next 20-30 years.